Market Update 10-26-2022

Overview

Energies are higher on the back of a softer U.S. dollar.?"World stocks at five-week high, but mood souring" reads a Reuters headline this morning. Energy prices first dipped overnight as API data disappointed.

The euro climbed back above parity against the dollar for the first time in a month on Wednesday after poor U.S. economic data reinforced speculation that the Federal Reserve will slow its interest rate hikes. (Reuters)

API???????????? ??Forecast??????????Actual

Crude?Oil???????+0.2/+0.6???????+4.5

Gasoline????????-0.9/-1.2??????????-2.3

Distillate???????? -1.1???????????? ?+0.6

Runs?????????????? Unch?????????????n/av

Cushing???????????n/av?????????????+0.7

Comments seen yesterday from the head of the IEA and the Saudi Energy Minister are also seen as supportive. The IEA head warned that the world is in an "energy crisis" as world LNG markets tighten and oil supply is reduced via the OPEC+ cuts. The Saudi Energy minister warned that "losing emergency (oil) stocks would be painful in the months to come. " (Reuters)

Bloomberg details the low level of diesel inventories seasonally, with the tightness seen in the Northeast being duplicated in the Southeast. Bloomberg says that diesel inventories are the lowest ever seasonally heading into winter. The supply crunch is not seen being alleviated on the East Coast for another 2 weeks with ample Colonial Pipeline shipments not arriving until November 10 and imports not arriving until the end of November.

Technicals

Rb has the best look among the energies with its momentum trying to turn positive and prices rising over recent resistance.

December RB futures have support at 2.5390-95. The low overnight is 2.5250. Resistance lies at 2.6163-85.

ULSD in December has carved out support above 3.50. Support lies at 3.5450-3.5500. Resistance comes in at 3.6425-50.

Spot WTI futures see support at 84.53-61. The low today is 84.14. Resistance above is seen at 87.17-27, then at 89.66-73.

Natural?Gas

NG is lower as November is seen as warm. The past 2 days' rally is seen as having been due to short covering. The past two days saw the largest two-day gain in 11 weeks,as per WSJ reporting.

The November options expire today with no sizable open interest in nearby strikes that would suggest end of day fireworks.

Tomorrow's EIA data is seen as slightly supportive with estimates of a build of 59-62 BCF being less than that seen a year ago (+88 BCF) and the 5 year average (+66 BCF).

Technically, the spot futures seem to have hit a wall with yesterday/today showing a double top at 5.740/5.748. December's double top is at 6.265/6.281. Momentum is positive, although the last 4 sessions suggest a near term range between the lows just below 5.40 for December futures and the double top. Some support in December futures is seen at 5.727-5.738 and then at 5.618-5.626. Resistance below the doube top lies at 6.130-6.132.

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