Market Update 06/12/2020
Overview
Energies have clawed back to being up on the day as pandemic fears have eased today. Brent spot futures even attacked the gap left from the expiration of the July contract. Yesterday, energies suffered steep losses as the market feared an increase in Coronavirus cases. The Dow Jones Index suffered its worst performance since March 16. The index fell by 6.9%/-1861.82 points. (CNBC)
Today, in Asia, the Dubai market structure eased back as Saudi crude allocations are awaited and refining margins remain weak. Dubai Cash vs. futures were seen at +62 cents vs. the 4 month high of +93 cents seen June 9th. (Platts)
Platts reports that the US rig count is seen approaching a floor near 300. Last week, Baker Hughes' total was 284. The rig count is seen stabilizing until early 2021. A significant increase in rig activity is not expected until 2022.
Shippers are seen cancelling installation of scrubbers, as the investment is seen as too costly, especially as shipping demand has fallen due to covid-19. Shippers were hoping to buy cheaper High Sulfur Fuel Oil (HSFO) upon installing the scrubbers. (Reuters)
Chinese car sales in May were up 7% vs. the year ago level. This is the first year on year growth seen since June 2018. (Reuters)
Technicals
Technically, the energies remain soft as momentum is negative. On the positive side, the crudes and RB bounced off their DC mid-Bollinger. WTI support is seen at 3541 and then at 3421-32. The overnight low is 3448. Resistance lies at 3706-07 then at 3818. The mid-Bollinger lies at 3445.
Brent fell into the rollover gap from a few weeks ago. The top of the gap is 3719; the overnight low is 3701. Support for August is seen at the 3720 area and resistance at 3972-75. The DC mid-Bollinger lies at 3740.
RB support in July is seen at 10917-38 and then at the overnight low of 10741-58. Resistance comes in at 11352 and then at 11517. The DC mid-Bollinger lies at 10795.
July ULSD support lies at 10775-80 and then at 10534-37, which is the overnight low. Resistance lies at 11384 and then at 11526.
Natural Gas
NG is down 1 cent as milder weather in the immediate term, worries over the pandemic, concerns about LNG exports from the US are seen hurting prices. Yesterday's EIA storage number was right on target at +93 BCF. Total storage is now 2.807 BCF, which is +748 BCF (+36.3%) YOY and +421 BCF (+17.6%) vs. the 5-year average. Refinitiv forecasts next week's EIA data to show a build of 87 BCF, which compares to last year's +111 BCF and equals the 5-year-average for the period.
Refinitiv sees US NG demand dropping next week to 79.1 BCF from this week's 82.5 BCF. However, in two weeks, demand is seen rising to 85.4 BCF as hotter weather is forecasted then. US NG output has been running at 88.6 BCF in June, which is down from May's 89.2 BCF pace. LNG feedgas in June has been running at 4.1 BCF, down from the 6.4 BCF level in May. Though, LNG pipeline exports to Mexico and Canada have risen by 0.7 BCF in June from May. (Reuters/Refinitiv)
Japanese LNG terminals are seen topping out in Augustt , which is one month earlier than previously expected. Weak demand is the cause. But, some hope for NG is coming from its competitive pricing relative to coal. Yet, some end users are seen deferring long term contracted cargoes and dipping into the spot market as prices there are low. (Platts)
Technically, NG is boringly sideways when looking at the spot flat price. Momentum remains negative, though it looks like it too will go into neutral in the coming days. We see support for July at 1763-66 and then at 1741-43. Resistance lies at 1829-1833, which are 2 of the previous 4 sessions' highs. The high today is 1822.
Disclaimer
This e-mail, its contents, and any attachments are intended solely for the addressee(s) shown above, The e-mail and its contents are provided to you for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.
Notice: This e-mail message and any attachment to this e-mail message contain information that may be legally privileged and confidential from Liquidity Energy, LLC. If you are not the intended recipient, you must not review, transmit, convert to hard copy media, copy, use or disseminate this e-mail or any attachments to it. If you have received this e-mail in error, please immediately notify us by return e-mail or by telephone at and delete this message. Please note that if this e-mail message contains a forwarded message or is a reply to a prior message, some or all of the contents of this message or any attachments may not have been produced by Liquidity Energy LLC.
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 LLC.