Market Update 4-29-2022

Overview

Crude prices are up again today as supply worries are outweighing Chinese Covid concerns.

June ULSD continues to lead the way up, as East Coast supplies of distillate are the lowest since 1996. A surge in refined product exports is reducing overall allocations to Colonial Pipeline's primary line carrying distillates like diesel and jet fuel to the U.S. East Coast, PBF Energy's CEO said on Thursday. In the past four weeks, U.S. exports of refined products have averaged 6.3 MMBPD, the most in U.S. history. Exports of distillates like diesel have averaged 1.5 MMBPD, also a record, U.S. Energy Information Administration data showed. (Reuters)

BP became the latest energy company to tighten restrictions on its contractual definition of Russian oil for the Platts market-on-close process. In bids in both the Asia and European Platts market-on-close process, BP was publicly bidding for jet fuel under terms that the product delivered should not contain any oil produced in or exported from Russia or blended with products produced in or exported from the country. (Quantum Commodities)

Germany is seen moving closer to stopping importing Russian oil. (Reuters)

Earlier this week Exxon announced a force majeuere on supplies from its Sakhalin-1 Russian oil project, affecting up to 273 MBPD of exports. (Reuters)

June loadings out of the N.Sea are seen at the lowest level since August 2007. The crude oil loading programme for June shows that crude oil exports of north Sea BFOET grades (Brent, Forties, Oseberg, Ekofisk and Troll) could drop to 540 MBPD for the month due to maintenance at some of the oilfields in the region. The planned maintenance at the Ekofisk stream, which happens once every three years, will see crude oil shipments from the field falling significantly over the month to 40 MBPD only compared to 213 MBPD in May. Shipments from Johan Sverdrup could also see supplies falling. (ING)

Saudi OSP's for June are seen falling by $5 from May's record level as the Mideast sour crude oil complex has weakened. April's average for Dubai cash versus futures has been $3.65, down from March's value of $9.25. (Platts) One trader sees the OSP's falling by only $4 given the strength of refining margins seen in Asia.

May RB & ULSD futures expire today, as do the June Brent futures.

Technicals

Yes, even May ULSD can fall in the face of higher crude and RB prices. May ULSD is blowing off some of the incredible steam seen this week as it expires today. But June ULSD is still firm. June ULSD has positive momentum as it has set a new contract high today. Resistance, based on DC chart, data is seen at 4.0730 then at 4.1284. Support lies at 4.0170 then at 3.9607.

June RB has positive momentum. Resistance lies above at 3.5244-57 via the DC chart. Above that resistance is seen at 3.5888 from the run up seen for the June RB in March of this year. Support lies at today's low at 3.4250-54, then at 3.3932-54.

The momentum for WTI has turned positive, while that for the July Brent is trying to turn up. Brent is up more than WTI befitting the news about the N.Sea loadings for June.

June WTI has support at 104.47-55, tested with a low today of 104.54. Resistance lies at 107.64-84.

July Brent support comes in at 106.15-35 and resistance at 109.67-83.

Natural Gas

TTF prices have rebounded back above 100 Euros/Mwh helping NG futures bounce modestly as well. Worries over Russian supply and how to pay for it are supporting European TTF prices, even as increasing LNG imports arrive and weather next week will ameliorate lessening demand there. (Bloomberg)

June NG futures yesterday fell by over 40 cents due mostly to a fall in cash pricing. NGI’s Spot Gas National Avg. dropped 50.0 cents to $6.570. Some point to the EIA data possibly having weakened prices. Storage rose by 40 BCF, more than last year's 18 BCF build. Storage, though, remains 406 BCF (-21.4%) below the year ago level and is 305 BCF (-17%) below the 5 year average.

A comment from a colleague this week seems to sum up NG trading. "The market is a beast, very hard to trade.". Momentum is neutral for the spot futures on the DC chart. Prices are currently about midway between the high and low seen on the DC chart this week. June NG futures see support at today's and Wednesday's lows at 6.800-6.805. Resistance at 7.080-7.091 has been tested this morning. Above this we see resistance at the 7.146 area.

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