Market Update 2-10-2023

Crude?is?up?75?cents???????RB?is?up?2.59?cents?????ULSD?is?up?5.66?cents

Overview

Energies are higher as Russian Deputy Premier Novak said that Russia would voluntarily cut their crude oil output by 500 MBPD in March.

"We will not sell oil to those who directly or indirectly adhere to the principles of the 'price ceiling,'" Mr. Novak said.?Analysis says that the crude oil cut announced may lead to Russia cutting their domestic refinery runs, while crude supplies could remain robust.?Kpler adds that the reduction so far has only been announced for March and Russia’s output could rebound after that. (Bloomberg) The general belief is that the Western sanctions are having an effect on Russia. Limited tanker availability could be hindering Russia's efforts to divert refined oil to other markets, according to UBS analysis. (Reuters)

Adding support to energies is the continued supply outage from Turkey. Exports of Azeri oil from Turkey are unlikely to resume until next week as authorities check for earthquake damage at Ceyhan. (Quantum)

Goldman Sachs has lowered their Brent forecast for 2023 to $92 from their prior forecast of $98. They see Brent prices reaching $100 only by December after they formerly had expected that to happen by mid-2023. Goldman says that higher supply from Russia and the U.S. will lead to a small surplus of 150 MBPD in 2023. (This forecast alteration obviously came before today's news out of Russia.) Goldman downgraded their demand outlook for the U.S. and Europe due to the warm winter experienced in the Western hemisphere and due to less switching from gas to oil demand as LNG/NG prices have fallen so much. Goldman sees Brent averaging $100 in 2024, down from their prior estimate of $105. (OIlPrice.com) Hedge fund manager Pierre Andurand remains bullish, however, telling the Financial Times that oil could hit $140/bbl later in 2023 on a Chinese demand recovery.

Quantum highlights the high level of middle distillate and gasoline supplies in Europe. Refined product stocks in the EU-16 hit a nine-month high in January on higher gasoline and diesel supply, as European crude runs reached their highest for the month in three years. Quantum reports that ARA diesel/gasoil stockpiles reached 2.49 million tonnes this week, which is 50% over year ago level. Stockpiling in recent weeks ahead of EU sanctions on fuel oil products from Russia has been cited as a further cause for the high level of inventories, besides the higher refinery run rate. But, both gasoline and middle-distillate stocks are still relatively tight, according to Euroilstock data, around 8-9% below their five-year average for the month.

Technicals

Momentum?remains?positive?for?the?energies?as?WTI?tested?$80?today.

WTI spot futures have resistance above at 80.30-33, which is the overnight high. Support lies at 77.97-98, then at 77.08-10.

March RB support lies at 2.4400-25, then at the double bottom seen the prior 2 sessions at 2.4045-64.

ULSD?for?March?has?support?at?2.7882-2.7905?ad?resistance?at?2.9300-11.

Natural?Gas?--up?2.2?cts

NG is up slightly as opposing forces of tepid weather demand in the immediate face off against a supportive EIA number seen yesterday. Some support today is said to be coming from a cooler forecast being teased for the end of the month. (NGI)

Yet,?Next?day?Henry?Hub?pricing?remains?below?$2.50.

The EIA data seen yesterday showed a draw of 217 BCF. This beat estimates that were about 15-20 BCF lower. The draw reduced the surplus to the 5 year average to 117 BCF (+5.2%). The surplus to last year though grew to 233 BCF (+10.9%). The prevailing belief though is that the next few weeks data will widen the surpluses.

News from Europe and Asia shows prices there are languishing. Warmer than usual weather and stockpiling ahead of winter have left both continents with ample supply. JKM physical prices at $15.714/mmbtu are said to be the lowest since August 20,2020, as per Quantum reporting. The March JKM futures settled yesterday at $17.915. TTF prices have fallen to the low 50 Euro/MWH area this week, as mild weather caps demand, Bloomberg says. Today's price of 53.05 Euro/Mwh equates to $15.55/mmbtu. The expected resumption of supply from Freeport is seen as weighing on TTF prices as well, Bloomberg says. Even in the face of this current environment, Equinor's CEO says that Europe must cut NG consumption so as to be able to refill storage as Russian gas will be less available in 2023 compared to 2022. (Reuters)

Yesterday, the FERC approved Freeport LNG's request to return ship loading to service at its long-idled export plant. Freeport was on track to receive about 0.069 BCF of pipeline gas on Thursday, according to Refinitiv data. Freeport has received an average of 0.034 BCF of feedgas since Jan. 26 when federal regulators approved the company's plan to start cooling parts of the plant. FERC said this authorization to "return to service LNG Loop 1 circulation and dock 1 ship loading" does not grant authorization to place liquefaction trains or other remaining facilities back into service. A hearing is set for tomorrow (Feb.11) to allow Federal regulators to hear local community comments regarding the restart of the Freeport facility.

Technically we see the market stuck as suggested by the sideways pattern seen over the past 8 days. A supportive element at present is the double bottom seen on the weekly chart at 2.341 / 2.350 from last week and this week. Also supporting is the weekly chart showing a very oversold condition. A move over resistance at 2.612-2.615 would put NG on much firmer footing we believe.

Disclaimer

This e-mail, its contents, and any attachments are intended solely for the addressee(s) shown above, The e-mail and its contents are provided to you 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.

This e-mail message and any attachment to this e-mail message contain information that may be legally privileged and confidential from Liquidity Energy, LLC. If you are not the intended recipient, you must not review, transmit, convert to hard copy media, copy, use or disseminate this e-mail or any attachments to it. If you have received this e-mail in error, please immediately notify us by return e-mail or by telephone at and delete this message. Please note that if this e-mail message contains a forwarded message or is a reply to a prior message, some or all of the contents of this message or any attachments may not have been produced by Liquidity Energy LLC.

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