Market Update 10/16/20

Overview

Energies are lower as virus cases rose to record levels in Italy, France and Germany on Thursday. The World Health Organization warned Thursday that the death rate in Europe this winter could be 5 times worse than the April peak. (Washington Post) New curfews are to take effect in France tomorrow. (Euro news)

Platts also cited the fall in U.S. crude oil exports seen in yesterday's DOE data as contributing to the drop in energy prices today. Crude exports hit a 14-month low at 2.135 MMBD. Exports are seen staying weak into the end of the year as the arb does not work. Platts Analytics sees exports staying low into 2021 partially due to the lower U.S. crude production leading to fewer barrels being available for export. They see exports at 2.1 MMBD. The first 8 months of 2020 saw them average 3.22 MMBD.

On the plus side, the distillate portion of the barrel is being supported by yesterday's DOE stats and news that Indian Gasoil sales in October rose for the first time since lockdown measures were imposed in March. (Reuters) The DOE stats showed a very large decline in Distillate supplies of 7.245 MMBBL, which were the most since 2003. (Houston Chronicle)  Expectations were for a drop of 2.0 to 2.5 MMBBL, as per news surveys. Distillate demand rose by 307 MBD to a healthy 4.175 MMBD.  Gasoline disappointed slightly as demand fell by 320 MBD to 8.576 MMBD. 

Heads of key trading houses see a slow demand recovery in oil demand with oil prices only getting to near $50 by October of next year. The CEO of Vitol sees prices of $55, Trafigura $52, and Gunvor $50. (Reuters)

Technicals

Energies remain in recent ranges. WTI has resistance at 4129-33 and support at 3976-82. Momentum is neutral for the crude oils.

Brent support lies at 4136 in December. Its resistance comes in at 4345-48.

ULSD November support lies at 11564-81 and then at 11484-89. Resistance is seen at 11926-39, just above the 11900 high seen today. Momentum for the products is negative.

RB November futures have support at 11550-57. The low today is 11550. Below this, next support is seen at yesterday's low of 11384. Resistance comes in at 11990-12000.

Natural Gas

NG spot futures have risen over yesterday's high propelled by the better than expected EIA storage number and the hope for a pickup in LNG feedgas demand. An NGI article has feedgas flow today at 8.15 BCF, which is about 1/2 BCF better than 2 days ago's level.

Yesterday's EIA data showed a build of 46 BCF. This beat estimates for a build of 53 to 56 BCF. Storage is now 388 BCF/11.1 % above year ago levels and 353 BCF/10.0% above the 5-year average. The tightening of the storage surplus is supporting prices today. 

Today's rise comes in spite of news from the National Weather Service yesterday that has them seeing warmer than average temperatures for much of the U.S. from December through February. (Platts)

Technically, NG still has negative momentum on the DC chart. Resistance lies above at 2884. Support comes in at 2743-2751. This is just below the overnight low of 2759. 

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