Market Update 03/11/21

Overview 

Energies are higher, lifted by a weaker U.S. dollar, strong product draws in the DOE data seen yesterday, and the passage of the Covid-19 relief bill in the U.S. 

Muted US CPI inflation data brought stability to US bond yields, and improved risk sentiment in the market, and weakened the dollar. (Platts) 

The DOE data showed a very large increase in crude oil stocks, which was more than offset by product draws. Notable was the rise in product demand Distillate demand surged by more than 18% (699 MBPD) on the week to 4.49 MMBPD, the strongest since November 2019. Implied gasoline demand jumped by more than 7% (578 MBPD) on the week to 8.73 MMBPD, the strongest since early November 2020. (Platts) The gasoline demand still lags behind that of the past 2 years. Crude stocks rose by 13.798 MMBBL, while gasoline stocks fell by 11.869 and distillates by 5.504 MMBBL. The gasoline draw was concentrated on the high-demand US Atlantic Coast. Refinery runs rose by 13% . Crude inputs to refineries rose by 2.407 MMBPD. U.S. crude output rose by 900 MBPD to 10.9 MMBPD. Net crude imports into the U.S. fell by 919 MBPD. Thus, given that crude inputs rose as much as they did and that net imports of crude fell, the large build in crude supplies is hard to justify even as crude output rose. 

The high gas crack is drawing imports of gasoline to the U.S. According to Kpler ship tracking data, gasoline imports into the US Atlantic Coast (USAC) are expected to hit 7.34 MMBBL the week beginning March 8, and 5.78 MMBBL the following week. EIA data shows USAC imports at around 3 MMBBL for the week ended March 5. (Platts) 

Technicals

Momentum for the crude oils & ULSD remain positive, although they are looking as if they wish to turn negative. 

RB has resistance at 2.1119, which is the high seen Monday. Support lies at 2.0764-77, then at 2.0579-90. The overnight low is 2.0750. 

ULSD resistance lies at 1.9362, then at 1.9530. Support is seen at the low 1.9080-99, then at 1.8885. 

WTI shows its support at 6454-57, then at 6381-82. Resistance lies at 6598-99, then at 6642. 

Natural Gas

NG is softer today as it looks like it has a found a near term trading range, caught between warm temperatures in the near term slowing demand and the notion of storage buying interest as stocks are at a deficit to prior years. 

Today's EIA storage data is forecast to show a draw of between 65 and 78 BCF. This compares to last year's -72 BCF reading and the 5 year average of -89 BCF. 

Platts Analytics is forecasting US Gulf Coast LNG terminals to be running near full capacity through the end of 2021. Platts reporting says buying interest from Asia is firming for May. After topping 11 BCF last Friday – a high since the Texas freeze and near the levels seen prior to mid-February — LNG feed gas volumes have hovered near 10 BCF for five straight days, NGI data shows. 

Technically, NG looks like it is trying to turn higher from oversold condition. Resistance lies at the double top at 2.707-2.714. Above that, resistance lies at 2.734. Support is seen at 2.623-24, then at 2.591-96. 

Disclaimer 

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