Energy Market Update 10-20-2023

December crude is up 99 cents???? December RB is up 2.93 cents??? December ULSD is up 3.55 cents

Overview

Energies are higher as tension mounts in the Mideast as Israel is preparing to launch an attack on Gaza.

The Israeli Defense Minister told troops gathered at the Gaza border on Thursday that they would soon see the Palestinian enclave "from inside", suggesting an expected ground invasion could be nearing. (Reuters)? Adding to tension in the region was news that a Pentagon press secretary told reporters Thursday that a Navy destroyer intercepted three missiles and several drones that were launched by Iran-backed Houthi forces in Yemen, but their target was unknown.(Marketwatch)

On Thursday, the U.S. DOE announced that that it will post monthly solicitations to purchase oil for the SPR through at least May 2024, beginning with a solicitation for up to 6 MMBBL for delivery in December 2023 and January 2024. DOE will purchase oil in those months where it can do so at a good deal for taxpayers: a price of $79 dollars per barrel or below, far less than the average $95 per barrel DOE received for 2022 emergency SPR sales. (energy.gov)

Federal Reserve Chair Jerome Powell signaled the US central bank could hold rates steady at its next policy meeting, although he cautioned that inflation was still too high. (Quantum Commodities)

India is resisting Russian pressure to pay for oil imports in Chinese yuan. Some Russian energy suppliers are demanding payment in yuan, but New Delhi fears popularizing the Chinese currency could hurts its efforts to internationalize the rupee. Russia is now the top crude supplier to India, making up almost half of the South Asian nation’s purchases. Russia has an excess supply of rupees, which it’s struggling to use, while at the same time its demand for yuan has grown sharply in the past year as the economy becomes more reliant on China for imports. (South China Morning Post)

Today is the last trading day for the November WTI?futures.

Technicals

Momentums are positive for the energies.

RB has a steep up ladder look. December futures see support at 2.3285-2.3305 and then at 2.2942-2.2960. Resistance lies at the 2.3850 area and then in the 2.41 area.

Brent DC futures have a gap up to 94.90. Resistance is seen below that though at 94.21-94.25. Support comes in at 91.56-91.63.

December WTI support is seen at 87.76-87.85. Resistance lies at 89.89-89.99, which was almost tested with a high of 89.85. Above that resistance lies at 90.75.

ULSD in December sees resistance at the 3.16 area. Support lies at just above 3.08 and then at 3.0567-3.0574.

Natural Gas--NG is down 4.4 cents

The comment from Celsius Energy re the EIA data seen yesterday says it all :"well ouch". The EIA data and tepid weather demand are still weighing on NG. As Celsius Energy says, NG is still looking for a catalyst to help lift prices to the upside.

The EIA storage report disappointed dramatically as mild weather of late caused a much greater injection in the stats. Storage rose by 97 BCF. Estimates were for a build of 79-81 BCF.? Total storage rose to 3.626 TCF. Storage was thus 300 BCF/9.0% over last year's level and 175 BCF/5.1% over the 5 year average.

We note the December call options open interest on the CME rose quite a bit in Thursday's trade. We see the December $4.00 call having been bought against selling of the $2.75 put and against twice as many $4.50 calls. Also notable in the options was a trade along the entire Cal 25 strip in which the $5.50 calls was bought versus selling twice as many $2.50 puts. The trade was priced at 9.5 cents cost. The Cal 25 strip settled in the middle between the put and call strikes at $4.01 Thursday.

Technically NG still has negative momentum. "As the NGI headline reads :Bears Extend Dominance Over Slumping Natural Gas Futures Prices After Plump Storage Print." One thing that might help NG is the fact that with yesterday's close the market was down 7 days in a row. But no indicators suggest an oversold condition as yet. Support at 2.935 has been broken. Support is seen at 2.900 and then at 2.862-2.868. Resistance comes in at 3.004-3.009. If broken, resistance above that comes in at 3.053-3.055.

Disclaimer

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