Energy Market Update 8-15-2023

Crude?is?down?$1.01???RB?is?up?20?points?????ULSD?is?down?2.93?cents

Overview

Disappointing data from China has caused crude oil and ULSD to fall today. RB is near unchanged.

Retail sales and industrial production figures missed estimates. Industrial production in July was up 3.7% year on year. This was down from June's +4.4% figure and below the Reuters estimate of +4.4%. Retail sales in July were up 2.5% year on year, down from June's +3.1% and below the Reuters forecast for a 4.5% gain. In addition, China lowered a key one year lending rate by 15 basis points in a surprise move. As per Bloomberg, this adds to the "gloom" that China will struggle to meet its goal of 5% growth this year.

Chinese refinery thruput rose in July to 14.87 MMBPD, which is the 3rd best rate ever. It is up marginally from June's rate of 14.83 MMBPD, but just below March's record rate of 14.90 MMBPD. Thruput was raised on the back of good domestic travel demand for gasoline and jet fuel. The rate was also boosted by refiners seeking to capitalize on strong regional cracking margins. July fuel exports were up 55.8 % year on year. (Reuters)

The EIA on Monday, in its monthly drilling report, said they estimate U.S. crude production from the 7 major shale basins to drop by 20 MBPD in September from August. Total crude production is estimated from the shale plays at 9.415 MMBPD.

Gasoline prices at the pump continue to rise. The AAA says today's U.S. national average has risen to $3.861, up from a price of 3.566 seen just one month ago. Is this enough to support RB futures?

Over the weekend , Shell said they were resuming exports from their Forcados terminal in Nigeria. They had been halted since July 12. Loadings in July were to average 220 MBPD. Quantum Commodities says that production of Forcados crude fell to 106 MBPD in July from an average of 234 MBPD produced in the first half of 2023.

Benchmark 10-year U.S. Treasury yields hit a nine-month high on Monday before retail sales data on Tuesday is expected to show solid growth in July. The dollar was firmer Monday on the back of the higher yield. Tuesday's retail sales data is expected to show a 0.4% increase in spending during the month, supporting the view that the economy remains solid. (Reuters)

Technicals

Crude oil and ULSD momentums point lower, while that for RB is positive. Crude & ULSD have stepladder down looks.

WTI support at 81.51-81.52 has been broken. Next support lies at 80.59-80.60. Resistance lies at 82.59-82.63, which is below the overnight high of 82.91.

RB support in September is seen at 2.8605-2.8616. Resistance lies at the overnight high at 2.9235-2.9255 and then at 2.9475-2.9490.

ULSD for September sees support at 3.0100-3.0122. Resistance lies at the overnight high at 3.0917-3.0927.

Natural?Gas--NG?is?down?6.7?cents

NG is down as forecast have shed some demand, even as the temperatures in the South currently remain elevated, and the West heats up. Words used to describe gas trading Monday were "stable" and "sluggish".

On Monday, the EIA said they see U.S. gas production falling by 0.147 BCF/d in September from August's level. Total output would be 98.262 BCF/d. The record of 98.5 BCF/d was set in July.

Refinitiv said Monday that they see U.S. gas demand this week at 104.3 BCF/d rising next week to 106.0 BCF/d. The demand estimate for this week is down slightly from their estimate of a few days ago of 104.8 BCF/d.

The trading range for the spot futures seen Monday was the narrowest in 3 weeks. Volume was on the low side in Mondays' action on the CME. Several sources we have seen are talking bullishly, but our momentum indicator points lower. Support for the spot futures at 2.720-2.724 has?been tested with a low so far of 2.723. Next support is seen at 2.687-2.693. Resistance comes in at 2.827-2.833, which is below the overnight high of 2.863.

Notable are some trades seen Monday in the October January calendar spread options. The $1.75 put traded 2.4 cents with the underlying spread valued at the time at $1.14. On the flip side the 75 cent call traded 3.1 cents and the $1.00 call traded 9.4 cents. We do not know if the trades were related. The spread itself is hugging the lower bollinger band the past 3 sessions. Current value is $1.177. The lows seen in May and June lie at $1.224. Momentum favors the January at present.

Disclaimer

This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.

Commodity trading involves risks, and you should fully understand those risks prior to trading. Liquidity Energy LLC and its affiliates assume no liability for the use of any information contained herein. Neither the information nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice, are that of the individual, and not necessarily the opinion of Liquidity Energy LLC