Market Update 3-10-2023

Crude?is?unchanged?????RB?is?up?28?points??????ULSD?is?up?438?points

Overview

Energies rallied to positive territory after the Non Farm Payroll data was issued after spending much of the overnight session in negative territory. The dollar weakened after the Payroll data was released and the energies rallied on the back of that. Energy prices overnight had fallen to their lowest values for the week.

The Non Farm Payroll number came in stronger than expected. 311,000 new jobs were added, well over the estimates we saw of +205,000/+225,000. But, separately from the February NFP number, Reuters reported Thursday that layoffs by U.S. companies over January and February touched the highest since 2009, with the tech sector accounting for more than a third of the over 180,000 job cuts announced.

Bloomberg reports that millions of barrels of Russian diesel are being stored at sea. This is seen as leading to less Russian exports in the future. This might have a ripple effect of Russia having to reduce crude processing rates and even maybe cutting oil production. Wood, Mackenzie sees Russia's diesel exports in the second quarter falling to 750 MBPD, from January's level of 1.1 MMBPD. Wood, Mackenzie sees Russia reducing its refinery runs by 1 MMBPD from the start of the second quarter from January's level.

Energies were hurt overnight by worries over interest rates, but also by concerns over losses seen in bank stocks globally over the past 24 hours, as concerns rise that there are unrealized losses on the banks' balance sheets from fixed income holdings. This contributed to the S&P falling to its lowest value Thursday since January 19th.

Technicals

Momentum remains negative. The past 4 sessions for the energies have stepladder down looks. But, some support could be derived from ULSD having tested its lower DC bollinger band. ULSD today fell to its lowest spot futures values seen since Jan. 25,2022.

The ULSD lower bollinger on the Dc chart intersects at about 2.6775. Support is seen possibly at prior lows at the 2.6643-53 area. The overnight low is 2.6294. Resistance comes in at the 2.7670 area.

WTI spot futures see support at 74.97-75.06, which was tested with a low of 74.77. Below this we see support at 74.31-35. Resistance comes in at 77.73-77.83.

RB for April has support at 2.5619-36, slightly below the overnight low of 2.5677. Resistance lies at 2.6580-90.

Natural?Gas-NG?is?down?2?cents

NG is lower as the tone since mid-morning yesterday is that the increasing storage surplus in the EIA data outweighs the colder weather due to arrive next week. Reuters cites less cold weather and lower heating demand over the next two weeks than previously expected for today's NG pullback. Next week's demand is seen at 119.2 BCF/d, up from this week's demand of 116.4 BCF/d.?Demand is projected at 118.9 BCF/d in 2 weeks' time.

The EIA storage data issued Thursday showed a larger than expected draw. The -84 BCF number beat expectations by 3 to 5 BCF. The immediate reaction post data was quizzical to us. We thought that the market may have tried to rally, given the better than estimated data. But, instead prices retreated by 5-6 cents, because the surplus widened versus last year to 32.1% and versus the 5 year to 21.5%.?EBW analysis sees the storage surplus peaking later in the month and then falling by 80 BCF by mid-April. (NGI)

NG prices retreated overnight even as TTF prices rebounded sharply today. TTF is being supported by colder weather arriving in Europe and by issues in France with energy supplies. The nationwide, one-week strike is expected to reduce French LNG send-out of gas to the grid by around 0.5 billion cubic meters. This is in addition to the drop in nuclear power seen in France. 22% of Frances's power supply is derived from nukes and hydro power. (Reuters) Today the April TTF futures are seen trading near 46.3 Euros/Mwh, which equates to $13.57 /MMbtu.

Reuters reports that the NE Asian LNG price for April delivery has fallen this week to its lowest value in 20 months. The price is seen at $13.50, down $1 from last week. But, the low price has stirred some buying interest from China. A Chinese state run enterprise was said to have bought 2 cargoes, with one of the cargoes said to have been priced below $12.

The EU today agreed to set a target reduction of 11.7% in energy consumption by 2030. This equates to a need for annual reductions of 1.49% in 2024 thru to 2030. To hit the target, it seems that a key aspect will be that buildings will have to be renovated to avoid wasting energy. (Reuters) Separately, in Europe the number of LNG terminals is seen rising to 35 by next year from current 27, as per Bloomberg reporting.

NG still has negative momentum, but has a double bottom at current from yesterday/today at 2.460-2.465. Below that support is seen at 2.410-2.415. Resistance lies at 2.694-2.698.

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