Energy Market Update 4-26-2024

Crude is up 81 cents??????? June RB is up 1.86 cents?????? June ULSD is up 2.76 cents

Overview

Energies are higher as news wires tout comments by Treasury Secretary Yellen that the disappointing GDP figure seen yesterday will be revised upward.

"Yellen also said in the Reuters interview that inflation would likely ease after being affected by various unusual factors, which contributed to the weakest performance of the economy in nearly two years, adding the Q1 GDP may underestimate the underlying strength of US economy." (Quantum Commodities)

Mideast tension continues to simmer with Israel having stepped up air strikes on Rafah after saying it would evacuate civilians from the southern Gazan city and launch an all-out assault despite allies' warnings this could cause mass casualties. (Reuters)

The U.S. March PCE inflation figures came in as expected this morning. The monthly increase was +0.3% and the year on year inflation reading was +2.7%. Energies have not reacted to the expected data.

Bloomberg reports that on Wednesday US Oil Fund, the biggest oil ETF, posted its largest daily outflow on record as crude prices. Bloomberg cited the reduced tension in the Mideast for the withdrawal. The withdrawal of $376 million was bigger than the previous record of $323 million set in 2009. But, it followed two days of similarly large inflows in the two prior sessions, Bloomberg adds.

GasBuddy sees gasoline prices "gently falling" in the coming weeks before driving season. The easing of tensions in the Mideast and the belief that refiners will ramp up runs ( which they have not done over the last 4 weeks) are seen as stemming the recent run up in gasoline prices. Also, it was pointed out that money managers had reduced their net length in RB futures in the latest CFTC data seen last Friday. All this even as the DOE stats seen Wednesday showed gasoline inventories at their lowest since December. But, the DOE report also showed gasoline demand having fallen by 239 MBPD on the week to a middling amount of 8.423 MMBPD and lagging last year's demand by over 1 MMBPD. GasBuddy also cites the change over to the summer RVP grade of gasoline as having been completed, thus reducing one factor that had been helping push up pump prices in recent weeks. (Reuters/WANE.com (TV Indiana) )

Platts details how S. Korea imported more American crude for the second straight month in March, while lowering their imports from Saudi Arabia as the economics favored the U.S. oil.? Saudi crude was expensive due to rising Persian Gulf tanker insurance rates because of the Mideast tension. Refiners paid on average $85.25/b for Saudi Arabian crude shipments in March, $1.55/b more than the monthly average of $83.7/b paid for US volumes received in the same month, as per the S. Korean National Oil Corp.'s data. Lighter and sweeter crude grades including US WTI Midland should typically cost more than high sulfur Saudi Arabian grades purely in terms of quality. Refinery and trading sources highlighted that higher quality and a longer voyage duration for US crude should cost at least $2/b more than high sulfur Middle Eastern sour crude, but South Korea's free trade agreement with the US provides huge advantage over other Asian buyers when competing for WTI Midland spot cargoes. And imports of Kazakh crude fell dramatically year over year as the crude has become very expensive due to shipping rates as tankers avoid the direct route thru the Red Sea and Suez canal, Platts added.

Technicals

Momentum is positive for the energies. June Rb and spot WTI futures show rising highs this week on their respective charts.

June WTI sees support at 82.55-82.60. Resistance lies at 84.75-84.85 and then at 85.50-85.51.

June RB sees resistance at 2.7566-2.7577, which was almost tested with a high of 2.7562. Above that resistance lies at the 2.78 area. Support is seen at 2.7150-2.7175 and then at 2.7015-2.7025.

June ULSD has a sideways look from trading seen this week. Resistance above lies at 2.6142-2.6151. Support lies at 2.5527-2.5538, just below the overnight low of 2.5549. The 100 day moving average on the June daily chart lies above that at 2.5625.

Natural Gas--June NG is down 6.7 cents

NG prices are lower as May futures expire today with May futures having traded as low as $1.482, coming within one tic of its contract low. This is a drag on the June contract.

Weakness in NG the past 2 sessions has been due to lower feed gas volumes, the disappointing EIA storage number and what one analyst says is the peak of low shoulder season demand to be seen next week.

The EIA storage data showed a build of 92 BCF, which was 6 to 12 BCF over forecasts we had seen. Total storage rose to 2.425 TCF, which is +439 BCF / +22.1% versus last year's level and +655 BCF / +37.0% versus the 5 year average.

LSEG said Thursday that demand this week would be 97.4 BCF/d, falling to 91.6 BCF/d next week. These estimates are lower by a total of 2.9 BCF/d versus that seen end of the week last week.

Reuters said that the feed gas volume on Thursday was at 11.3 BCF/d, down from Monday's level of 12.8 BCF/d. Thursday's volume was down 2.3 BCF/d versus a year ago. Furthermore, it was said that Freeport's volume had dwindled to 0.1 BCF/d Thursday from 0.5 BCF/d seen Monday.

June NG has broken support at 1.926-1.928 and is close to testing the contract low of 1.907. Momentum is negative. Support below the contract low lies at 1.867-1.870 via DC chart data. The June daily chart's lower bollinger lies above that support at 1.902. Resistance for June futures lies above at 2.010-2.014.

Disclaimer

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