Market Update 07/06/2020
Overview
Crude oil is waffling near unchanged as equities were strong overseas, but the uptick in virus cases in the U.S. is a drag.
China stocks rose over 5% on Monday, boosted by ample liquidity, cheap funding and expectations of a faster and better bounce back in business activity than other major countries still battling coronavirus infections. (Reuters)
The Saudis raised their OSPs for August, which was seen supporting prices as the Saudis base their pricing on fundamentals and demand. The price for the flagship A-Light crude was raised by $1 to Asia, by $0.30 to the U.S. and by $0.40 to Northwest Europe. Some see the price rise as hurting demand, but this may cause more barrels to be released from storage, which may help demand for replenishing later. (Reuters)
Crude oil output has restarted at 2 fields shared by Kuwait and Saudi Arabia. One field is being started at 10 MBPD and then seen rising to 70 MBPD by the end of August and to 145 MBPD by the end of the year. The second field is seen starting up at 80 MBPD, rising to 100 MBPD by early September and to 175 MBPD by year end. (Reuters)
Thursday, Baker Hughes reported that the U.S. oil rig count fell by 3 units.
The CFTC Commitment of Traders report will be released later today.
Technicals
Technically, the energies have a positive look, but the ULSD and crudes are bumping up against their upper DC Bollinger Band, which may limit some upside.
ULSD has made a fresh 4 month high today on the DC chart. ULSD sees the upper Bollinger Band at about 1.2430. We see chart based resistance at 1.2770. Support lies at 1.2080-1.2100, which is the low of the 2-day session of Friday and today.
RB support is seen at 1.2340-50 and then at 1.2170-85. Resistance above comes in at 1.2782-92 and then at 1.2960.
WTI has its support at 3905-10 and its resistance at 4163. The upper DC Bollinger Band intersects at about $41.
Natural Gas
NG is up almost $0.07 in the spot contract, but is $0.06+ off the overnight high as it ran into major resistance. The higher pricing is due to the current hot weather in much of the U.S. Also said to be aiding prices is the bullish number for EIA NG storage seen last Thursday. The number beat all expectations with a build of 65 BCF. Storage remains 712 BCF YOY and +466 BCF vs. the 5-year average. Platts Analytics is calling for this week's number to show a build of 59 BCF, which is 9 BCF less than the 5-year average.
Technically, NG looks firm as it trades at a 4-week high. But it hit major resistance at the 1861-1865 area with the high seen earlier this morning of 1864. Support below comes in at 1758-1763. The low of Friday and today's session is 1.714.
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