Market Update 2/12/2021

Overview

Oil has slipped today dragged down by the demand estimate reductions seen in yesterday's 2 key monthly reports. Profit taking is likely also weighing on prices.

OPEC lowered demand by 100 MBPD, while the IEA lowered their forecast by 200 MBPD, which was the 4th straight month that the IEA lowered their forecast. The International Energy Agency (IEA) said oil supply was still outstripping demand globally. (Reuters)

""We believe we are witnessing some profit taking after the RSI index hit the highest level in more than five years "", according to one analyst quoted by WSJ.

Technicals

Momentum has turned negative from overbought condition. The energies are setting up stepladder down looks.

WTI has support for the spot futures at 5727-29. Resistance above lies at 5862-71.

Brent futures spot month support is seen at 6005-13. Resistance is up at the recent high of 6169.

ULSD March futures see support at 1.7145-50, as support at 1.7340-60 has been pierced today. Resistance above comes in at 1.7530, then at the highs seen earlier this week at 1.7663-77.

RB futures for March see their support at the 1.6245 area. Resistance is seen at 1.6615, which is below the highs seen the past 3 sessions.

Natural Gas

NG is up almost 5 cents today as some regional prices have risen to multi year highs as the Midcontinent is being gripped by very cold weather.

Houston is to see the coldest February temperatures in 70 years next week. (ABC13.com) The Houston Ship Channel saw NG pricing on Thursday of $10.796, which was the highest since July,2008. (Platts). Furthermore, cash prices at hubs in Kansas, Oklahoma and eastern Arkansas hit levels not seen since 2014, with select locations hitting record highs, Intercontinental Exchange data showed. The surge in prices comes as the region braces for its coldest weather in over a decade. We heard prices in Oklahoma traded into the high teens. Freeze offs are possible in some producing areas. Platts says that the Midcon has seen output fall by 800 MMCFD below the prior 30 day average. N G I said that freeze offs might total as much as 3-5 BCFD.

Despite the regional pricing strength, NG futures fell yesterday on the CME, as the EIA storage data disappointed. Storage drew by 171 BCF, which was below most estimates seen , which were in the range of 175-181 BCF. But, storage is now 9 BCF below year ago level and the 5 year surplus has shrunk to 152 BCF. That surplus is seen falling further over the next 2 weeks.

Platts Analytics is forecasting next week's number to show a draw of 265 BCF. The 5 year average is -142 BCF. They also see a very strong withdrawal number for 2 weeks from now. They are saying that the withdrawal may set a record. They say that storage could drop by 365 BCF. The record withdrawal is 359 BCF, seen in January of 2018. EBW analysts are saying the withdrawal for the week ending February 19 could be 312 BCF. (N G I)

Technically, NG spot futures have neutral momentum. The price action during this month shows a basically sideways pattern. Support lies overall at 2.75 and resistance is at about 3.05 , basis the lows and highs seen this month. For today, we see support at 2.864-66, then at 2.834-39. The overnight low is 2.834. Resistance above lies at 2.982-2.985, then at the highs at 3.045-3.057.

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