Energy Market Update 1-12-2024

Crude is up $2.17?? RB is up 5.74 cents??? ULSD is up 7.83 cents

Overview

Energies have surged today as the U.S. led attacks against Houthi installations in Yemen.

The U.S. and British militaries bombed more than a dozen sites used by the Iranian-backed Houthis in Yemen on Thursday. “These strikes are in direct response to unprecedented Houthi attacks against international maritime vessels in the Red Sea — including the use of anti-ship ballistic missiles for the first time in history,” President Biden said in a statement. Yemen’s Houthi rebels responded defiantly to U.S.-led strikes against them Friday, saying that the attacks had failed to cause significant damage and that they remained undeterred from launching more attacks on U.S. and international targets in the region. Prior to the strikes, Houthi leader Abdul Malik Al-Houthi vowed a “big” response if the US went ahead with its planned action. The total number of tankers carrying clean petroleum products — gasoline, diesel and jet fuel — through the Bab el-Mandeb Strait at the southern end of the Red Sea was down by 47% in the week through Jan. 7 from around a month earlier, according to data from Vortexa Ltd. The drop for vessels transporting crude and fuel oil was 27% over the same period, the analytics firm said. (WSJ/AP/Bloomberg)

Technicals

Momentums have turned positive in the strong rally.

ULSD spot futures tested the upper DC chart bollinger band today. That value lies at about 2.7690. The overnight high for spot ULSD futures is 2.7863. Resistance is seen at the filling of the DC gap at 2.7961. Support is seen at 2.6970-2.6980.

RB for February sees support at the overnight low at 2.1390-2.1400. Resistance comes in at 2.2156-2.2163.

WTI spot futures see resistance at 75.31-75.37 and then at the recent high on the DC chart at 76.18. Support for February WTI lies at 72.60-72.63.?

Natural Gas-NG is up 9.7 cents

NG prices are higher following the other energies, besides being supported by the bullish EIA data seen yesterday and the prospect for a very big withdrawal near 300 BCF in the data release in 2 weeks as arctic air invades the U.S. in the coming week.

The polar plunge could threaten century-old record low temperatures, according to USA Today reporting. The National Weather Service warned that arctic air will bring subfreezing temperatures as far south as southern Texas and the Florida Panhandle by early next week. This will likely lead to some freeze offs in the Permian region, as we suggested yesterday. Prior freeze offs in the region saw production reduced by 2 to 4 BCF/d. One colleague, though, added that this weather event will not feature much precipitation, thus reducing somewhat the freeze off concern. He added that a quick weather event will further limit the production impact.?

The EIA data released Thursday showed a much stronger than anticipated draw. 140 BCF were pulled from storage, well above most estimates that hovered around -120 BCF. Total storage stood at 3.366 TCF as of Jan 5th. That was 436 BCF / 15.0% over last year's level and +348 BCF / +11.6% versus the 5 year average.

With the cold already freezing the Pacific Northwest, next-day power prices at the Mid-Columbia hub soared by 741% to a 16-month high of $850 per megawatt hour for Thursday. The cold has also started to limit gas supplies by freezing oil and gas wells, pipes and other equipment in the Rockies (Colorado and Wyoming) and Bakken shale (North Dakota). (Reuters)

TTF prices in Europe are higher today, but their response is muted considering talk earlier this week of worries over supply due to the risk of prolonged disruptions to a key shipping route. What is supportive for TTF? are the lows in February TTF pricing bunched just above 30 Euros/Mwh in trading seen in the prior 3 sessions. EU storage was seen at 83% as of Monday, which is the 2nd highest level seen at this time of year since 2011, as per Gas Infrastructure Europe data. "Gas consumption has remained well below normal levels, which coupled with healthy LNG and pipeline supply, means storage reserves are way above normal for the time of year for a second year in a row,” as per an analyst quoted in the Financial Times. A Bloomberg comment from earlier this week describing the European gas market read: "winter is over".

Technically NG spot futures have neutral momentum basis the DC chart. Resistance above comes in at 3.265-3.275 and then at this week's 3.392 high. Support lies at the overnight low at 3.099-3.102 and then at 3.022-3.024.

Disclaimer

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