Market Update 10/02/20

Overview

Energies are lower as President Trump and the First Lady have tested positive for COVID-19. This news has amplified the concerns overall for the worldwide threat the virus presents. Oil prices were also hurt by supply concerns and receding hopes for a U.S. stimulus package. (Reuters)

Russia's September output of oil and condensate was up 0.6%. The oil portion is pegged at 9.13 MMBD. This is 137 MBD over their quota. Russia's crude exports are seen rising in October by 9% from September. (Reuters)

In Asian trading, even before the news about President Trump, Cash Dubai fell to a 4-month low versus Dubai futures. The value was seen as -90 cents. Bearish supply and "tepid" demand were cited. (Platts)

All the bearish news above is overshadowing the prospect of a possible loss of 330 MBD from Norwegian fields starting this coming Monday due to the ongoing labor unrest there. (Platts)

The U.S. Non-Farm Payroll data issued this morning showed 661,000 new jobs added in September. This was below estimates we saw of +800/+850,000. However, the data from August and July were revised upward by a combined total of 145,000, thus offsetting some of the disappointment from September's figure. 

Technicals

The technical picture is not supportive with momentum pointing lower and prices near the recent lows. In fact, in the case of spot Brent, futures today saw a new low made since mid-June. One bright spot for the technical picture is the support that the lower bollinger bands may present if prices fall much further. Support for December Brent lies at 3895-97. The low is 3897. Below this we see support at 3782. Resistance lies at 4003-09 then at 4096. The lower bollinger on the DC chart intersects at about 3920. 

The lower bollinger band on the WTI DC chart comes in at about 3670. Support via chart congestion is seen at 3682-93, which was tested with a low of 3680. Below this we see support at 3613-16. Resistance above lies at 3835-45.

RB November futures support lies at 10927-33, then at 10755. Resistance comes in at 11292, then at 11550-57. The overnight high is 11510. The lower DC bollinger comes in at about 1.0815.

ULSD support for November futures lies at about 10717-34, which was tested with an overnight low of 10708. Below this, the recent low of 10605 provides support. Resistance lies at 1.1000, then at 1.1155-75. The overnight high is 1.1235.

Natural Gas

NG has also been hit by the concerns over COVID-19, falling in the spot futures contract to test below $2.40 this morning. The winter strip fell below support at $3.00. It has tested light support at $2.925. Below this we see support for the strip at $2.85. The $3 mark is likely near-term resistance for the strip. 

Yesterday, the next day Henry Hub cash price was seen as low as $1.25. This is a very large discount to the spot month CME contract, which likely added to the presssure on the futures pricing.

Yesterday's EIA storage number was mildly bullish. The build of 76 BCF was below estimates. Storage though remains 471 BCF/14.3% over year ago levels and 405 BCF/12.1 % over the 5-year average.

November futures support at 2.383-2.390 was tested today with a low of 2.372. Below this, we see support down at 2.302-2.308. Resistance at 2.490-2.497 is being tested as we write. Above this, resistance comes in at 2.552-2.557. Momentum is negative in the NG market. A colleague today suggested that the drop today in prices was due to liquidation of length.

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