• Harmonic Trader



    Morning Energy Update

    Courtesy of Battalion Capital 1/6/17

    Energies are higher on news of supply cuts from OPEC. Saudi Arabia is said to have cut their output by 486,000 bpd since October – fulfilling their part of the OPEC agreement (DJI/WSJ) And Reuters is reporting that the Saudis are discussing possible cuts of 3-7% in February crude oil loadings

    Reports have surfaced of Royal Dutch Shell shutting its Trans-Niger Bonny Light crude oil pipeline due to a fire (which might be an act of sabotage by rebels) — the pipeline is said to be able to carry 140,000 (as per WSJ) or 180,000 bpd ( as per Bloomberg ) Bloomberg says that the pipeline has been shut since Tuesday.

    Yesterday’s DOE energy data was disappointing – as distillate inventories rose by over 10 mln barrels – the most in any report ever (Reuters) Distillate demand fell by 1,175 mln bpd from prior week and gasoline demand fell by 813,000 bpd from last week. The drop of over 7 mln barrels in crude oil inventories was all seen in the Gulf Coast Padd – attributable possibly to year-end tax considerations.

    Technically, the energies remain in the ranges we spoke of yesterday – momentum is turning more neutral – the upper end of the ranges for WTI and ULSD are not far away. WTI has support at 5341-46 (the latter is the overnight low), then at 5278-79 (yesterday’s
    low)–resistance lies above at 5451 – 52 (a recent high and the upper Bollinger band on the DC chart ) – above that resistance is seen at 5524.

    ULSD has an overnight high of 17146 – very close to resistance at 17170 -just above that is where the DC upper Bollinger lies ( 17175-80 )–above this we see resistance at 17415-25. Support below comes in at 16780-16800, then 16700-20.

    RB – for today we support at 16320-25, then at 16169-85 — resistance comes in at 16592 area then at 16738 area.

    NG is down 3,6 cts from settlement – and at current having an inside day after yesterday’s volatile session. Yesterday NG made a fresh low for this move as EIA data disappointed — the draw was 49 bcf – much below the 75 WSJ survey forecast. On the basis of that news, the market fell to its low – only to see a late day post-settlement time rally. For now, momentum and price action still have the contract on the defensive – and with an eye to next week – we see the weekly chart’s momentum ready to point to lower pricing. For today, we see support at 3201-3211, then at yesterday’s low of 3.172 — resistance above is seen at 3307-3317 (the overnight high), then at 3346-3358 (the previous 2 sessions’ highs).

    We received a message from a colleague last night stating that he is bullish as NG prices have now fallen below coal. He stated that the disappointing EIA figure was due to NG being very expensive relative to coal last week (when the price of NG almost touched 4 dollars on the Jan expiration) – others likely attribute the weak EIA data more so to holiday demand being lower. For now though, weather reports still indicate mild temperatures moving forward – and we note a gap on the DC chart below at 3121-3130 left from late Nov – and wonder if that is a target in the near term.

    ng-dc
    ng-weekly
    rb-dc
    ulsd-60-min
    ulsd-dc
    wti-dc

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