Energy Market Update 9-21-2023

Crude is up 57 cents ????November RB is up 1.75 cents ???November ULSD is up 10.22 cents

Overview

Energies are higher now after retreating overnight as the Fed has signaled it will keep rates higher for longer. The dollar strengthened on that news, thus hurting commodities. The Fed news outweighed positive DOE data seen Wednesday. Distillate prices are strong today on news of a temporary Russian ban on diesel and gasoline exports.

USLD and Gasoil prices have risen strongly today on news that Russia will halt gasoline and diesel exports starting today. ?Russia has introduced temporary restrictions on exports of gasoline and diesel in order to stabilize the domestic market, the government said on Thursday. Government officials have said that the plans are intended to restrict fuel exports only to those who make the oil products. Russia has already cut its seaborne diesel and gasoil exports by nearly 30% to about 1.7 million metric tons in the first 20 days of September compared to the same period in August, according to traders and LSEG data.(Reuters)

The Fed kept rate unchanged for now, but most Fed officials still see one more rate hike in 2023. Fed officials expect to hold rates higher for longer in 2024, 2025 than they had signaled in their June projections. The dollar rose to a 6 month high. (WSJ) Ten-year U.S. Treasury yields rose to their highest since 2007, as borrowing costs were unlikely to be cut until much later in 2024. The central bank is not expected to take its Fed funds rate target back down to around 5% until Oct. 2024, according to 30-day Fed Funds futures. Just a few weeks ago that level was expected to be reached around June. (Marketwatch)

The DOE stats seen yesterday showed commercial and SPR crude supplies combined have fallen to their lowest level since 1985. Distillate supplies fell for the first time in 6 weeks. (Quantum) Crude supplies fell by 2.136 MMBBL on the back of an almost 2 MMBPD jump in crude oil exports to almost 5 MMBPD. Crude imports fell by just over 1 MMBPD, bringing total net crude imports to a very low level of 1.450 MMBPD. Cushing supplies fell by 2.064 MMBBL, dropping them to 22.9 MMBBL, which is the lowest total amount since July 2022. Minimum operating capacity at Cushing is said to be 20 MMBBL. Product demand rose on the week. Gasoline demand rose by 103 MBPD to 8.41 MMBPD, just over last year's figure of 8.322 MMBPD. Distillate demand was healthy at 4.166 MMBPD, rising 588 MBPD. This was well over last year's rate of 3.409 MMBPD.

Distillate prices are also supported by a mishap at Shell's Pernis refinery in Holland. A diesel producing unit was shut yesterday due to a gas leak at the facility. ?Jet fuel production is also seen being impacted. The Hycon unit went offline as of Tuesday, according to monitoring data from Wood Mackenzie, which estimates the kit can process 25.4 MBPD. (Bloomberg) According to a statement from Shell, although the government was informed about the incident, there’s no clear information regarding how long the outage would last, what processing capacity was impacted or what it would mean for the fuel supply system. (Zack's)

News wires are touting the recent increase in Iranian crude exports. The news wires reporting comes on the back of the release of 5 Americans from Iran this week. Iran now exports at least 1.5 MMBPD, more than three times as much as it did in 2019. SVB International, a consultant, estimates Iran's oil production increased in August to 3.15 MMBPD, the highest since 2018. (Barron's/Reuters)

Technicals

Momentum has turned lower for the crude oils on the pullback seen the past 24 hours. ULSD and Gasoil prices have risen over the wall of highs seen in the prior 3 trading sessions. Product momentum remains negative.

WTI support for the spot futures is seen at the overnight low at 88.29-88.37. Resistance comes in at 90.87-90.89 and then at 91.55-91.57.

November RB sees support at 2.5245-2,5264 and resistance at 2.6260-2.6280.

November ULSD has resistance at 3.35 and then at 3.3785-3.3790. Support is seen at the prior 2 lows at 3.2148-3.2161.

Natural?Gas?-?October?NG?is?down?1.0?cent

NG is lower as fall begins in 2 days bringing "benign weather". (NGI) ?The lower weather demand is outweighing the positive support that comes from the EIA data today, which is seen reducing the storage surplus.

NG prices suffered Wednesday as the LNG facility at Cove Point, MD is set to enter maintenance from today (Sept.21) until the 29th. The facility has capacity of 0,8 BCF/d. Analysts at LSEG noted that one week would be a "very short" maintenance outage since the plant typically shuts for about three weeks every autumn. In 2022, it shut from around Oct. 1-27, according to LSEG data. (Reuters)

LSEG forecast U.S. gas demand, including exports, will ease from 95.6 BCF/d this week to 94.5 BCF/d next week. This is down from their forecasts of a few days ago of 96.0 BCF/d and 96.3 BCF/d respectively.

Chevron has accepted recommendations made by Australia's industrial tribunal, the Fair Work Commission, to end a dispute with unions at its liquefied natural gas (LNG) facilities in Western Australia, a company spokesperson said on Thursday, as per Reuters reporting. A union official, who declined to be named, said members were in a meeting to discuss the Fair Work Commission offer. The move raises the possibility the parties could reach a deal that could call off strikes hours before the two sides appear before the Commission. After hosting three days of talks between the parties earlier this week, a senior figure at the Commission on Thursday published a set of terms to try to resolve the dispute prior to the hearing. The Commission is set to meet Friday for hearings.

TTF prices are down just a small bit today on the news out of Australia and improved Norwegian gas flows. Gas capacity at the giant Troll field is ramping up after repeated delays, according to network manager Gassco AS. However, works on the on network that delivers supplies to a terminal in the UK are taking longer than planned. Europe’s gas stores are 94.4% full, latest data from Gas Infrastructure Europe showed. Yet, a gas trader, quoted by Reuters said that gas demand for heating and power is forecast to increase in the day ahead amid an expected drop in temperatures and wind speeds that may drive prices up. (Bloomberg/Reuters) There is still a gap on the downside from 33.755 to 33.48 on the October TTF chart. Current pricing is near 36.5 Euros/ Mwh.

Today's EIA data is seen as a build of 67 BCF, as per news wire surveys. This compares to last year's build of 99 BCF and the 5 year average build of 84 BCF.

NG DC chart based momentum has turned negative. Support for October is seen at 2.637-2.640 and then at 2.600-2.604. Resistance above lies at 2.777-2.782 and then at 2.865-2.872.

Disclaimer

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