Liquidity Energy Morning Update 10/24/16
Over the weekend the Russian Energy minister met with Persian Gulf Council reps - Russia gave no commitment to either freezing or cutting output to assist OPEC (Bloomberg)
Over the weekend the Iraqi oil minister asked OPEC for an exemption from cutting output--and the Iraqis are disputing OPEC's output figures. Iraq says that they are pumping 4.7 mln BPD - OPEC has their output at 4.2 mln bpd - Iraq is looking to boost exports in 2017 to 3.2 mln bpd from 3.172 this year
Over the weekend clashes intensified between ISIL and Iraqi forces in the region near Kirkuk in Iraq
Data out today shows Chinese crude oil imports rose in September by 18% year on year and the Jan-Sept period saw a 14% increase over last year -- but the picture for the products is a more bearish one. Gasoline exports from China rose by 72% for the 1st 9 months of this year over 2015; diesel exports rose by 44%; Fuel oil exports were +52 % year-on-year
Friday CFTC data showed that money managers lowered their bullish and bearish bets on WTI - lowering their bearish bets by slightly more than their bullish ones for the period ended 10/18. Bloomberg says that the net bullish position is the most in 2 years and that short positions are at their lowest amount since May. Net bullish RB positions rose by 9,4 % to 40,085 contracts (Bloomberg), and ULSD length fell by 7%
The oil rig count rose by 11 units as per Baker Hughes data issued Friday--it is the 8th straight increase (WSJ)
Late last week the front end RB contract rallied due to issues at 2 refineries in the East--one being the Trainer, PA refinery operated by Delta Airlines
Technically, the energies are on the defensive - despite the RB having made a fresh 3 mth DC high on Friday - momentum for all the energies points lower on the DC chart basis. For today, RB has resistance at 15245-55 then the 15370 high from Friday--support lies below at
15060-75 then 14910-25. ULSD spot futures has support at 15630-35 then 15535-45, resistance is seen at 15830-45 (the overnight high is 15846). Then, resistance comes in at 15923.
WTI has support at 4990-5000 then 4930-35 --with resistance at the double top of today/Friday of 5098/5102, then at 5155-65
Nat Gas is lower again today by 6 cts in the spot futures contract - after falling almost 15 cts on Friday - we suspect that the benign weather and some long liquidation is causing the fall
Friday, the front spread widened to the greatest differential seen in a front month spread since May 29,2013 -- at 39,2 cts at its widest, the Nov/Dec spread reached just under the Nov/Dec 2015 differential seen almost one year ago at 38,2 cts (today Nov Dec has pierced 40 cts) -- and we suspect this is a function of 2 things: 1) the willingness of some speculative longs to hold the positions by rolling from Nov to Dec and 2) the lack of winter demand is putting pressure on cash prices and making Nov weaker
Technically, the NG contract looks weak - with weekly momentum having turned downward--and the mean reversion on the weekly chart having been confirmed Friday the spot futures settled below the mid Bollinger on the DC chart (that values lies now at about 3,095). DC support at 3,10 has been broken emphatically. Resistance lies at 2990-98 then 3021-29 (the overnight high lies above that at 3044). Support below comes in at 2905-2911 then the major low of Oct 3rd at 2866. As much as price action/momentum/spread values are all bearish - it is hard to advocate getting short much below 2900 - given the congestion we see - and the sharp/steep fall that has happened in the past 5 sessions
NG rigs rose by 3 in the Baker Hughes report issued Friday (DJI)
CFTC data showed an increase in money managers’ bullish bets by 20.7% in the period ended 10/18
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