Market Update 2/2/2021

Overview

Energies have surged to new multi-month highs as cold weather in the U.S. has lifted heating demand and supply cuts from producers are in place. "We've seen Saudi Arabia's strong willingness to hold back in favour of prices and (U.S.) shale production is not going anywhere soon,” as per a quote from a source cited on DJI wire. 

Global stock markets gained for a second day on Tuesday, spurred by increased optimism about economic stimulus and global recovery. (Reuters) 

BP says global inventories are expected to return to their five-year average by the middle of the year. (Reuters) 

Silver has retreated from 8-year highs today as margin requirements were raised by the CME in a move that could edge out smaller players who lack the cash to make necessary deposits. (Seeking Alpha) 

The JTC meeting and the ministerial gathering on Wednesday are not expected to recommend any adjustments to oil output policy, two OPEC sources said. (Reuters) This comes as compliance to the OPEC+ accord was said to be 99% in January. (Oilprice.com) 

Oil data from the U.S. this week is seen with crude supplies falling by 2.4 MMBBL, as per a Platts survey. Platts Analytics sees U.S. crude oil exports at 4.02 MMBD. This is up from the DOE showing exports at 3.355 MMBD in last week's data. However, a Reuters survey has crude supplies rising by 0.347 MMBBL. Distillate supples are seen dropping by 0.4 MMBBL while gasoline supplies are seen rising by 1.633 MMBBL. 

Technicals

WTI has risen to its highest price since late January 2020. Brent, RB & ULSD are at their highest since late February last year. Momentum has turned positive for crude oils. The only drawback is that prices are bumping up against the upper DC bollinger bands for all the energies. 

For WTI, the upper DC bollinger intersects at about 5450. Support lies at 5374-83, then at 5275. Resistance seen above lies at 5535-42, then at 5620-27. These values are from late 2019. 

RB support lies at 1.6119, then at 1.5890-1.5900. Resistance is seen at today's high at 1.6411, then at 16500-08. The upper bollinger intersects here at about 1.6200. RB failed to close lower yesterday negating the key downside reversal seen Friday. 

ULSD support is seen at 1.6616-26, then at 1.6503. Resistance is seen at 1.7021-27 from DC values from February 2020. 

Natural Gas

Today, NG futures have hit their highest price since November 13th, testing $3.00, with a high of $3.005. "The overnight European model added 23 heating degree days for this weekend through February 15th. The coming pattern is still the best it’s been in two-plus years,” NatGasWeather said. (NGI) 

Platts Analytics forecasts the drawdown from NG storage to be above 580 BCF total over the next 2 weeks. This will narrow the surplus to the 5-year average to 75 BCF. Last week the surplus stood at 245 BCF. 

The price rise has been fueled by forecasts for colder weather going forward. In February, more than 25 states stretching from California to Pennsylvania face a 33% to 60% risk for below-average temperatures, according to a revised 30-day outlook published January 31st by the National Weather Service. (Platts) 

Technically, NG looks firm with the only drawback being that prices are well over the the upper DC bollinger band. The band intersects at about 2.915. Resistance lies at 2.996-2.005, then at 3.057-3.066. Support is seen at 2.899, then at 2.806-2.811. 

Disclaimer

This e-mail, its contents, and any attachments are intended solely for the addressee(s) shown above, The e-mail and its contents are provided to you for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.

This e-mail message and any attachment to this e-mail message contain information that may be legally privileged and confidential from Liquidity Energy, LLC. If you are not the intended recipient, you must not review, transmit, convert to hard copy media, copy, use or disseminate this e-mail or any attachments to it. If you have received this e-mail in error, please immediately notify us by return e-mail or by telephone at and delete this message. Please note that if this e-mail message contains a forwarded message or is a reply to a prior message, some or all of the contents of this message or any attachments may not have been produced by Liquidity Energy LLC.

Commodity trading involves risks, and you should fully understand those risks prior to trading. Liquidity Energy LLC, and its affiliates assume no liability for the use of any information contained herein. Neither the information, nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice, are that of the individual, and not necessarily the opinion of Liquidity Energy.