Energy Market Update 3-20-2024

May Crude is down $1.15????????? May RB is down 3.95 cents?????? May ULSD is down 5.91 cents

Overview

Energy prices are lower as product supply data seen in the API disappointed and a stronger dollar is providing headwinds. The markets are waiting for the Fed minutes to be released later in the day. Some profit taking after the recent rally is also seen weighing on energy prices today.

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

Crude Oil???? -1.2/-2.7????? -1.519

Gasoline????? -1.4/-2.1????? -1.574

Distillate????? -0.1/-2.3???? +0.512

Cushing?????? +0.487?????? +0.325

Runs???????? +0.5/+0.9%??? n/av

The Fed is expected to hold rates steady for a fifth consecutive meeting later Wednesday, although policymakers may give hints about when they will be ready to pivot to easing. But, while the Federal Reserve is officially apolitical, it does not want to be seen as influencing the general election in November, meaning there might be an unofficial clock ticking on how close to that date the Fed could implement an interest-rate cut without undermining its credibility. "They’d probably prefer to get started in June rather than September so it's not too close to the election.", one analyst said. Respondents see three cuts this year, which is fewer than most analysts had forecast earlier this year. Overall analysts have dialed back their rate cut expectations. Goldman Sachs went from forecasting a full percentage point of cuts in 2024 to three-quarters of a point. The chief economist for the Americas at Vanguard, said between recent data and a "cautious" Fed, "it's entirely possible that the Fed may not be in position to cut rates this year" at all.? (NBC News/Reuters/CNBC)

Oil Price.com describes how the U.S. government's plans to refill the SPR has boosted the Mars sour crude price versus the WTI. Mars crude, produced in the Gulf of Mexico, traded on Friday at a 90-cent premium to benchmark West Texas Intermediate prices, from a discount of 40 cents on Thursday, according to Syntex Energy. The jump came after the Energy Department said it plans to buy 3 MMBBL of sour oil for delivery in August and September, the bulk of US driving season. The market for sour oil was already tightening, because output cuts by OPEC and its allies have reduced supplies of the stuff around the globe. Expectations that the US will in April renew sanctions on Venezuela, another sour oil producer, is also supporting prices.

Gasoline prices at the pump continue higher today. The national average at the pump in the U.S. has risen 2.6 cents from yesterday to $3.515, which is the highest price seen since October 26. One month ago the price was $3.296, while a year ago it was $3.443.

Today is the last trading day for the April WTI futures.

Technicals

Momentum for the products has turned negative from an overbought status with May crude poised to do the same.

May ULSD is off considerably from the highs seen the past 2 days at 2.7540 and 2.7666. Resistance is seen at 2.7260-2.7285. The high today is above that at 2.7378. Support lies at 2.6500-2.6510 and then at 2.6280-2.6290.

May WTI sees support at 80.56-80.61 and then at 80.01. Those are the prior 2 days' lows. Resistance is seen at the past 2 highs at 82.50 and 83.12.

May RB sees its support at 2.6783-2.6801 and then at 2.6464. Resistance comes in at 2.7320-2.7340 via the May 60 minute chart. Above that resistance is seen at the double top of Monday/Tuesday at 2.7540-2.7549.

Natural Gas -- April NG is down 0.4 cents

NG prices are near unchanged as the sideways price pattern seen in futures the past few days persists. Ample storage and higher wind generation are offset by the drop in production seen the past few weeks and an uptick in the Freeport LNG facility's demand seen Tuesday as the terminal is said to be heading towards full usage by May. The EIA data due out this week is seen raising the inventory surplus, which is a negative factor.

Based on the amount of gas flowing to Freeport, analysts said it looked like a second train at the plant could be starting to return to service. LSEG said gas flows to Freeport were on track to rise by 0.2 BCF/d to 1.0 BCF/d on Tuesday from Monday.? At full capacity, the facility can process 2.2 BCF/d. Maintenance will increase the Texas facility’s capacity to 16.5 million metric tons a year, up from the approximately 15 million tons a year currently, Freeport's CEO said Tuesday on the sidelines of the CERAWeek conference in Houston. Repairs are set to conclude in early May, the CEO said. A 4th train is set to expand the capacity by a further 25% when it becomes operational. Freeport LNG’s fourth train expansion is currently permitted, but still undergoing customer discussions, the CEO said. (Bloomberg/Reuters)

On Tuesday, LSEG forecast gas demand in the lower 48 states, including exports, would rise from 114.7 BCF/d this week to 115.0 BCF/d next week. Those forecasts were higher by 2.7 BCF/d than LSEG's outlook on Monday.

Celsius Energy analysis sees coal plus NG power generation amounting to 77% of the total power load, which Celsius says is up 10% versus last year. Celsius adds that that bodes well for summertime cooling power generation.

Comments seen the last 2 days point out certain price points that analysts are stressing: (A) "The 37% premium that natural gas storage is holding to the five-year average should keep a $2.00 cap on front month prices,"? (B)? "We look to $1.65 for April 2024 as an important level bulls want to hold and bears want to take out," says one analyst. This sentiment is echoed to some degree by another analyst : "? Technically the bearish trend continues with support to April futures at the $1.60 area."

Technically NG spot futures' momentum is trying to turn positive on the DC chart. The price pattern of the past 5 days though has a sideways look. Resistance lies at 1.767-1.774 and then at 1.837-1.841. Support comes in at 1.643-1.651.

Disclaimer

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