Market Update 04/06/21

Overview

Energies are higher. The support is said to stem from a weaker US. dollar index, good economic data from the U.S. & China, and some bargain hunting after the steep losses seen Monday. 

In the U.S., the services ISM rose to a record in March. The reading was 63.7, up from 55.3 in February. Businesses are said to be resuming large projects that were on hold prior due to the pandemic. Higher sales were seen at retail outlets. Yet, reporting by Reuters talks of supply constraints, such as port delays, shortages of materials and issues with availablity of trucks and containers. These factors are seen leading to rising costs for businesses. The ISM news follows the strong jobs data seen Friday, which helped see U.S. equities rise to new record highs Monday. 

In China today, the Caixin/Markit PMI index for March was seen at 54.3, up from February's 51.5 reading. The services sector reading for March was 53.1, versus 51.7 for February. (Reuters) 

Indian state refiners are dialing back purchases of Saudi crude in May. They are seen taking a total of 9.5 MMBBL. This is down from 10.8 MMBBL in April. Reuters reporting says they normally buy 14.8 MMBBL per month. The Indians are seen sourcing crude from Brazil, Guyana and Norway. These crudes look to be sweeter than Mideast crude. This is befitting the recent trend for better gasoline margins and hence the desire for more sweet crude for the refining process. 

The jet crack margin in Asia is said to have risen to a 4-week high at $4.16. One month ago, the crack stood at $3.96. Scheduled airline seat capacity globally is said to have risen by 27% in March from February. The jet crack though still remains 55% below the 5-year seasonal average according to Reuters. 

Technicals

Momentum has turned negative for the crude oils and ULSD, but the price action still signals a sideways pattern to us. 

WTI support in May futures is seen at 5885-86, then at 5763. The overnight low is 5862. Resistance above comes in at 6134-36. 

May RB support lies at 1.9550-75 and resistance at 2.0050, then at 2.0202-14. 

May ULSD resistance is seen at 1.8204-05, then at 1.8324-30. Support comes in at 1.7760-72. The overnight low is 1.7722. Below this we see support at 1.7627. 

Natural Gas 

Cooler temperatures in the forecast for mid-April are supporting higher NG values today. 

Platts details the strength in Waha Hub pricing out of the Permian basin. They attribute it to lower production and competition for the supply from East and West, as a key new takeaway pipeline opened in recent months. The Kinder Morgan pipeline directs flows eastward towards the Gulf Coast. The June through August strip at the Waha Hub is said to be 8 cents below the Henry Hub. This is very narrow. Last summer, the differential was seen at -55 cents for cash Waha versus the Henry Hub. Production in the Permian year to date is seen at 1.2 BCF below year ago levels, Platts says. 

NGI reported yesterday that European storage was at 31% as of Saturday. Prices at the benchmark TTF were said to be $6.62 as of late last week, while spot LNG prices in North Asia also remained healthy Monday at over $7/MMBTU as spring restocking continues across the region as well. These values are seen keeping US exports strong. 

Technically, NG momentum on the DC chart has turned negative, but the price action looks sideways, with $2.50 providing support for now. Below the $2.502-04 support, we see next support at $2.454-58. Resistance lies at 2.585-2.592, then at 2.615-2.616. 

Disclaimer 

Commodity trading involves risks, and you should fully understand those risks prior to trading. Liquidity Energy LLC, and its affiliates assume no liability for the use of any information contained herein. Neither the information, nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice, are that of the individual, and not necessarily the opinion of Liquidity Energy.