Daily Energy Market Update 12-26-2024

Crude oil is up 48 cents???? February RB is up 1.06 cents???? February ULSD is up 2.12 cents

Overview

Energies are higher on the back of the draw in crude supplies seen in Tuesday's API data, which beat estimates. The DOE petroleum data will be issued tomorrow (Friday) at 1PM. Also supporting prices today are the Chinese stimulus plans announced earlier this week.

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

Crude Oil????? -1.9?????????? -3.2

Gasoline?????? -1.1?????????? +3.9

Distillate?????? -0.3?????????? -2.5

Chinese authorities have decided to issue a record-breaking 3 trillion yuan ($411 billion) in special treasury bonds next year, in an intensified fiscal effort to stimulate a struggling economy, Reuters reported on Tuesday.

Tension in the Ukraine-Russian conflict increased this week.? Russia attacked Ukraine's energy system and some cities with cruise and ballistic missiles plus drones on Wednesday in an "inhuman" Christmas Day assault, Ukraine's President Volodymyr Zelenskiy said. U.S. President Joe Biden denounced the "outrageous" attack and said he had asked the U.S. Defense Department to push forward with a new surge of military aid to Kyiv. (Reuters)

Russian Foreign Minister Sergey Lavrov, an ally of Russian President Vladimir Putin, has reiterated a nuclear weapons warning against countries "testing our resolve," saying Moscow will safeguard its national interest "by any means necessary." (Newsweek)

In Mideast crude trading, cash versus futures prices rose to their best value in 2 months.? Cash Dubai & cash Oman were the highest for the front month since end-October, , while cash Murban was the strongest since Oct. 11. Traders said the recent spike was likely due to buying interest persisting in the market despite the volume of available barrels drying up as the end of the trading cycle approached, as well as some short-covering. One trader suggested : "You have to discount these days of low liquidity,". February cash Dubai stood at a premium of $1.56/b to same-month Dubai futures at the market's close, rising 45 cents/b on the day, while February cash Oman was assessed at a premium of $1.75/b, increasing 64 cents/b on the day. February cash Murban gained 30 cents/b on the day to a premium of $1.85/b to same-month Dubai futures.

The Libyan National Oil Corporation (NOC) announced that daily crude oil production has exceeded this year’s target, reaching 1.405 MMBPD of crude oil. Their target was 1.4 MMBPD. The corporation confirmed that plans are underway to increase production further in the coming years. (Libya Observer)

Technicals

Technically today,?WTI's momentum on the DC chart has turned positive, as has RB on its February daily chart. ULSD momentum on the February chart is neutral, befitting the sideways price action.

WTI spot futures have pierced resistance at 70.51-70.56, with next resistance lying at 71.38-71.44. Support lies at 69.70-69.74 and then at 69.14-69.18. The DC chart has a stepladder up pattern from the past few sessions.

February RB sees support at 1.9660-1.9674, just below the overnight low of 1.9685. Below that we see support at 1.9507-1.9527. Resistance comes in at 1.9896-1.9903 and then at 2.0072-2.0091.

ULSD for February sees support at the double bottom from Tuesday/today at 2.2215/2.2207. Resistance lies at 2.2779-2.2797.

Natural Gas--February NG is down 19.0 cents

NG futures prices are lower now after opening last night higher versus Tuesday's settlement, with the soon to expire January futures reaching $3.97 at the opening of the session. That higher print was the best spot futures value seen since January 9, 2023. Prices have since fallen back as the spot futures seem overvalued given next day cash prices are down near $3.

The January LN/NG options expire Today. The $3.50 and $4.00 strikes have the most open interest for the expiring January options, as per CME data.

The EIA gas storage data is due out tomorrow (Friday) at 10:30 AM. Initial estimates we have seen are calling for a draw of 95 to 98 BCF. This compares to last year's draw of 87 BCF and the 5 year average draw of 127 BCF.

Celsius Energy commentary for NG spot futures prices reads as follows: " The big year-over-year gain ( in spot futures prices) comes despite natural gas inventories being at a relatively modest -68 BCF or -1.9% deficit versus 2023, highlighting the strength of the bullish sentiment and confidence in the longer-term prospects for the sector." Today's spot futures price printing $3.864 is up 51.5% from the settlement price of $2.550 seen December 26, 2023.

On Tuesday, LSEG forecast average gas demand in the Lower 48, including exports, rising to 132.6 BCF/d this week from 124.7 BCF/d in the prior week. These forecasts were up 3.2 BCF/d total from the Monday estimates.

In Europe, the Russian Deputy Prime Minister said that Russia is ready to continue gas exports to Europe through several routes, as the current gas transit agreement thru Ukraine is set to end. It is up to authorities in Kyiv and the European Union to agree on the future of gas transportation, Novak said Wednesday in an interview. Besides Ukraine, the fuel is transported via a leg of the TurkStream pipeline that crosses the Black Sea. Supplies are also sent in tankers as LNG. (Bloomberg) The TTF European natural gas market is closed today for the Boxing Day holiday.

"The soon-to-expire Jan 2025 contract is very overvalued by nearly 30%" , as per one analyst. While the January futures contract might seem high relative to the next day Henry Hub cash value, a 30% overvaluation is not appropriate in our view, as that would put the January futures down at about $2.76. With next day cash near $3 and January having commanded a near 32 to 34 cent premium during the past week or so, that would suggest that January futures should command a value near $3.30-$3.35.

Technically, the January spot futures again tested the upper DC bollinger band overnight. The February futures printed $3.530 on the opening last night, thus almost testing resistance at 3.536/3.545. We even see some resistance at 3.471-3.477. Support lies at 3.283-2.289 and then at 3.236-3.240. Momentum looks to be turning lower with the selloff today.?

Disclaimer

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