Energy Market Update 9-22-2023

Crude is up 96 cents ??November RB is up 1.64 cents ?????November ULSD is up 98 points

Overview

Energies are higher on the back of the Russian ban on diesel and gasoline exports. Russia exported 4.817 million tons of gasoline and almost 35 million tons of diesel last year. (LSEG) The Russian news is outweighing "demand fears driven by macroeconomic headwinds and high interest rates", according to Reuters reporting.

But, Gasoil prices retreated in Asia as the market there sees the Russian ban as lasting a short time. (Quantum)

Russia's Transneft suspended deliveries of diesel to the key Baltic and Black Sea terminals of Primorsk and Novorossiysk on Friday, state media agency Tass said. (Reuters) Russia ships around 1 MMBPD of diesel, according to ING. "How severe of an impact the loss of Russian diesel has on the global market will really depend on how long the export ban is in place," the bank says in a note.

While the Western hemisphere struggles to keep refinery output up. Shell's Pernis in Holland is said to be expected to restart their hampered unit by this Monday. (Reuters) There have been 124 unplanned mechanical issues reported at U.S. refineries in the first three quarters this year, up 53% from the 81 in the same period last year, energy research firm IIR said. Compressor failures, loss of steam, tube leaks and similar issues are types of mechanical outages. (LSEG)

The Eurozone flash Composite PMI for September issued today rose slightly from August's 33 month low reading. September's reading was 47.3, up from last month's reading of 46.7. ?But, the belief of analysts is that the Eurozone will contract this quarter. A Reuters poll is calling for a flatline number. "Unlike in the winter half-year of 2022/23, the economic weakness is not concentrated in Germany, which has suffered particularly badly from high energy prices," said an analyst at Commerzbank.

Hydropower generation in Asia has plunged at the fastest rate in decades amid sharp declines in China and India, data shows, forcing power regulators battling volatile electricity demand and erratic weather to rely more on fossil fuels. Asia’s hydropower output fell 17.9% during the seven months through July, data from energy think tank Ember showed, while fossil fuel-fired power rose 4.5%. In some cases, the hydropower output plunge was a result of efforts to conserve water and alter supply patterns. Asian power generation from wind and solar increased 21% in the seven months to July, Ember data showed. (Reuters)

Technicals

Momentums are negative, but the picture is a bit more muddied than that. Crude and RB are having inside days, while November ULSD tried to rise over the resistance wall that seemed to be created earlier in the week.

That ULSD resistance wall lies between 3.3269 and 3.3346. November ULSD seems to have created a floor above 3.20 from the prior 4 sessions. November ULSD sees support at 3.2578-3.2601 and then at 3.2386-3.2417. Resistance lies at 3.3510-3.3530 and then at 3.3765-3.3785.

November RB sees support at 2.5323-2.5338 and resistance at 2.6260-2.6280.

Spot WTI futures see support at 88.29-88.37. Resistance lies at 91.55-91.57 and then at 92.00.

Natural?Gas--November?NG?is?up?5.7?cents.

NG is up as Thursday's headline EIA number was supportive and the energies rally back.

NG and TTF are up even as the labor dispute in Australia has been settled as both parties have agreed to terms on pay and working conditions proposed by the Fair Work Commission. Union agreements are said to last 4 years, as per Reuters reporting.

TTF prices have risen today even in the face of the Australian labor dispute settlement. TTF prices seem to be underpinned by supply concerns, as the Norwegian Troll field has experienced some hiccups this week in returning production and the news of the lower feed gas volume in the U.S. is worrisome.

Feed gas volume was on track to fall to a three-week low of 11.6 BCF/d on Thursday due to the shutdown of Berkshire Hathaway Energy's 0.8 BCF/d Cove Point in Maryland for annual maintenance and a reduction at Cheniere Energy's Sabine Pass in Louisiana. ?Gas flows to Sabine were on track to drop to a one-month low of 3.6 BCF/d on Thursday from an average of 4.5 BCF/d over the past several weeks. (Reuters)

LSEG forecast U.S. gas demand, including exports, will ease from 95.3 BCF/d this week to 93.7 BCF/d next week. This was a further reduction of a total of 1.1 BCF/d from estimates seen the day before.

The EIA storage data seen Thursday showed an increase of 64 BCF. This beat the news wire survey estimates by 3 BCF. Yet, the number was seen by some as slightly negative due to the increase in storage seen in the key South Central region. A drop had been expected there due to the recent heat that had engulfed Texas. Total storage rose to 3.269 TCF. This is 410 BCF/14.3% over last year's total and 183 BCF/5.9% over the 5 year average.

November NG has a double bottom from today/yesterday at 2.832-2.834. There is a major low from June just below that at 2.825. Resistance is seen at 2.963-2.966 and then at 3.004-3.009.

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