Market Update 7/20/2020
#Crudeoil #Naturalgas
Overview
Crude oil and Rb are lower, while USLD is unchanged as the market is worried about demand loss due to the pandemic. Some hope is being pinned to an EU recovery fund, which is helping support the Euro. (Reuters)
Simmering Chinese US tensions are hurting. CNN has the following headline from last week "US-China relations are at an all time low".
In Asia, the Dubai forward structure weakened due to sluggish demand. Aug/Sept fell into contango again. The value was seen at minus 8 cts , which was down from friday's plus 3 cts valuation. Sept/Oct fell to -14 cts from -5 cts friday. Sluggish demand is seen from Chinese refienrs due to poor domestic margins there and their backlog of prior crude purchases that are still being offloaded in ports. Floods in China are also hurting demand there. Worries over increased supply from OPEC come August are also weighing on pricing.(Platts/Reuters)
India's petrol and diesel sales in the first 1/2 of July have fallen by 18% from the same period in June. Renewed lockdowns and higher prices hurt sales there. (Reuters)
Friday's Baker Hughes oil rig count showed a decline of 1 unit.
Friday's CFTC Commitment of Traders report showed an increase of 614 contracts in net length in WTI held by money managers on ICE/CME combined. This underscores for us the lack of conviction in price direction seen by the market.
RB length held by money managers on CME rose by 4,989 contracts in the week ended Tues 7/14.
Platts reporting sees the prices for RINs in the US staying in a "tight range" due to uncertainty over small refinery exemptions from biofuel blending mandates. Prices since late May have "hovered" in the high 40 ct area. Friday's valuation was 46.75 cts.
Today is the last trading day for the August WTI futures contract on CME.
Technicals
Crude momentum is neutral, while those of the products are negative.
September RB has slipped below its mid bollinger on its daily chart. That value lies at about 1,2116. Support below that is seen at 1.1773-89. Resistance above comes in at 1.2297-1.2307.
August ULSD support is seen at 1.1950-70, while its resistance lies at 1.2425-36.
September WTI support is seen at 39.57-58. Resistance above lies at 41.12-19.
September Brent support is seen at 4194-99. Resistance lies at 4342-50.
Natural Gas
NG is down 3 cts as the slow drift lower continues due to worries over demand loss from the pandemic and high supplies in the US.
Friday's Baker Hughes NG rig count posted a drop of 4 units.
Money managers raised their net length in futures/options in NG on the CME by 15,465 contracts. Their net length totaled 37,307 contracts as of Tues. 7/14.
Tudor, Pickering sees this week's EIA NG storage report as a rise of 40 bcf. This compares to the 5 yr avge of +37 bcf.
Temperatures in the US are seen remaining hot thru early August. This is helping the Aug Sept spread on CME narrow today by almost 1 ct from Friday's settlement. Current value is 3,8 cts , which is near the recent highs of 3.5-3.6 cts. The spread made a fresh 3 month high today at 3,4 cts.
For today we see support for the spot futures at 1.672-1.674. Below that we see support at 1.655-1.656. Resistance above lies at 1.750-1.753. Momentum is negative. The contract has fallen below the mid DC bolinger. That value lies at about 1.733.
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 LLC.