Market Update 3-29-2022

Overview

Reports that the Ukraine Russian peace talks are constructive has caused a quick drop in the past 2 hours. Energies tried to bounce back prior during today's session as Russian supply concerns were outweighing worries over Chinese demand loss.

Peace talks between Russia and Ukraine getting underway today in Turkey have been dubbed as "constructive" by Russian officials, to quote WSJ reporting. Russian officials add that Russia plans to de-escalate the conflict as the discussions continue.

The Russian supply concerns are underscored by news from the Kazakh Energy ministry saying that 320 MBPD is lost due to the pipeline problem thay have at a Russian loading port. This output loss is seen lasting one month they say. (Reuters) Also of concern are reports that Russia's pipeline operator Transneft is reaching tank tops at some storage terminals as exports slump underpinned the rebound, as the knock-on effect is likely to lead to lower field production. (Quantum Commodities)

The lockdown in Shanghai is likely to lower demand by up to 200 MBPD for the duration of the restrictions," said Rystad. (Quantum)

The OPEC meeting happens in 2 days. OPEC is not expected to sway from their current course of adding 432 MBPD in May, even as the world clamors for more crude supply. (OilPrice.com)

Technicals

Support near $100 for WTI has been pierced with strong support at $95 next in line. Momentums for RB and the crude oils have turned negative.

Spot WTI futures may find support ahead of the $95 area with the 50 day moving average on the DC chart coming in at 97.60. Resistance above lies at the 104.08-24 area.

June Brent support is seen at 102.94-103.03, which was tested with a low of 102.19. Below that support lies at 100.66-100.89. Resistance lies at 106.04-06, then at 109.31-38.

May RB support comes in at the 3.04 area. The low today is 3.0309. Below that support is seen at 2.9975. Resistance lies at 3.1157-77, then at 3.1905-33.

ULSD for May sees support at 3.2231. The low today is 3.2114. Resistance is seen at 3.3555, then at 3.4050-55.

Natural?Gas

NG prices are lower as April futures expire today. U.S. Weather demand in the 11-15 day period has declined.

Russian gas is still flowing to Europe, even as the March 31 date nears for possible Ruble payment requirements for purchasing Russian NG. (Reuters)

Refinitiv sees U.S. NG demand falling next week to 98.4 BCF from 106.0 BCF this week. Reuters forecasts this week's EIA storage data to show a 9 BCF injection. This compares to last year's +7 BCF number and the 5 year average draw of 23 BCF. Platts forecasts that next week's number will show a draw of 17 BCF. This is a change from the 26/27 BCF injection they had forecast prior. The 5 year average for next week's number is +8 BCF. The forecast change has come as the Eastern portion of the U.S. has been extremely cold this week and portions of Texas have heated up.

Technically the elements we touted the past 2 days have come to fruition. The mean reversion set up was confirmed with yesterday's pullback and momentum has turned negative from the overbought status. May NG futures support at 5.330-5.332 was tested with a low of 5.328. Below that support lies at 5.240-45. Resistance is seen at at 5.508. The overnight high is 5.527.

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