Market Update 7-29-2020

Overview

Crude oil and ULSD are higher, but RB is lower reflecting last night's API data, which saw a surprise draw in crude stocks and a surprise build in gasoline supplies.

Market news out of Asia is less supportive as Indian refiners are seen cutting runs and Asian Gasoil cash premiums are at a 7 week low.

Indian refiners are seen dropping runs in July as demand has slowed due to higher prices, renewed lockdowns and monsoon season hurtng transport and industrial demand. One Indian refiner is seen running at 70% vs an early June rate of 90%. August's runs are seen dropping further nationally in India as their top refiner is scheduling maintenance. Also hurting runs is a less favorable export market. (Reuters)

The cash Gasoil premium in Singapore trading fell to 20 cts Wednesday. This was down 7 cts from Tuesday and down 26 cts since last Friday. Exports from China are seen increasing 15% from June levels. (Reuters)

ADNOC will cut term volumes to customers in September by 5% as they did in July and August. They are planning to raise their oil output by 144,000 bpd in August from the quota they have kept since May of 2.446,000 bpd. (Platts)

The IEA chief warns that the Iraqi government could be destabilized as protests have increased due to power supply / blackout issues there. 2 people were killed in protests in Baghdad Sunday. The power supply issue together with the fall in government revenue due to the drop in oil prices is seen undermining poitical stability there. (Bloomberg)

API           Forecast       Actual

Crude oil       -0.6/+0.45      -6,83

Gasoline        - 1,4         +1,1

Distillate     -0.267/ +0.5    +0.187

Cushing         n/av         +1,1

Runs           +0,3%        n/av

Technicals

Technically the sideways patterns persists as momentum points lower.

September WTI resistance lies above at 4236-40. Support is seen at 4064-66.

Brent September support lies at 4313-16 then 4236-39. Resistance comes in at 4384-93, which was tested wth a high of 4390. Above this resistance lies at 44.40.

September ULSD sees its support at 1.2426-40. The resistance lies at 12702-12 then 12892.

RB September futures have support at the double bottom of yesterday/today of 1.2223-1.2224 then at 12074-80. Resistance comes in above at the prior 2 highs at 12581-91 then at 12705-15.

Natural Gas

NG is down 2.5-3 cts as August futures expire today as "weather guidance is materially cooler" as per N G I Headline

Yesterday the market rallied as NY saw its peak power load for the year, which supported front end prices, according to Platts reporting.

Tomorrow's EIA number is seen as a +23 bcf as per Platts survey.This week last year saw a +44 bcf build.

While next week's number is seen as a +34 bcf as per Platts Analytics. The 5 year avge is +33 bcf for next week.

Technically NG still has positive momentum, though we see no discernible trend.

September has ranged between 1.65 and 1.99 over the past month. For today we see support at 1.793-96 then 1.765-69. Resistance above lies at 1.871-74 then at 1.905-1.910.

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