Energy Market Update 1-3-2024

Crude is up 59 cents????? RB is up 36 points????? ULSD is up 3.07 cents

Overview

Crude prices are higher now after sliding overnight as optimism about early U.S. interest rate cuts has ebbed. The Euro weakened and equities retreated. But, prices have rebounded with some concerns over the Hamas war resurfacing. Israeli forces intensified their bombing of the Gaza Strip on Wednesday, after the war stretched into Lebanon with the killing in Beirut of Hamas' deputy leader. (Reuters)

The market will keenly be looking at the minutes from the U.S. Federal Reserve's December meeting, which are due at 2 PM EST today. Germany's 10-year Bund yield climbed 4 bps to 2.1%, rising for the fourth consecutive session. The market will also focus today on the 10 AM EST release of the U.S. ISM index, which is forecast to show a reading of 47.1, up from November's level of 46.7.?

Russia plans to boost diesel exports from its major western ports by almost a fifth in January amid growing refinery runs. The exports are set at 817 MBPD, or 18 percent more than the nation exported in the first 28 days of December, according to calculations based on historical data from intelligence firm Kpler. The export increase comes as refineries are increasing their processing rates. In the first 20 days of this month, crude refining averaged about 5.57 MMBPD, an increase of almost 60 MBPD from November, when the planned maintenance season ended.(Bloomberg)

Libyan crude production at the 300 MBPD Sharara field has been shut due to protests. Disgruntled protestors took to the field on Wednesday morning stating that the field would not be re-opened until their demands would be met. Libya's National Oil Company confirmed the closure in a letter Wednesday. Fears are that the protests may spread to the nearby 60 MBPD El Feel field. (Oil Price.com)?

On Tuesday, news was seen that the OPEC+ Joint Ministerial Monitoring Committee will convene in the first week of February. The meeting has been supposedly scheduled for Feb. 1. The OPEC+ JMMC typically meets every two months to review oil market conditions on behalf of ministers. The full 22-nation coalition is next due to gather on June 1 in Vienna. (Reuters/Detroit News)

A poll of 5 Asian refiners sees Saudi Arabia dropping their February A-Light crude oil OSP by $1.70. In December, the Dubai M1/M3 time spread fell to an average of 17 cents from $1.70 in November, thus underscoring the weaker OSP price likelihood.?

Net-long positions held by non-commercial players across the major oil contracts on average stand at the lowest in records dating back to 2011, according to data compiled by Bloomberg. WTI net length held by money managers, as per the latest CFTC data seen Friday, is said to be at the 2nd lowest level since August 2011, as per Hightower Energies. Speculators will need some convincing before deciding to turn decisively long on oil in 2024. Commodity hedge funds saw returns slump last year to the lowest since 2019, while raw-material prices logged their first decline in five years, according to Bloomberg indexes.

Indian refiners reduced oil imports from Russia as discounts on cargoes weren’t attractive, according to Oil Minister Hardeep Singh Puri, who dismissed the notion flows dropped because of payment-related challenges. News wire reports recently had said that the 6 cargoes of Sokol crude stranded off India were delayed due to currency payment issues. The country needs 5 MMBPD, of which 1.5 MMBPD has been coming from Russia. (Bloomberg)

The API petroleum stats will be issued today at 4 30 PM EST, with the DOE data release forthcoming tomorrow at 11 AM EST.? Crude supplies are expected to decline in the data, as refiners continue their urge to keep inventories lower in Texas for year end taxation reasons. Reuters says that product supplies are expected to rise in this week's stats.

Technicals

Momentum remains negative for the energies on the DC chart bases.

Spot ULSD futures prices seem framed by resistance at the double top from Friday/Tuesday at 2.5956-2.5967 and by support at the double bottom from yesterday/today at 2.5075-2.5108.

RB futures for February see support at 2.0742-2.0752, which was pierced overnight with a low of 2.0670. Below that support lies at 2.0542-2.0558. Resistance comes in at 2.1255 then at the 2.16 area.

WTI February futures see support at 69.50-69.54. The overnight ow is 69.28. Resistance lies at 72.60-72.62.??

Natural Gas--NG is up 7.4 cents

NG is a little higher today as weather models overnight recouped some of the cold lost in the Tuesday midday forecast. Intraday volatility will prevail as the market reacts to weather forecasts. Currently NG spot futures are having an inside day.

TTF prices have rebounded today after the February contract (on its daily chart basis)? fell to a fresh 52 week low Tuesday. Temperatures are set to plunge below zero from Paris to Berlin next week. (Bloomberg) The February TTF price fell to 30.025 Euros/Mwh on Tuesday, piercing support at the double bottom at 30.500/30.625 that existed in spot futures from early September.? Resistance lies up near 35 Euros/Mwh.

Data seen Tuesday lends a supportive tone to NG. NG demand this week is seen at 133.5 BCF/d, rising next week to 135.8 BCF/d. These forecasts added 2.7 BCF/d of demand versus the forecasts seen Friday from LSEG. In addition, NG output in the U.S. so far in January is seen at 107.4 BCF/d, down from December's record pace of 108.8 BCF/d. Feed gas volumes in January have risen to 14.9 BCF/d from December's record level of 14.7 BCF/d.

Initial estimates seen for tomorrow's EIA storage are calling for a draw of 39 to 40 BCF. This is well below last year's draw of 219 BCF. The 5 year average is 87 BCF.??

Technically NG has positive momentum, but that looks to be cresting. Support comes in at yesterday's low at 2.524-2.528. Resistance ies at 2.675 and then at 2.722.

Disclaimer

This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.

Commodity trading involves risks, and you should fully understand those risks prior to trading. Liquidity Energy LLC and its affiliates assume no liability for the use of any information contained herein. Neither the information nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice, are that of the individual, and not necessarily the opinion of Liquidity Energy LLC