Daily Energy Market Update 10-9-2024

Crude is down 4 cents???????? RB is down 0.73 cents????????? ULSD is down 1.10 cents

Overview

Energies are lower now after attempting to rally slightly overnight. Several factors are weighing on sentiment today : a large crude build in the API data, a lack of Chinese stimulus, reduced Mideast tension, and the EIA significantly lowering their 2025 crude oil prices forecast.

API??????????? ? Forecast?????? Actual

Crude Oil?? +1.3/+2.0???? +10.9

Gasoline???? -0.3/-1.5?????? -0.557

Distillate???? -1.0/-1.9?????? -2.59

Runs????????? -0.1/-0.3%??? ? n/av

Cushing????? +0.874?????? +1.359

The EIA wrote in their STEO issued yesterday : "No oil supplies have been affected by increased military action in the Middle East at the time of STEO publication, and we do not assume any disruption in our forecast. "

Hezbollah's deputy leader said that he supports ceasefire efforts led by the Speaker of Parliament, a Hezbollah ally, while Israel continues targeted operations in Lebanon. For the first time, the Hezbollah Deputy leader omitted any mention of? a Gaza truce deal as a precondition to Hezbollah's cessation of attacks on Israel. But, the Hezbollah deputy Leader said that Hezbollah would not be the first to yield in the war and that its capabilities were still intact. (India Times) The Israeli Defense minister's scheduled trip to Washington for talks with the U.S. government has been cancelled, somewhat tempering the hopes for a more measured Israeli response to the Iranian attack of October 1.

Global and U.S. oil demand growth next year will not meet prior forecasts due to weakening economic activity in China and North America, the EIA said on Tuesday in its Short-Term Energy Outlook (STEO) report. World oil demand is expected to grow 1.2 MMBPD to 104.3 MMBPD next year, about 300 MBPD below prior forecasts, the EIA said. Demand is seen at 103.1 MMBPD this year, a 20 MBPD reduction from last month's forecast. In its STEO, the EIA sharply lowered their 2025 oil price forecast. Brent is seen averaging $77.59, down 7.7% from last month's forecast of $84.09. WTI is seen averaging $73.13 in 2025, down 8.2% from last month's forecast of $79.63. The EIA's forecast was lowered to largely reflect a reduction for global oil demand growth in 2025, they wrote.

Waning optimism over new stimulus measures in top oil importer China also weighed, after authorities declined to introduce stronger, fiscal stimulus measures to shore up slowing growth. (Investing.com)

Technicals

Technically the energies are having inside trading days today versus yesterday's price range. Momentum has turned negative on the DC charts on the back of the sharp fall in prices seen over the past 24 to 36 hours.

WTI spot futures have support at 72.69 and then at 71.58-71.67. Resistance lies at the overnight high at 74.41-74.45 and then at 75.03-75.07.

November RB sees support at 2.0317-2.0339 and then at 1.9969-1.9980. Resistance lies at 2.1041 and then at 2.1258.

ULSD resistance for November futures is seen at 2.3145-2.3163, which was tested with a high overnight of 2.3176. Above that resistance lies at 2.3400. Support lies at 2.2646-2.2665 and then at 2.2304-2.2318.

Natural Gas--NG is down 2.5 cents

NG spot futures are lower as Hurricane Milton is seen causing demand destruction and mild weather in the U.S. overall has reduced demand.

NGI's headline from yesterday : " Natural Gas Futures Tread Lightly as Hurricane Milton Threatens ‘Catastrophic Damage’"

The EIA wrote in their STEO issued Tuesday : The Henry Hub natural gas spot price rose by 15% to $2.28/MMBtu in September. We expect the Henry Hub price to continue rising to around $2.80/MMBtu in the fourth quarter of 2024 and to further increase to around $3.10/MMBtu on average in 2025 as liquefied natural gas exports, a component of total natural gas demand, increase with the addition of capacity. The EIA raised their 2024 NG price forecast to $2.28 from last month's forecast of $2.19. But, they lowered their 2025 price forecast to $3.06, from last month's forecast of $3.14. In 2024, U.S. gas production is seen at 103.5 BCF/d, up 0.1 BCF/d from last month's estimate. In 2025, gas production is seen running at 104.6 BCF/d. This forecast is down from September's forecast of 104.8 BCF/d.? End of October gas supplies are seen at 3.889 TCF, down from last month's estimate of 3.921 TCF. The EIA is forecasting end of withdrawal season, thus end of March 2025, inventories to be 1.939 TCF.

The move lower in NG prices comes even as LSEG's demand forecast seen Tuesday for this week and next was raised by a total of 3.5 BCF/d from Monday's estimates. LSEG forecast average gas demand in the Lower 48, including exports, will rise from 97.1 BCF/d this week to 99.0 BCF/d next week.

The double index fund roll was in effect again Tuesday. Open interest for the NG futures on the CME shows a total drop of 12,592 contracts from Tuesday's activity. But, the November contract saw a drop of over 31,000 contracts with the rest of the winter strip seeing increases, thus underscoring the rolling of positions. The November open interest drop also reflects some long liquidation, we believe.

Technically NG has negative momentum. The DC gap down to 2.690 was filled this morning. Below that support lies at 2.635-2.640. Resistance lies at? 2.781-2.787.

Disclaimer

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