Morning Update 10/3/16
Energies are mixed with crude oil unchanged - but the products down WTI hit a 3 month high today - while ULSD hit a 4 month high. The news wires talk of a lingering bullishness from the OPEC "agreement" of last week as the catalyst for the higher prices, yet most everything we read in the news from Friday late and today is more of a bearish tone
Friday, Baker Hughes reported that the US oil rig count rose by 7 units--the 14th rise in the last 15 weeks (Bloomberg). Friday's CFTC data showed that money managers raised their bullish stance on WTI by 8,1% in the period ended 9/27. ICE reports that Brent bullish bets fell by 7% in the same period ULSD bearish bets rose by 11% and RB bullish bets rose by 5,7 % in the same period (Bloomberg)
Iran is seeking to boost its crude oil exports to 2,3 mln bpd (currently 2,2 mln) (Bloomberg)
Forcados crude is supposedly flowing out of Nigeria - which is likely to raise Nigerian crude exports to 1,98 mln bpd --the most since January (Bloomberg)
Reuters reported Friday that OPEC output reached a record in September at 33,60 mln bpd - up from 33,53 mln bpd in August -- Iraq and Libya seem to have caused the increase - even as Saudi output fell slightly
Russia's Energy ministry confirmed that their oil production reached a post-Soviet record in September at 11,11 mln bpd (up 4 % vs August) ---Reuters
BP shut a North Sea oil platform over the weekend after an oil leak (DJI) - no details of output loss or size of field involved
Alon reported a problem with a cat cracker at its Big Spring Texas refinery - the refiner has a total capacity of 70,000 bpd - no exact details otherwise given (DJI)
Technically, the energies look firm via price action - but in the case of ULSD we see 2 cautionary signals:
1) Front end of the curve seems to have topped out --Nov/Jan spread has turned via momentum to lower pricing and a close below 240 likely signals that the top has been seen
2) The spot DC chart shows a mean reversion set up -- a close below 15435 area confirms the reversion For today ULSD has resistance at 15547 and support at 15200-25 RB has support at 14434-36 (a double bottom from Friday/Today)then 14205-25--resistance comes in at 14855-67, then 14942
WTI has support at 4736-46 and resistance at 4928-35
Nat Gas continues its stepladder down move--having settled below the DC mid-Bollinger on Friday Support at 2863-66 is close at hand --below that double pivots for today at 2839-2840 provide support then congestive support is seen at 2815-2820--resistance lies above at 2942-45 (above the high of over- night of 2937 )---the DC mid-Bollinger lies at about 2917 area.
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