Market Update 11/10/20

Overview

Energy prices are positive. Overnight crude oil prices fluctuated between gains and losses. The losses were seen in Asian trading as concerns over demand resurfaced.

Reuters cites a location technology company's data that sees traffic down sharply in November in Paris, Madrid and London after a peak in October. Also, concerning yesterday was a statement by N.Y. Mayor deBlasio saying New York was "dangerously close" to a second wave of the virus. New Jersey Governor Murphy issued some new light restrictions in rsponse to a rise in Covid-19 cases. (CBS Philly/NY Post)

Vitol's CEO said they see prices rising to $50 in 6 months and the (crude) curve flattening. This will be possible if OPEC+ delays adding barrels to the market and demand improves. Oil inventories will return to "normal" by Q3 2021. (Platts)

The Jet Fuel crack against Dubai Crude rose in Asia to its best value since March 30th, helped by kerosene demand. The crack was valued at $3.55. One week ago, the crack was seen at $2.15. The cash differential was quoted at -9 cents today, versus the -45 cents valuation one week ago. (Reuters)

Russian Energy Minister Novak said today that it is too early to discuss talk about changes to the OPEC+ deal. (Reuters)

Technicals

Momentum remains positive for the energies. They are having inside days. Three indicators give us some pause for the bullish argument. 

ULSD is again bumping up against its DC upper bollinger band. That value lies at about 1.23. There is a mean reversion from yesterday's settlement over the upper bollinger band. Chart based resistance lies at 1.2477-90. Support comes in at 1.1980-1.2000. The low overnight is 1.1980.

WTI futures volume on the CME yesterday was just under 1.5 million contracts. Tops and bottoms are signaled by high volume. We see spot futures support for WTI at 3978-83 and then at 3926-35. Resistance above comes in at 4129-33 and then 4170.

January Brent support is seen at 4145-50. Resistance lies at 4345-48.

RB support in December is seen at 1.1310-30. Resistance above is at 1.1925.

Natural Gas  

NG spot futures are up 1 cent, despite the weakness in cash prices recently seen in certain regions and the prospect of relatively warm weather lasting through the end of the month. We suspect that support is coming from the strong feedgas demand seen of late. Yesterday with all 6 major U.S. LNG trains running near capacity, feedgas volume hit a record of 10.6 BCF. (Platts) NGI cites a slight addition to HDD's as helping prices today. 

Northeast NG cash prices rebounded Monday, albeit from very weak levels. Boston cash prices were quoted at 58 cents and N.Y.'s at 42 cents. Both were said to have risen 20 cents from last week's values. In Appalachia, the key Dominion South hub was priced at 30 cents. Appalachian Basin output fell by 1.7 BCF over the weekend. Northeast cash values are seen staying weak as cold weather is elusive. Prices are seen remaining under $1 until later this week. Dominion South pricing for January was seen at $2.29 Friday. This is down from late October pricing, which was over $3. Storage in the region is very close to record level. (Platts)

Technically, the December contract on the daily chart basis is getting oversold. Spot futures have settled lower the past 6 sessions. Support for NG is seen at 2821-2825 and then at 2743-2751. Resistance above lies at 2922-2925 and then at 2.950-2955.  

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