Market Update 03/08/21

Overview

Energies are lower after surging to new highs overnight on news of Houthi drone attacks, which included a Saudi Aramco facility at Ras Tanura. Saudi Arabia said its largest oil export terminal at Ras Tanura in the Persian Gulf was undamaged. As a result, prices have fallen back quite a bit from their overnight highs.(Platts) 

Total's CEO said that it could take 2 years for the world economy to recover. He does not see prices staying at $70, but says the right price to him is $50-60. (Reuters) 

Iran has moved a record volume of oil into China, and is reaching out to other Asian clients for trade resumption. India expects Iranian supplies to return to the market in 3 to 4 months. China has imported 306 MBPD of Iranian crude over the past 14 months. Petro Logistics says that Iranian crude loadings hit 600 MBPD in January. This was the highest total since May, 2019. (Reuters) 

Saudi Arabia raised their OSPs to Asia by 20-60 cents for its light and medium grades. They kept their heavy grade OSP to Asia unchanged. OSPs to Northwest Europe fell by $1.50-1..80. They fell by $1.00-1.90 to the Mediterranean. Prices to Europe fell with many nations there still under tight pandemic-induced restrictions. OSPs were seen unchanged to 30 cents higher for April loadings. (WSJ) 

Reuters also suggested that oil prices were helped by the U.S. Senate passing the Covid-19 relief package. On the economic front, Friday's U.S. Non Farm payroll data was also seen as supportive. The jobs report showed 379,000 new jobs in February, which was well above the forecast of +210,000 (WSJ). Over the weekend, China said that exports for January/February combined were up 60.6% from year ago and +18.1% from December. Exports out of China may ease going forward, though, as fewer masks and medical supplies are needed worldwide. This year's exports were up versus year ago levels, as a year ago China closed many factories due to the onset of the pandemic. (U.S. News) 

Chinese crude imports for January/February averaged 11.08 MMBPD, which was up 4.1% versus 2020 and +9.5% versus 2019. (Reuters) 

The gasoil cash differential in Asia fell to a one month low of -27 cents today. One week ago it was -4 cents. Buying interest was said to be sluggish, as per Reuters reporting. Also hurting was a "surge" in Chinese Gasoil exports, and barrels coming from India and the Persian Gulf. 

Friday's Baker Hughes oil rig count rose by 1 unit. 

Friday's CFTC Commitment of Traders Report showed money managers reduced their net length in WTI on ICE/CME combined by 3,323 contracts, as more shorts were added on the CME. RB net length fell by 3,458 contracts. More shorts were added than longs. ULSD length rose by 3,165 contracts in the week ended Tuesday March 2nd. Longs were added. 

Technicals

Momentum is positive for the crude oils and ULSD, while that for RB is trying to turn negative from overbought conditions. Today's price action, though, suggests greatly that the market has found a price point that is hard to sustain, as the Total CEO implied. The crude oils and ULSD are bumping against their DC upper bollinger bands. 

WTI resistance is seen at 6642, then at 6798, which are the highs from Friday/today. Support lies at 6486. The upper DC bollinger here intersects at 6575. 

Brent spot futures have support at 6770-75. Resistance comes in at 6969 then at 7138, which are the highs from Friday/today. The upper DC bollinger here lies at 6935. 

RB support in April is seen at 2.0242. Resistance lies at 2.0790, then at 2.1119, which are the highs from Friday/today. 

ULSD has its upper DC bollinger at 1.9510-15. Resistance above that is seen at 1.9530, then at 1.9868, which are the highs from Friday/today. Support below is seen at 1.9193-1.9213.

Natural Gas 

NG has softened again today as temperatures are seen well above normal for much of the U.S. for several days this week. 

The Baker Hughes NG rig count seen Friday was seen unchanged. 

CFTC data issued showed NG net length held by money managers fell by 3,458 contracts in the week ended Tuesday March 2. This was due to longs being shed. 

The question going forward is at what price point will we see an uptick in end user buying interest as we head to injection season. 

Technically, NG support at 2.643-45 is being broken. Next best support lies at 2.591-95. Resistance lies at the lows from Thursday/Friday at 2.681-84. The overnight high is 2.734. Momentum has turned negative on the DC chart, but at a nearly oversold condition. 

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