Market Update 04/19/21

Overview

Crude oil and RB prices are higher now after trading lower most of the overnight as concerns due to Covid-19 have increased. India reported a record new number of Covid-19 cases over the weekend. Restrictions were being extended to India's capitol city of New Delhi. Some smaller Asian countries also announced extensions of curbs. (Platts) 

In Japan, the number of new cases reported were the most seen since late January. The Japanese are looking at possible renewed lockdown restrictions in Tokyo and Osaka. (Reuters) 

Prices may also have been hurt by the resumption of nuclear talks this week in Vienna. (Platts) 

Near term demand for crude oil from teapot/independent refiners in China is seen "remaining subdued" according to Platts reporting. The "teapots" need to clear supplies they have stockpiled. Cheap Iranian crude has caused some of the excess. Some crude cargoes held in Chinese ports are said to be unsold. Also, some refiners have gone into maintenance this month. Thus, the need for seaborne supplies to be loaded in May and June may be slack. 

Chinese diesel exports in March were said to be near record level. Diesel shipments totaled 2.81 MM tonnes (664.4 MBPD) last month, versus the previous monthly record at 2.83 MM tonnes in March 2020. Exports rose as companies battled to ease brimming domestic inventories. Diesel supplies exceeded demand, resulting in very high stocks. However, exports of gasoline eased 14.6% from a year earlier to 1.56 MM tonnes, compared with 1.83 MM tonnes in March 2020. The exports have eased relative to last year, since last year the pandemic had dampened Chinese demand for the motor fuel. The gasoil cash differential in Asian trading was the worst in three weeks, falling for the sixth straight session. A rise in Covid-19 cases and strong Chinese supply were cited. The differential was seen as -30 cents. This is down from a -1 cent valuation just ten days ago. (Reuters) 

On the positive side, toll traffic in NYC in April is seen as the busiest in seven years. (Platts) 

The dollar is seen having hit a six week low today and Europe Stoxx 600 index hit a record. (Reuters) 

Friday's Baker Hughes oil rig count showed an increase of 7 units. 

The CFTC data issued Friday showed money managers shed RB length by 7,227 contracts, while adding 1,511 contracts of WTI length on ICE/CME combined. ULSD net length rose by 252 contracts. 

Technicals

Technically, momentum remains positive, but we see one or two indicators that dampen the bullish argument. 

ULSD momentum is getting overbought. May ULSD is carving out a wall of resistance above 1.90. Today and Thursday's highs are at 1.8994-95. Resistance above lies at 1.9120-45. Support is seen at 1.8805-12, which is just below the overnight low of 1.8826. 

RB support for May is seen at 2.0309-14, tested with a low overnight of 2.0298. Below that we see support at 2.0171-76. Resistance lies at 2.0622, then at 2.0750-61. 

June WTI support lies at 6162-67, which are the lows seen today and last Thursday. Resistance above lies at 6394-6404. The May WTI futures expire tomorrow. 

Natural Gas

NG continues its upward bias today as temperatures in the Midwest are below average and global markets signal an urge to restock for next winter, which supports U.S. LNG exports. 

Reuters reporting on Friday said LNG into North Asia was worth $7.60, while last week May deliveries were seen valued at $7.30. The Chinese, Japanese and South Koreans were said to be interested in stockpiling for next winter. In Europe, a cold spell earlier this month caused a net withdrawal from storage there. Storage is now less than 30% full. Q3 pricing in Europe has risen as worries there grow over restocking, as per Platts. 

Friday's Baker Hughes NG rig count showed a rise of 1 unit. 

CFTC data out Friday showed a very large increase in net length held by money managers in futures/options on the CME in the week ended Tuesday, April 13. Net length rose by 17,858 contracts as longs were added and shorts were covered. 

Technically, NG looks firm as it approaches some decent resistance from prior highs above 2.75. Resistance lies at 2.768-2.773. Support lies at 2.658-2.663. 

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.