Energy Market Update 9-27-2024

Crude is unchanged???? November RB is down 0.55 cents???? November ULSD is down 2.16 cents

Overview

Crude oil are steady, while products are lower as the market digests this week's news of stimulus efforts by the Chinese government and Central Bank, countered by reports of increased supply possibly from Saudi Arabia/OPEC+ and Libya.

China's central bank on Friday lowered interest rates and injected liquidity into the banking system. More fiscal measures are expected to be announced before China's week-long holidays starting on Oct. 1, after a meeting of the Communist Party's top leaders showed an increased sense of urgency about mounting economic headwinds. Reuters reported on Friday, citing sources, that megacities Shanghai and Shenzhen are planning to lift key home purchase restrictions in coming weeks, joining a long list of smaller cities that have done so to ease a years-long property crisis. On the heels of the Politburo huddle, China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of fresh fiscal stimulus. One economist, cited by Reuters, sees these measures boosting growth by 0.4%.? Chinese stocks registered their best week since 2008 on the stimulus expectations.

Adding to the FT report of the Saudis' plan to raise output come December, Reuters reported that OPEC+ will likely to go ahead with planned production increases from December, quoting OPEC+ sources. OPEC+ is scheduled to increase oil output by 180 MBPD in December. Yet, at the same time,? Iraq and Kazakhstan have pledged to cut 123 MBPD in September to compensate for earlier pumping above agreed levels. Thus, "the impact of the increment will be negligible," one of the OPEC+ sources said, referring to the December increase. (Reuters)

The BSEE reported Thursday that 441.9 MBPD / 25.25% of oil production was shut in in the Gulf of Mexico. That was down 69 MBPD from Wednesday's amount.

For the last few weeks, speculators have been wagering against oil prices like never before. Bloomberg cites concerns over increased supply and weakening demand for the bearishness. Investors who hold oil to protect against inflation have nearly vanished, and next year’s bearish price outlook is scaring discretionary traders from buying crude’s dips. Their retreat has let commodity trading advisers — trend-following funds that trade largely on technical indicators — gain even greater prominence and build up huge short bets. Fund managers have slashed their allocations to commodities to the lowest in seven years, a Bank of America Corp. survey for September showed.

Technicals

Technically crude oil and distillates are having inside trading days today versus yesterday's price ranges. RB fell to a further low overnight in this week's selloff. ULSD momentum on the November daily chart has turned negative. RB & crude oil momentums remain negative, having turned so yesterday.

WTI spot futures see support at 66.95 and then at 65.63. Resistance lies at 69.20-69.23 via the 60 minute November chart. Above that resistance comes in at 70.01.

RB for November sees support at 1.8975-1.8985. Resistance lies at 1.9781-1.9798.

ULSD for November sees support at 2.1178-2.1179 and then at 2.0974-2.0980. Resistance comes in at 2.1707-2.1716.

Natural Gas--NG is up 7.9 cents

Natural gas prices are now higher as November becomes the spot contract. Prices were lower overnight with two million customers without power as a result of Hurricane Helene, as per Weather.com reporting.

The EIA storage data showed a build of 55 BCF. But 8 BCF of this increase was due to "base gas" being added to "working gas". Without that 8 BCF addition to the data, the build of 47 BCF would have been 6 BCF below news wire survey estimates seen. Total storage rose to 3.492 BCF, which is +233 BCF / +7.15% versus the 5 year average and +159 BCF / +4.77% versus last year's level. The surplus over the five-year average has declined in 19 of the past 20 weeks. (Dow Jones)

As was seen in Wednesday's settlement, again on Thursday the 2024/2025 winter strip lost value relative to the rest of the 2025 Calendar strip. December, January and February fell by 4.3 to 4.7 cents, while from April 2025 on back settlements showed prices down by anywhere from 0.2 to 1.5 cents. Is this a reflection of a belief that the LNG export demand will be delayed until later on 2025? Is this a reflection that the storage surplus will not be wiped out until the end of the winter and thus putting the rest of 2025 on firmer footing relative to inventory?

LSEG forecast average gas demand in the Lower 48 states, including exports, will drop from 99.5 BCF/d this week to 98.5 BCF/d next week. These forecasts were +1.2 BCF/d total versus those seen Monday.

The BSEE reported Thursday that 0.363 BCF/d (19.81%) of gas production was shut in in the Gulf of Mexico. The production loss was up 50 MMCFD from Wednesday's amount.

The November contract is now also the spot futures in the TTF market. The TTF DC chart shows a stepladder up pattern. Resistance lies up at 40.45 Euro/Mwh. Support comes in at 35.20 and then at 33.75 Euro/Mwh. The TTF market has been supported recently by concerns over supply due to the Ukraine and Mideast conflicts. The concern comes even as storage in the EU as of Wednesday was nearly 94% full.? (Gas Infrastructure Europe)

Technically there is a rollover gap on the NG DC chart from the October expiration. The gap goes down to 2.690. Momentum on the DC chart is neutral and remains nearly overbought. The DC chart's upper bollinger, which lies at 2.810 has been tested this morning, with November trading as high as 2.838. The November futures have support at 2.720-2.724. The low overnight is 2.720. Resistance lies at 2.844-2.848 and then at the recent highs for the November contract at 2.887-2.895.

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