Daily Energy Market Update 11-12-2024

Crude is?up?68 cents???? RB is up 2.26 cents? ? ULSD is up 3.02 cents?

Overview

Energies are currently higher versus Monday's settlement after dipping overnight. One commentary speaks of a "cautious recovery" in prices, after the 5% drop in the prior 2 sessions. One other comment speaks of OPEC's monthly report being "relatively bullish", even as they lowered their 2024 and 2025 demand forecasts.

OPEC, in their monthly report, lowered their 2024 oil demand growth forecast by 110 MBPD to 1.82 MMBPD. The forecast for next year was lowered by 100 MBPD to 1.54 MMBPD. China accounted for the bulk of the 2024 downgrade. OPEC trimmed its Chinese growth forecast to 450 MBPD from 580 MBPD and said diesel use in September fell year on year for a seventh consecutive month. OPEC did raise their global economic growth forecast for this year and next by 0.1%. OPEC supply in October rose by 466 MBPD to 26.535 MMBPD, as Libyan output rose by 556 MBPD, as a dispute that had reduced output there ended. In its report, OPEC -- which does not see consumption peaking through 2050 -- said oil demand growth will be "bolstered by strong transportation fuel demand and ongoing healthy economic growth, particularly in a number of non-OECD countries," as well as "refinery capacity additions and petrochemical margins". (Platts/Reuters)

Platts is forecasting crude supplies to rise by 1.5 MMBBL in this week's API/DOE statistics. The rise would see the deficit to the 5 year average fall to -4.5 % from last week's -4.9%. They suggest that the build is due to crude exports remaining near seven-month lows. Total outbound shipments averaged 3.13 MMBPD in the week to Nov. 8 as per Commodity Insights data; the EIA said that exports were 2.85 MMBPD in the week prior. Platts says that exports could see a boost in coming weeks amid improved economics. The arbitrage incentive for moving heavy Mars crude into China versus Dubai has averaged $1.17/b to-date in November, Commodity Insights data showed, up from 23 cents/b in October. Platts is forecasting U.S. refinery utilization to rise by 0.5% to 91.0%, which would be an eight-week high and 4.9% above the five-year average for this time of year. Platts is forecasting that gasoline and distillate supplies will fall 1.0 MMBBL in this week's data. If the gasoline draw comes to pass, gasoline stocks would fall to their lowest level since early November 2022, Platts adds.

Technicals

Technically there is some modest support from the RB contract bouncing off its DC chart lower bollinger band Monday and the double bottom in the ULSD contract. Momentum remains negative for the energies. We have added a Brent chart today, given key nearby support levels.

December ULSD has lows from yesterday / today at 2.1896 / 2.1879. Below that support is seen at 2.1700-2.1702. Resistance lies at 2.2450-2.2475.

RB spot futures see the DC chart bollinger band intersecting today at about 1.9470. Chart support lies at the recent low at 1.9339. Resistance lies at 2.0055-2.0063.

WTI for December sees support at 67.24-67.31 and resistance at 70.81-70.82.

Brent spot futures have a support trendline on the DC chart that intersects today at 71.30. The DC chart lower bollinger intersects at about 71.39. Chart support lies at 70.65-70.72. Resistance lies at 73.34-73.39.

Natural Gas --NG is down 3.5 cents

NG futures are lower after the market yesterday saw its best one day performance since February. The up move was supported by increased demand forecasts and recent lower production. But, now the proof needs to be in the pudding.

The LSEG NG demand forecast for this week and next seen Monday rose by 5.0 BCF/d from that seen Friday. Demand this week is seen at 108.3 BCF/d (Friday that was said to be 104.1BCF/d) and next week's is seen at 110.8 BCF/d (up from 110.0 BCF/d on Friday).

Due to a continued cooling trend in the near-term temperature outlook, the 14-day accumulated Gas-Weighted Degree Day (GWDD) forecast is not at a 5-yr low for the first time this month, as per Celsius Energy analysis.? Their forecast of 265 GWDDs for the Nov. 12 thru Nov. 25 period now tops 2020 (262 GWDDs) & last year (258 GWDDs).

U.S. gas production saw a sharp drop over the weekend and, per Monday’s early-cycle data, which showed output at 99.5 BCF/d, down a steep -7.3 BCF/d vs 2023. The drop is likely short-lived due to pipeline maintenance, but is still providing a buffer against mild temperatures, Celsius Energy wrote.

There seems to have been some skepticism surrounding Monday's strong rally. The following comments were seen : one firm saying that "the recent rally may have been driven in part by short-covering if managed money closed out bearish bets." Another wrote: " "If weather is the only factor driving the values higher, we expect a significant chunk of today's gains to be relinquished by week's end,". Another comment reads: " Pressure (is now) on (the) temperature outlook to verify (the rally)."

The notion of short covering is evidenced in the CME's open interest data from Monday's trading activity. Total open interest fell by 9,472 contracts, led by December open interest falling by 18,039 contracts. Notable to us is the very large open interest in the January contract of 348,346 contracts, which we believe is leaning more short than long, given the speculative positioning?? information provided by the CFTC.

The December/January NG spread rose on Monday to the narrowest value for the contract since late November 2022. The contract was well over the upper bollinger band on the daily chart. That band intersected at 22.5 cents. The spread settled at 20.6 cents, thus setting up a mean reversion.?

The TTF spot futures price today hit the highest price since November 28, 2023 fueled by "cooler temperatures and softer wind drive demand", as per MSN commentary.? “Lower electricity output from renewables is forcing utilities to ramp up their gas-fired power generation,” ANZ Research analysts say. “The drawdowns could accelerate as weather forecast suggest a cold snap is expected by the end of November.” The market is also concerned about supply-side issues, as it is still unclear if Russian gas will be able to make its way to Europe and what Donald Trump’s return to the White House will mean for the war in Ukraine. Technically the TTF futures have positive momentum. The December daily chart shows the upper bollinger band being tested today. Upside resistance lies at the December contract's recent high seen at 45.830 Euro/Mwh. Support lies in the 41.2-41.3 Euro/Mwh area.

Technically there is currently a double top on the NG DC chart from yesterday/today at 2.956 / 2.954. If pierced, a test of $3 is likely. Support lies at 2.825-2.831. Momentum is positive.

Disclaimer

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