Energy Market Update 2-2-2024

Crude is down 40 cents??? Rb is down 1.87 cents??? ULSD is down 2.81 cents

Overview

Energies are lower as the markets continue to be weighed down by the prospect for a ceasefire between Hamas and Israel, the negative DOE data seen this week and concerns over Chinese demand.

Energy prices dropped Thursday amid reports that said Qatar was ‘optimistic’ after receiving ‘initial positive confirmation’ from Hamas on a ceasefire and hostage agreement with Israel. (Quantum Commodities)

Two OPEC+ sources said on Thursday that the group has kept its output policy unchanged and will decide in March whether to extend the voluntary oil production cuts in place for the first quarter. OPEC member Algeria said on Thursday it was ready to carry on with its voluntary cut beyond March if needed, while Kuwait said it was committed to the curbs without saying whether they should be extended. Riyadh has said that the cuts could continue beyond the first quarter if needed. If the first quarter voluntary cuts are unwound, OPEC+ would begin to return 2.2 MMBPD to the market from the beginning of April. This would leave in place 3.66 MMBPD of output cuts agreed earlier. (LSEG/Reuters)

BP says it is restarting operations at its Whiting, Indiana refinery, after a transformer failure caused a plant-wide power outage and forced an evacuation of all but the most essential workers Thursday. The refinery has a capacity of 435 MBPD. Chicago gasoline and diesel cash differentials jumped between 15 and 20 cents in late Thursday trading to 30 cents per gallon below the gasoline and diesel benchmarks, respectively, on the New York Mercantile Exchange. Accordingly, the price of Western Canadian Select crude oil? for March delivery, which settled at $18.10 a barrel under WTI on Wednesday, was sold off on the Whiting news and settled at $19.00 a barrel under WTI. (Quantum Commodities/Reuters)

Technicals

Momentum points lower still.

WTI spot futures have support at 72.60-72.63 and then at 71.81-71.85. Resistance lies at 74.38-74.40, just below the overnight high of 74.52.

RB futures see support in March at 2.1545-2.1560 and then at the 2.14 area. Resistance lies at 2.1922-2.1931 and then at the overnight high at 2.2140-2.2163.

ULSD March futures see support at the 2.66 area and then at 2.6365-2.6370. Resistance lies at 2.7129-2.7150 and then at 2.7305-2.7329. The overnight high is above that at 2.7378.

Natural Gas--NG is up 9 ticks

NG prices are near unchanged after dipping earlier this morning. As one colleague says : not enough weather support. Among comments seen today are : " Navigating consolidation amid uncertain markets" .." NG is on the verge of either breaking below $2 or jumping back over $2.10".

NG has fallen to a fresh low today, as the prospect of warm weather through mid-February weighs on prices. It looks like stop loss orders were triggered in the drop to the fresh low today as volume in NG futures on the CME spiked in the minutes surrounding the drop in prices. There was little follow through lower after the possible stop loss orders were triggered.

The market reacted negatively after the EIA data release yesterday. The draw of 197 BCF was within market expectations. Total storage stood at 2.659 TCF as of January 26. This is 54 BCF/2.1% greater than last year and +130 BCF/+5.1% versus the 5 year average. The storage surplus is seen ballooning over the next few weeks. This was seen as the cause for the post data drop Thursday. But, some below normal temperatures are possible in the second half of February in the eastern half of the U.S.

On Thursday, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 126.7 BCF/d this week to 127.5 BCF/d next week. This was a gain of 1.2 BCF/d total versus the estimate seen the day before. LNG exports from the U.S. fell to an average of 13.9 BCF/d in January, down from a monthly record of 14.7 BCF/d in December. They have fallen due to cold weather and outages at second-largest exporter Freeport LNG. (LSEG/Reuters)

Technically the momentum on the NG DC chart is getting oversold. We see support at 2.011-2.015 and then at the prominent low from April of last year at 1.944-1.946. Resistance lies at the highs seen the past 2 days at 2.158-2.168.

Disclaimer

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