Energy Market Update 6-20-2024

August Crude is up 51 cents?????????? August RB is up 2.14 cents??????????? August ULSD is up 1.20 cents?????? (The price changes are versus Tuesday's CME price settlements)

Overview

Energy prices are higher as the market awaits the DOE petroleum data due out at 11 AM EDT today. Prices remain overall buoyed by summer demand hopes and geopolitical tension, as well as some crude oil and refinery production issues.

Diesel prices in Europe were supported Wednesday by news about the largest refinery in Europe. Shell closed a 56.3 MBPD hydrocracking unit at its Pernis oil refinery in the Netherlands on Tuesday June 18, consultancy Wood Mackenzie reported. Wood Mackenzie also reported decreased activity on the 58.6 MBPD vacuum distillation unit (VDU) during the morning of June 18, it said in its refinery intelligence report.

On Wednesday, the spot Gasoil futures reached their highest value in 2 months. Prices have since retreated, as they were technically overbought.

In the U.S., Exxon had a flaring event at its large Baytown TX refinery that saw an unplanned shutdown of a Hydrofining unit. But, Exxon said that there was minimal impact to production. The refinery has a capacity of 564.4 MBPD. (Reuters)

Nigeria has shut in up to 40 MBPD of crude oil production after an oil spill in the increasingly hazardous Niger Delta region. Oil theft and pipeline vandalism have long plagued Nigeria’s upstream oil and gas industry, driving majors out of the country.? (Quantum Commodities/Oil Price)

Summer demand hopes are underscored by analysis from Standard Chartered Bank. In a report released on Tuesday, Standard Chartered put actual April oil demand at 101.77 MMBPD, or 470 MBPD bpd higher than its previous forecast. Previously, Standard Chartered forecast that global oil demand would reach a new all-time record in May and then go beyond that in June. With the Tuesday report, the analysts are reiterating that forecast, even slightly revising their May and June demand projections upwards. The bank added :" We think prices could make a relatively rapid move higher towards USD 90 per barrel, helped by the tailwinds of further speculative short-covering, some precautionary consumer hedging and a likely improvement in the strength of high-frequency US oil data."? (Oil Price.com)

Geopolitics have also ratcheted up this week. These concerns are tied to continued Ukrainian drone strikes on Russian oil infrastructure and increasing hostilities between Israel and Iran-backed Hezbollah. Israel's military has approved plans for a possible invasion of Lebanon, the Wall Street Journal reported, raising the risk of a wider war that could endanger crude flows from the Middle East. After Israel said operational plans for an offensive in Lebanon had been approved, Hezbollah said that if Israel opens a "total war" it must prepare for attacks from the ground, the air and the sea. This is in addition to Israeli forces continuing their attacks in Gaza. (Quantum Commodities/Marketwatch)

The July WTI futures expire at the close today.

Technicals

Momentum is positive for the energies, although ULSD's momentum is getting near overbought.

August ULSD sees resistance at 2.5720-2.5750 and then at 2.5882-2.5887. Support is seen at 2.5286-2.5299 and then at 2.5119-2.5131. The 100 day moving average intersects today at 2.5471.

RB for August sees support at 2.4577-2.4596 and then at 2.4367-2.4374. Resistance lies at 2.5026-2.5043 and then at the recent high at 2.5342. The 100 day moving average intersects today at 2.4905.

August WTI resistance lies at 81.54-81.63 and then at 82.42-82.43. Support lies at 79.57-79.63 and then at 79.13-79.17.

Natural Gas -July NG is down 6.4 cents versus Tuesday's settlement

NG prices are lower as the heat wave in portions of the Eastern U.S. is set to end in the next 2 days. Also, hurting prices this morning is a warning from Golden Pass regarding its LNG plant.

New England will "cool off" a bit by the time we get into Friday. Boston has a forecast high temperature of 95 degrees on Thursday and "only" 83 degrees on Friday. Saturday will see temperatures that are even lower, with many New England locations remaining in the mid- to upper 70s. (Fox weather)

The developers of the Golden Pass LNG export facility that's under construction in Texas warned of additional costs and delays due to the bankruptcy of contractor Zachry Industrial Inc. "Construction of a project of this magnitude, capable of employing nearly 10,000 workers, cannot be restarted without additional substantial costs and delays, which only become more significant the longer construction is impeded,” according to an emergency motion filed on June 18 for the US Bankruptcy Court. Golden Pass LNG has an emergency motion to kick Zachry Holdings off of the initial contract to complete the project at the Sabine Pass location. The company says the measure is needed so that work can continue for the project. (Bloomberg/12newsnow.com)

The EIA gas storage data is to be issued tomorrow (Friday) at 10:30 AM. The data is seen as a build of 69 BCF. This compares to last years' build of 92 BCF and the 5 year average build of 83 BCF.

Portfolio managers raised their bullish bets on Europe’s natural gas prices for a second consecutive week, lifting the number of longs close to the highest in more than two years. Hedge funds and other money managers continue to be concerned about Europe’s gas supply in the near term, despite comfortable levels of natural gas in EU storage sites. The EU’s storage was 74% full as of June 17, according to data from Gas Infrastructure Europe. European gas storage is forecast to reach 100% by the end of September 2024 and shall remain full until the end of October 2024, as per Wood Mackenzie analysis. They add, in their Europe gas and LNG markets short-term outlook Q2 2024,? that low European demand for gas has kept storage levels at record highs in 2024.?

TTF spot futures prices have been in a sideways pattern over the past week or so. They are framed by the spike high seen at the beginning of the month at 38.70 Euro/Mwh and the low of 32.30 Euro/Mwh seen 10 days ago. The momentum indicator is neutral, underscoring the sideways price action.? (Hydrocarbon Engineering / Oil Price)

NG futures have negative momentum. Resistance for the July spot contract lies at 2.966-2.967 and then at the psychological $3.00 level. Support below lies at 2.787-2.791 and then at the low seen Monday 2.754-2.759.

Disclaimer

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