Daily Energy Market Update 10-21-2024

December Crude is up $1.35?????? December RB is up 2.93 cents?????? December ULSD is up 3.03 cents

Overview

Energy prices are higher boosted by interest rate cuts by the Chinese, some concerns about geopolitical tension and some bullish remarks about demand from the Saudi Aramco CEO.

China reduced its primary benchmark lending rates by 25 basis points on Monday. The one-year loan prime rate (LPR) was trimmed to 3.1%, while the five-year LPR has been cut to 3.6%, the People's Bank of China (PBOC) announced. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. (Reuters)

The head of Saudi Aramco said on Monday that they are fairly bullish on China and oil demand, especially in light of the government's stimulus package. We see more demand for jet fuel and naphtha especially for crude-to-chemical projects," Aramco CEO Amin Nasser said on the sidelines of the Singapore International Energy Week conference. (Reuters) Aramco sees global oil demand at more than 100 MMBPD through 2050, Nasser said, citing significant growth in the global south as economies expand and living standards rise. Worldwide daily consumption is expected to hit 104.5 MMBPD this year, based on Aramco’s forecasts, higher than an estimate by the International Energy Agency at 102.8 MMBPD. (Bloomberg)

Mideast tensions still simmer following Israeli air strikes in Lebanon targeting Hezbollah-run financial systems, local media reported. In addition, Israeli Prime Minister Benjamin Netanyahu also announced an assassination attempt on him Oct. 20 by "Iran's proxy Hezbollah." (Platts)

Libyan oil production has risen to over 1.3 MMBPD over the past week or so, which is close to the level that existed before disruptions in August dropped it to near 450 MBPD.? The resumption of Libyan crude output has led to a surplus in crude supplies in Europe, forcing competing sellers to cut their prices, trading sources and analysts say.? Prices for West African crude, also a substitute for Libyan barrels, could also weaken, a trader said. Nigerian Bonny Light was last week offered close to a premium of $1 a barrel to dated Brent and valued slightly below that, the lowest since December 2023, according to LSEG data. (Reuters)

Iran exported its first-ever crude cargo outside the Persian Gulf, according to satellite images and local reports, marking a small but significant expansion to the country's oil export options as Tehran faces retaliatory strikes by Israel which could target oil facilities. The cargo sailed from Iran's long-delayed Jask oil terminal in the Gulf of Oman. (Platts)

CFTC seen Friday data most notably showed money managers raised their net length in RB futures/options on the CME by 10,453 contracts. This put their net length at its highest level in 5 months. (Quantum Commodities) WTI net length fell by 12,057 contracts on ICE/CME combined. ULSD net shorts rose by 3,576 contracts to a total 22,488 contracts. The CFTC data was for the week ended Tuesday October 15.? Speculative net long positions in ICE low sulfur gasoil futures fell by 6,862 contracts to minus 30,621 in the week to Oct. 15, according to ICE data. Money managers reduced their net-length in Brent crude oil futures and options by 28,486 to 136,522 in the week ending October 15, mostly by selling out long positions.The

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

Technicals

Technically the energies are having inside trading days with momentum still pointing downward.

ULSD for December sees a double bottom from Friday/today at 2.1569-2.1576. Below that support is seen at the 2.13 area. Resistance comes in at 2.2159-2.2174 and then at 2.2416-2.2445.

December RB sees support at 1.9716-1.9728 and then at 1.9503-1.9512. The overnight low of 1.9612 lies between our support points. Resistance is seen at 2.0215-2.0220 and then at 2.0414-2.0423.

WTI for December sees support at 68.89-68.90 via the 60 minute chart. Below that support is seen at 68.17, which is the December contract's low from Friday. Upside resistance is seen at 70.67-70.69 and then at 71.57-71.60.

Natural Gas - November NG is up 4.4 cents

NG prices are higher after making new contract lows overnight for the November 2024 through September 2025 strip as the market rebounds from a very oversold condition with speculative positioning leaning extremely short as per the latest CFTC data.

CFTC data issued Friday showed a very large increase in the net short position held by money managers. They raised their net shorts by 59,811 contracts to a total net short of 79,431 contracts. They added 48,789 new shorts. The data was for the week ended Tuesday October 15. Friday's CME NG futures open interest data showed total open interest rose by 20,250 contracts. This again looks to be new shorts in the December through March contracts, as we saw Wednesday and Thursday as well.

Wind generation jumped to 1857 GWh on Friday, which was the highest since June 18. This suppressed 10.8 BCF of gas power burn demand, 6.0 BCF more than last year, according to Celsius Energy data.

European gas prices came under pressure last week on reports of stronger LNG flows, as per ING commentary. Recent data from Bloomberg suggests that flows from terminals that import LNG in northwest Europe rose to the highest level since April earlier in the week. An unusually mild autumn across Europe could also weigh on the gas demand for heating purposes over the next few days, ING wrote last week. Meanwhile, European storage was seen at 95% full as of 15 October, above the five-year average of 92%.? Technically the TTF futures are in a sideways pattern with momentum pointing downward. Support comes in at the 38 Euro/Mwh and then 35.7 Euro/Mwh levels. Resistance is seen near 42 Euro/Mwh and then at 43.35 Euro/Mwh.

On Friday, LSEG forecast that unseasonably warm weather would cause average gas demand in the Lower 48, including exports, to slide from 97.9 BCF/d for last week to 96.4 BCF/d for this coming week before rising to 99.9 BCF/d in two weeks. The forecasts for last week and this week were little changed (-0.2 BCF/d total) from those seen Thursday.

The Baker Hughes gas rig count showed a decline of 2 units.

The NOAA talks of a "weak La Nina" pattern setting up for this coming winter. They wrote: "Because the jet stream pushes northward during La Ni?a events and weakens it over the Pacific, that pattern can result in warmer than normal temperatures across the Southern U.S. and can “lead to a more severe hurricane season,”. (Yahoo News)

Technically, momentum on the DC NG futures chart looks to be turning upward from a very oversold condition. Resistance for the spot November futures comes in at the prior 2 sessions' highs at 2.370-2.377 and then at 2.407-2.417. Support lies at 2.248-2.249 and then at 2.210-2.214. The overnight low of 2.210 was seen on the opening of Sunday's session.

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