Market update 7-31-2020
Overview
Crude oil and ULSD are higher, bu RB is lower in a slower news environment.
RB is likely suffering from virus fears; the UK has postponed the next phase of lockdown easing for 2 weeks.(Reuters)
Also likely hurting RB is the lack of a new stimulus package from the US Congress. Some enhanced unemployment benefits will expire today. (CNBC)
A Reuters survey for oil has seen forecasts hiked for 2020 from last month. Brent is seen averaging $41.50 for 2020. This is up from June's estimate of $40.41 . WTI is seen averaging $37.51 in 2020. This is up from June's forecast of $36.10. Brent is seen averaging $49.85 in 2021 as per this survey.
Conoco says that they will restore most of their crude oil production cuts by the end of September. (Reuters)
Valero says that they will boost refinery runs in their US Gulf Coast refineries by 550,000-600,000 bpd in the 3rd quarter. Distillate demand has increased. Their exports in July are up 7% vs year ago level. Latin America is taking more diesel and the arb to Europe is open, they reported. In 2019, July's exports of diesel were 1/3 of their diesel production, while this month that figure has risen to 47%. Gasoline demand has also picked up they said. As of June gasoline demand had risen to 88% of normal in its system. (Platts)
Today the National Bureau of Statistics in China reported that July's PMI rose to 51,1 from June's 50,9. (GlobalCapital.com)
Today is the last trading day for the August ULSD and Rb and the September Brent futures.
Technicals
Technically the energies still have negative momentum, but for crude oil one glimmer of positive is the high volume trade yesterday in WTI futures , which may signal an interim low below 39 dollars.
The path of the US dollar seems to continue to be important according to new wire accounts. Crude oil is higher today, partially due to a weaker dollar.
WTI has support at 3905-12. The lower DC bollinger lies a bit above that in the 3920 area. Resistance above lies at 4083-93.
September RB futures support is seen at 11782-89. The low overnight is 11782. Below this support comes in at 11550-55. Resistance above lies at 12074-80 which has been tested with an overnight high of 12122. Above this resistance is seen at 12242-58.
ULSD for September has its support at 12145-60 then at 11937-50. Resistance lies at 12435-40, then at 12596-12605.
Natural Gas
NG is up 1,5 cts on what is likely some profit taking after yesterday's sharp fall.
Weather models are said to be unchanged overnight. (N G I).
Cooler weather is expected next week as some demand destruction may come from Hurricane Isaias, which will bring rain to the East Coast. (N G I)
Yesterday's EIA storage figure showed a build of 26 bcf, which was 1-3 bcf over estimates. Storage remains +636 bcf / +23.9% over year ago and +429 / +15.3% over the 5 yr average.
Tudor, Pickering sees summer pricing remaining below 2 dlrs, while they see the 2021 strip as reasonably priced at $2.70. Their thinking is that strip is worth $2.75. (N G I)
Platts Analytics sees next week's EIA NG number as a build of 26 bcf. Two days ago they had that forecasted as a build of 34 bcf. The 5 yr avge for next week's number is +33 bcf.
Technically Ng still has positive momentum, but it feels to us like it hit a wall yesterday at the 1.928 high. With the peak of summer heat likely having been seen, upward price mobility will be hard to sustain.
The front spread ( Sept/ Oct) is making a new low. We were wrong to see it rallying the other day.
For today we see spot month futures with support at 1815-1818, then at 1769-1772. Resistance above lies at 1891-1893 then at the double top on the Dc chart at 1924-1928.
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