Market Update 03/24/2020

Overview:

Energies are higher as hopes grow for a stimulus package from the US, as well as the Fed's measures to support the economy, which include the backing of corporate debt. (Reuters) US stock indices hit upper limits in trading overnight and the dollar fell—both supporting oil. (Yahoo Finance) Platts reporting says that prices were supported in Asia due to hopes for US/Saudi cooperation to stabilize the oil market.

Saudi crude oil exports in March were seen at 7.3 mmbpd--barely up from February's 7.26 mmbpd (Reuters) 

Jet fuel prices rebounded somewhat in Asia on Tuesday with the crack from Dubai crude rising to +62 cents from -7 cents seen Monday. However, traders see the jet market under pressure until the 3rd quarter. (Platts) The crude market in Asia was subdued as trading for May barrels seems to be coming to an end soon with buyers receding. Some regular spot market barrel buyers have deferred or cancelled monthly purchases due to declining refining margins. (Platts)

The news in the US & the Atlantic Basin for physical crude is not so good. Dated Brent traded down to -$1.73 Monday—its worst level since May 2013. (Platts) In the US, the cash April/May WTI traded -$3–its lowest since May 2010, underscoring the growing supply in Cushing. Note, Genscape sees Cushing stockpiles having risen 870 mbbls in the week ended last Friday. (Reuters)

Headlines we saw late Monday indicated further run cuts by US refiners. Phillips 66 is cutting at their Bayway, NJ unit (supposedly by 15-20% of the 258 mbpd refinery), Delta Trainer PA refinery is cutting 40 mbpd, PBF in Delaware is cutting gasoline output in favor of maximizing distillate yields. US Atlantic Coast demand for Gulf Coast products is waning, evidenced by Colonial Pipeline seen reducing flows northward by 20% on their 1.37 mmbpd gasoline and 1.16 mmbpd distillate main line. (Platts). This is all reinforced by the negative settlements for gas cracks on Monday on the CME. May WTI vs. June RB settled -37 cents.

Technicals:

Technically, the energies have stabilized with ULSD & WTI's RSIs back above 30 and momentum trying to turn higher, though some doubt that the definitive bottom is in place. May WTI futures support is seen at 2136 then 2080. Resistance is seen at 2663 then 2722-34.

May ULSD support is seen at 10330-50. Resistance is seen at 10854-76 (10854 is today's high).

May RB support lies at 4985-5000 (4985 is today's low) with resistance seen at 5595-5600 then at 5770-85, tested with a high of 5781.

Natural Gas:

NG is up in tandem with other asset classes as NGI cites a cooler forecast overnight and hopes for a US stimulus package as supporting prices.

Chevron has lowered their Permian production forecast by 20%. This is an underlying theme that is supporting NG recently—the loss of associated gas production. (Reuters) 

Technically, momentum for NG on the DC chart is trying to turn positive and the spot futures have pierced resistance at 1.642 area. Next resistance above lies at 1680/1683. We see support at 1.602-1610 then at 1583-1586 (1583 is the overnight low).

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