Energy Market Update 5-23-2023

Crude is up?83 cents???RB July is up 3.88 cents????ULSD July is up 1.73 cents

Overview

The crude market remains consumed with the debt ceiling standoff. RB is much higher as gasoline driving season is upon us. The U.S. Memorial Day holiday marks the start of the peak summer driving season.

"The tug-of-war continues at the negotiating tables." is a comment re the debt ceiling, although some positive sentiment was taken from a remark by Speaker McCarthy that he and President Biden had productive talks. In addition, President Biden has floated the idea of using the 14th amendment to raise the debt ceiling. (Reuters)

The Biden put remains an element that many analysts cite as supportive for crude in case of any price falls. The notion being that a price fall near $70 will see the U.S. seek to refill its SPR.

Saudi Arabia’s top energy official issued another warning to oil short-sellers, just over a week before the OPEC+ alliance is due to meet.“ I keep advising them that they will be ouching — they did ouch in April,” Saudi Energy Minister Prince Abdulaziz bin Salman said at the Qatar Economic Forum in Doha on Tuesday. “I would just tell them: Watch out!” (Bloomberg)

Technicals

RB is at its best value in over a month. Crude spot futures, though, in the past 2 weeks have basically been in a range between $70 and $73.50.?Momentum is positive for the energies, although that for RB is likely to be overbought within a day or 2.

WTI spot futures resistance lies at 73.89-73.93 and support is seen at 71.79-71.81, just above the overnight low of 71.71.

July RB sees support at 2.5585-2.5611 and then at 2.5277-2.5285. Resistance lies at 2.6100-2.6112.

ULSD for July sees support at 2.3653-54 and then at the 2.3320 area. Resistance comes in at 2.3968-2.3989.

Natural?Gas?-?July?NG?is?down?4.0?cents

NG spot futures gave back half of last week's gains on Monday, falling over 7%. Weather demand is seen as normal through the first week of June. (WSJ) Reuters cites increased NG production as contributing to Monday's fall.

Refinitiv said average gas output in the U.S. Lower 48 states rose to 101.5 BCF/d so far in May, which would top April's monthly record of 101.4 BCF/d. And feedgas demand has fallen in May to 12.9 BCF/d from April's high level of 14.0 BCF/d, due to maintenance at various plants. (Reuters)

We harken back though to comments made by colleagues 2 weeks ago : 1) " Rally Week"?2) " Does seem like sentiment is starting to change in NG though. Shift to a buy the dip mentality." At the time of those remarks, NG was near $2.15-$2.25. It is very hard to believe that that level will be breached as we move forward with summer demand to come.

European TTF prices have fallen today to their lowest value since June,2021 as European NG storage remains at near record level. Storage as of Sunday was seen at 65.9%, second highest on record, amid high LNG shipments. The 10 year average for storage at this time is 44.7%. (Reuters)

Technically, NG was repelled from its upper bollinger band, that was tested in the rally last Thursday and Friday. The sharp fall from yesterday has turned momentum negative. We harken back to a comment we made weeks ago that this is the season where prices have been seen range bound between $2 and $3 when looking at historical pricing.?In the immediate, support for the July NG is seen at 2.471-2.476 and then at 2.415-2.424. Resistance lies at 2.630-2.638.

Disclaimer

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