Market Update 12/2/20
Overview
Energies are near unchanged as U.S. API data disappointed, causing slippage last night. However, the market has been supported since the data release by news that the U.K. is the first western country to authorize the use of a Covid-19 vaccine. (Reuters)
The news of the vaccine approval overshadows the fact that the U.S. saw a record number of coronavirus-related hospitalizations on Monday. (WSJ)
Global equities were near record levels on Wednesday on the vaccine news and hopes for a U.S. stimulus package. The U.S. dollar is near a two and a half year low, which helps commodities. (Reuters)
In Asia, the Gasoil crack from Dubai crude fell to $5.27 from the day before's quote of $5.72, which was a 3-month high. The pullback today was attributed to "feeble" demand and expectations for a rise in near term supplies. The crack is up 5%, though, in the past 2 weeks as per Reuters reporting. The Gasoil cash differential was valued at -23 cents, while the December/January spread stood at -22 cents. The spread value as back on November 23rd was -16 cents per Platts reporting.
API Forecast Actual
Crude Oil -1.7/-2.4 +4.15
Gasoline +1.3 +3.4
Distillate -0.209/-0.4 +0.334
Cushing N/A -0.1
Runs +0.8% N/A
Technicals
The energies have negative momentum. RB and WTI have stepladder down looks. On the positive side, the ULSD and crude oils look like they are forming bull flags.
For today, WTI has support at 4378. The overnight low is 4392. Resistance above lies at the 2 prior sessions' highs at 4570-80.
Brent support for spot futures is seen at 4682-88, which are the past 3 lows. Resistance above lies at 4829-30.
ULSD for January shows support lying at 13244-58. Resistance comes in at 13756.
RB January futures support is seen at 12034-44, which was tested with a low today of 12037. Below that, support is seen at 11840-54. Resistance above comes in at 12341-53.
Natural Gas
NG is up 4 cents, despite what WSJ says is a warmer forecast. The bump in prices is likely due to the fact that temperatures currently are the coldest of the season. Yesterday, NG consumption was said to be 109 BCF, which is the highest since February, as per Platts reporting. Yesterday's cash Henry Hub next day pricing was seen at $2.83, Platts said.
The market has been held back this week due to forecasts for the month ahead predicting a 33-50% chance of mild weather for December according to the National Weather Service report issued Monday. (Platts)
Also possibly holding the market back is the expectation for a below average withdrawal in this week's EIA data. Platts survey is forecasting a draw of 13 BCF. The 5 year average for the period is -41 BCF.
Technically, NG has positive momentum as it holds above the DC mid-bollinger band, which lies at about 2848. Also supportive is the base that has formed by the prior 3 lows at 2823-2833. That is the support level. Resistance above comes in at 2963-2971.
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