Market Update 11-2-2022

Overview

The energy market seems consumed with rumors the past 24-36 hours. Energies tried to rally on the rumors and supportive API data fr crude oil.

The market attempted to rally on the back of social media rumors that China was relaxing Covid restrictions. Those rumors are unfounded with the Chinese Foreign Ministry saying that they are unaware of any such plan. (Quantum)

Another rumor swirled yesterday that Saudi Arabia was on high alert for a potential attack from Iran. Saudi Arabia has shared intelligence with the U.S. warning of an imminent attack from Iran on targets in the kingdom, putting the American military and others in the Middle East on an elevated alert level, said Saudi and U.S. officials. (WSJ)

API data was supportive for gasoline and crude, but not so for distillate. The large crude draw is seen due to the US unwinding the SPR release. The government sold a smaller-than-normal, 1.9 MMBBL of SPR last week, which could explain the large draw and may give a glimpse of potentially-large inventory declines over the coming weeks once the SPR program ends, as per WSJ reporting.

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

Crude?Oil????????-0.2/+0.3?????????????-6.53

Gasoline?????????-0.9/-1.3?????????????-2.64

Distillate?????? ?-0.7/-0.8????????????+0.865

Runs???????????????+0.5%?????????????? ?n/av

Cushing???????????n/av?????????????????+0.9

Platts and Quantum Commodities detail the weakness in gasoline margins in Asia. Quantum says the 92 RON gasoline crack in Singapore was -$2.89, which they say is close to the post pandemic low seen this week. Platts says the 4th quarter gasoline crack in Singapore versus 2nd month Dubai averaged $2.79 as of October 31. This is down from the 3rd quarter average of $10.17. Gasoline and jet fuel demand in Asia are weak due to China's Covid policy. Gasoil supplies in China have been seen as tight as it is peak season for fishing, harvesting and construction. (Platts) But,today, Quantum says that the physical jet price and diesel swap and crack are at 4 week lows. Weakness in LSGO in Europe was cited as a driver for the weakness in diesel pricing in Asia. November Gasoil (LSGO) on ICE is trading at its lowest value since October 5, as per the attached chart.

Technicals

Similar to the Nov Gasoil, ULSD on the DC chart has hit its lowest value since October 5. Momentums for the products point lower, that for crude points higher.

WTI has support in spot futures at 85.90-93. Resistance lies at the overnight high at 8973-79.

RB for December sees support at 2.5684-2.5700. Resistance lies at 2.6687-90.

December?ULSD?has?support?at?3.5558-3.5589?and?resistance?at?3.6608-31.

Natural?Gas

December NG is back over $6 as the 11-15 day forecast has turned cooler and US NG production has fallen quite a bit in the past few days versus the high level seen in October.

Today's NG output level is said to be 96.3 BCF/d as per Genscape data, down from October 31's level of 100.3 BCF/d.

Technically NG still has positive momentum. But, the past 3 sessions show lower highs. Yet, overall we wonder if the market is not stuck in a range of $5.50 to $6.50. For now we see resistance at the DC chart gap at 6.400-6.409. Support lies at 5.823-5.830. The overnight low is 5.787.

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