Market Update 11/13/20

Overview

Energies are lower due to yesterday's disappointing DOE crude stock information and renewed worries over Covid-19.

In Europe, the number of hospitalizations are now higher than at the peak of the first wave and officials said measures to control infections must continue. The U.S. Federal Reserve Chair Jerome Powell said on Thursday near-term economic risks remain. (Reuters)

The DOE showed crude inventories rose by 4.3 MMBBL last week, compared with an expected fall of 913 MBBL, as per a Reuters survey. The DOE data reversed the draw in crude supplies seen in the API's. The API said crude supplies fell by 5.1 MMBBL. Refinery runs fell by 105 MBD/0.8% . A WSJ estimate was for an increase of 0.5%. On the product side, the DOE statistics were supportive. Total product supplied was up 1.82 MMBD to 20.18 MMBD, which is an 8-month high. Gasoline demand rose by 426 MBD to 8.762 MMBD. Distillate demand rose by 292 MBD to 4.054 MMBD. Distillate stocks are 149.29 MMBBL, which is a 6-month low. Gasoine stocks are 225.37 MMBBL, which is a near 1-year low. Distillate stocks remain 15% over the 5-year average, but have dropped by about 30 MMBBL since mid-August. (Platts).  

Reuters reports that refiner selling pressured the Chicago diesel prompt price by 5.5 cents. Pricing for the prompt was -0.5 cents versus ULSD futures on the CME. The final day for Cycle 2 trading for the Buckeye pipeline complex is Friday.

Technicals

The energies are well off the highs seen earlier this week. ULSD momentum on the DC chart has turned negative. ULSD support for December lies at 1.1980-1.2000. Resistance comes in at 1.2317-20 and then at 1.2477-90. 

RB support in December is seen at 1.1225-30 and then at 1.1000-1.1005. Resistance lies at 1.1625-30.

WTI support comes in at 3952-57. Resistance is seen at 4157-59.

Natural Gas

NG is up 8.5 cents as colder temperatures are about to invade much of the northern half of the U.S.. In the Northeast, temperatures are set to be 2 degrees below normal over the next 7 days. (Platts) Also supporting prices is the prospect for a withdrawal in today's EIA NG statistics. This is contrary to the builds seen last year and in the 5-year average. A WSJ survey is calling for a 2 BCF draw today. Last year's build was 12 BCF. The 5-year average is +33 BCF. 

The higher NG prices seen recently are causing switching to coal for power generation. In November so far, gas usage in PJM is down 9-10% from September and October levels. Coal usage is said to be 22% this month, up from 16-17% in September and October. January and February forward prices are trading between $4 and $5 in some places in Northeast hubs, which compares to prices a year ago near $2. (Platts) 

Technically, NG continues its stepladder up movement. Having pierced the prior 2 sessions' highs at 3.057-3.064, NG spot futures find next resistance at 3.091 and then at 3.113. Support lies at 3.002-06 and then at the double bottom from yesterday/today at 2.941-2.949. Momentum has turned positive on the DC chart.

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