Morning Highlights
Morning Highlights

6.29.21 The petroleum complex experienced two sided trade overnight


Katie Murphy

Jun 29, 2021

Outlook: The petroleum complex experienced two sided trade overnight with prices recovering this morning. Currently we are seeing concerns regarding the Delta variant balance out with continued demand optimism. Several countries have added new restrictions due to the Covid-19 spikes, including areas of Australia. It seems the market is confident that demand recovery should continue due to vaccinations but will remain warry of new lockdowns going forward. Additionally, attention remains on OPEC+ proceedings this week and the upcoming supply decision. It is currently expected that OPEC+ will revive about 500,000 bpd of the current halted production in August. The market continues to tighten as strong demand growth is seen in both the U.S. and China. Crude stocks are expected to fall again this week in the U.S., further supporting this strong demand view. Equities also underpin prices this morning with the S&P 500 and Nasdaq both reaching new record highs.

Crude

  • OPEC’s Secretary-General Mohammad Barkindo stated during the JTC meeting that “the current significant uncertainties call for prudence”. He emphasized that strong demand fundamentals give hope, but that we are “not completely out of the woods yet”.
  • In the week ended June 22, Chinese crude inventories shrunk to their lowest level this year, coming in at 974.2 million barrels according to Kayrros.
  • Yesterday, the UK reported its highest level of new Covid-19 cases since January due to new Delta strain outbreaks.
  • The August crude oil contract is trading $0.55 higher at $73.46. The 20-day and 100-day moving averages are $71.27 and $63.61 respectively. The 14-day RSI is 67.60%.
  • As of 9:00 am CST: August Brent is up $0.49 at $75.17, the U.S. dollar index is 0.227 higher at 92.114, while the nearby e-mini S&P 500 futures contract is up 6.5 points at 4287.

Diesel

  • United Airlines reported yesterday that it had made its largest-ever aircraft order, comprised of 270 airplanes, as they expect strong demand growth.
  • The July ULSD contract is trading $0.0213 higher at $2.1395. The 20-day and 100-day moving averages are $2.1261 and $1.9375, respectively. The 14-day RSI is 58.49%.

Gasoline

  • Fuel prices in India are seen skyrocketing due to strength in both crude markets and increasing government levies. Record high Delhi gasoline prices are causing Indian car owners to struggle with affording fuel.
  • The July RBOB contract is trading $0.0158 higher at $2.2324. The 20-day and 100-day moving averages are $2.2058 and $2.0191, respectively. The 14-day RSI is 58.91%.

Propane

  • At last look, Conway propane was down $0.00500, trading at $1.03500. Mt. Belvieu was down $0.00500, trading at $1.04000. 

Natural Gas

  • Bullish sentiment continues in the natural gas market as power demand and exports remain strong. The RSI however now sits above 70%, signaling that the market may be overbought.
  • The August Natural Gas contract is trading $0.142 higher at $3.735. The 20-day and 100-day moving averages are $3.282 and $2.983, respectively. The 14-day RSI is 80.10%.
As of 9:00 AM CST   WTI AugustULSD JulyRBOB JulyNat Gas August
CONTRACT HIGH71.002.31752.21704.720
RESISTANCE75.002.18772.28553.480
PREVIOUS CLOSE72.912.11822.21663.593
GLOBEX-CURRENT73.462.13952.23243.735
SUPPORT66.702.11602.15583.000
CONTRACT LOW6.500.67240.51891.521