Daily Energy Market Update 10-14-2024

Crude is down $1.45???????? December RB is down 4.06 cents??????? ULSD is 4.66 cents

Overview

Energy prices are lower as there was a lack of any significant Chinese stimulus measures over the weekend after the Chinese Finance minister held a press conference. Also weighing on prices is the lack of an Israeli response to Iran's attacks of October 1.

The Chinese minister's briefing didn’t produce the headline dollar figure for fresh fiscal stimulus that the markets had sought. China's finance minister said Saturday the country would "significantly increase" debt issuance to counter slow economic growth, stabilize the property market, top up the capital of state banks, and offer help to poorer people. Adding to the weaker feeling from China, China's deflationary pressures worsened in September, according to official data released on Saturday. The consumer price index rose 0.4%, the data showed, missing expectations, and the producer price index fell at the fastest pace in six months, down 2.8% year-on-year, according to the National Bureau of Statistics. The PPI drop was the 24th straight month of a decrease. (Reuters/Bloomberg/Quantum Commodities/Market Watch)

Goldman Sachs has recently upgraded its growth forecast for China, highlighting a positive shift in the country's economic landscape. The bank expects China’s gross domestic product to expand 4.9 per cent this year, up from 4.7 per cent previously. It also lifted its growth prediction for next year to 4.7 per cent from 4.3 per cent, according to a report released recently. (Bloomberg)

Chinese oil imports fell in September as refiners grappled with weak margins and shut units for planned maintenance. September's crude imports fell by 7.4% from August to 11.1 MMBPD, as per Bloomberg calculations. Weekly refining margins for state plants at the end of September fell 44% from the previous year. Energy Aspects writes : “We expect Chinese crude imports to hold around 11 million barrels a day through the fourth quarter,” citing the ramp up of a new mega-refinery and purchases for strategic reserves. China’s oil demand is forecast to grow by no more than 300 MBPD next year, according to a Bloomberg survey of industry participants last month.

In their monthly report issued today, OPEC lowered their oil demand growth forecasts for 2024 & 2025. This year's global oil demand growth forecast was lowered by 106 MBPD; 2025's demand forecast was cut by 102 MBPD. That puts OPEC's estimate for 2024 oil demand at 104.14 MMBPD in 2024, down from 104.24 MMBPD in its September report. Demand for 2025 is seen at 105.78 MMBPD, down from 105.99 MMBPD. OPEC said that their September production fell by 604 MBPD to 26.04 MMBPD. Libyan output fell by 410 MBPD, while Iraqi output fell by 155 MBPD to 4.11 MMBPD, as per secondary sources, OPEC says. An Iraqi officia said Saturday that Iraq produced 3.94 MMBPD of oil in September, less than its OPEC+ output quota of about 4 MMBPD. The production figure given by the official, who asked not to be named, contradicts the findings of a Reuters survey published on Oct. 3, which found Iraq had pumped 90 MBPD more than the quota in September. (Reuters)

Notable from the OPEC report are the following comments they made : US product imports fell to the lowest level since 1997 amid declines in gasoline, jet fuel and other product categories. US product exports remain close to a record high at 6.9 MMBPD. They add that on a global basis, refinery margins in September declined across regions, as high product availability continued to weigh on product markets with most losses stemming from gasoline and middle distillates. In Northwest Europe, closed arbitrage for gasoline shipments, robust diesel imports and weak air travel suppressed refining economics. The recent release of Chinese product export quotas contributed to pressure on the already oversupplied region, amid strong product flows from the Middle East, particularly for gasoil. OPEC says that global refinery maintenance, especially in the Northern hemisphere, led to a drop of 1.4 MMBPD in September refinery inputs. October refinery runs are seen down 1.7 MMBPD due to the heavy maintenance schedule. In Asia, refinery runs are expected to remain healthy, supported by robust near-term regional requirements and the recent release of product export quotas in China.

The Biden administration said Friday that it was tightening sanctions on Iran in response to Tehran's large-scale ballistic missile attack on Israel earlier this month. (WSJ) According to the NBC news network, U.S. officials believe that Israel has narrowed down what they will target in their response to Iran's 1 October attack, which includes Iran's military and energy infrastructure. U.S. officials added that the Israelis have not made a final decision about how and when to act, NBC reported. The U.S. said on Sunday it will send troops to Israel along with an advanced anti-missile system in a highly unusual deployment meant to bolster the country's air defenses. The U.S. on Friday expanded sanctions against Iran in response to its Oct. 1 attack on Israel, targeting its "ghost fleet" that ferries illicit oil supplies across the globe. (Reuters) A series of U.S. airstrikes executed Friday targeted several camps run by the Islamic State group in Syria in an operation the U.S. military said will disrupt the extremists from conducting attacks in the region and beyond. (AP) Israel's military said it continues to operate in southern Lebanon to dismantle Hezbollah infrastructure. (Reuters)

Notable from the CFTC data seen Friday is the fact that money managers covered a lot of shorts in Brent, RB & ULSD in the week ended Tuesday October 8. Hedge funds reduced their bearish bets against Brent at the fastest pace in nearly eight years. (Bloomberg) As a result of shorts being covered and longs added, speculators added 123,226 lots to their net long position in Brent, a fourth consecutive week of long build-up. In contrast, net length in WTI on ICE/CME combined fell by 6,343 contracts. RB net length rose by 13,702 contracts on the back of the short covering. Net shorts in ULSD fell by 21,174 contracts to a total of 18,912 contracts.

Friday's Baker Hughes oil rig count showed an increase of 2 units.

Technicals

Technically the energies have negative momentum, but look to be overall range bound.

WTI spot futures have support at 73.26-73.36 and then at 72.48-72.58. Resistance lies at the overnight high at 75.03-75.08 and then at 75.97-76.04.

RB for December, which is now the highest volume traded contract, has support at 2.0570-2.0586 and then at 2.0400-2.0415. Resistance lies at the overnight high at 2.1145-2.1160 and then at 2.1307-2.1325.

November ULSD sees support at 2.2785-2.2788 and then at 2.2399-2.2403.

Natural Gas--NG is down 7.9 cents

NG futures are lower continuing the pattern seen since Friday morning. The fall back is seen due to the continued outages caused by Hurricane Milton as well as by recent increases in gas production. Fall like weather in much of the U.S. is also seen weighing. This drop in prices comes even as LNG feed gas demand has risen.

NGI’s Weekly Spot Gas National Avg. for the Oct. 7-11 period shed 25.5 cents to $2.075/MMBtu.

The Cove Point LNG export facility returned from maintenance Saturday with flows reaching 0.8 BCF/d, near capacity. Total LNG volumes thus rose? to 13.7 BCF/d, the highest since March 2, though still down -0.4 BCF/d vs 2023 due to a still-weak Calcasieu Pass LNG plant operation. (Celsius Energy)More than 1.2 million customers in Florida remained without power Saturday evening, according to Find Energy. (CBS News)

Friday's Baker Hughes gas rig count showed a drop of 1 unit.

CFTC data seen Friday showed money managers shed more longs than shorts thus adding 5,907 contracts to their net short position. This brought their net short total up to 19,620 contracts.

Technically NG still has negative momentum. Support for the spot futures lies at 2.518-2.524 and then at 2.471-2.475. Resistance comes in at 2.654-2.658.

Disclaimer

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