Market Update 7/23/2019

Energies are down a bit (except RB which is up a bit), trading in a relatively narrow range as the ying yang of slower demand versus supply concerns continues. Yesterday the IEA executive director said that emergency oil supplies were ample "for an extended period" to cover any supply disruption from the Persian Gulf. He reiterated their view that supply outstripped demand in the first half of this year by 900,000 bpd (Platts).

Chinese state owned refinery runs rates were said to have risen on avge to 81 % in July from 79% in June (Platts).

Tropical storm Barry has had a lingering effect on Gulf Coast sour crude oil values with Mars grade crude Monday trading at the widest versus cash WTI since mid-March at $7.50 premium. LLS has been dragged up as well to + $7.05. But, the 2nd mth values for these crude grades are not as firm indicating a need for prompt barrels due to the production losses from the storm. First to 2nd month Mars traded $3.60 Monday, the widest since Jan22,2014 (Platts).

Platts describes how jet fuel continues to carry a premium over diesel fuel as it has for much of the year. The trend is poised to continue until winter. The premium is seen as a function of strong demand for jet and also due to the closure of the PES refinery. Diesel is usually the most expensive fuel refineries produce given its low sulfur content and wide industrial and agricultural uses. But, jet has sustained a premium in most US markets this year amid strong summer demand and supply concerns. Also, we are reminded that diesel usage this year was hurt by the floods in the Midwest which delayed and reduced farmers' plantings. Jet fuel for Colonial's prompt cycle peaked July 10 at front-month NYMEX ULSD plus 2.25 cents/gal, its highest spot price since Hurricane Harvey. Excluding a two week period after Harvey landed, this summer was the first time cash prices were at a premium to futures since September 2014. As summer comes to an end and jet fuel demand dissipates, the price spread between jet fuel and diesel should return to normal. The prompt USGC jet swaps market is more steeply backwardated than diesel and it flips back to a discount by the fourth quarter.

Platts also reports that some Asian refiners might look for more non Mideast crude oil, seeking to avoid some of the risk of shipping thru the Straits of Hormuz. The IEA says that 18 mln bpd goes thru the Straits of Hormuz. One of the key concerns is the increased presence of naval vessels in the Persian Gulf that could lead to slower vessel traffic and even force shipping in convoys escorted by naval ships, leading to longer queues and higher voyage costs, ship brokers said (Platts).

Iran is said to be storing a lot of crude oil in China. The oil is said to be bonded --meaning it has not had to pass customs and is thus not in violation. But, some may be nervous of the release of a lot of barrels should Iranian sanctions be eased and or lifted. More oil is said to be en route from Iran to China now (Platts). Yesterday, the United States slapped sanctions on a Chinese company for importing Iranian crude in violation of US restrictions on Iran’s oil industry (kpax.com).

API data is seen with a draw of crude oil between 3,4 and 4,4 mln as per Reuters and Platts surveys. Platts survey has gasoline drawing by 1,13 mln, but distillate gaining 1,7 mln bbls.

Technically, the energies are seeing downside momentum waning with RB trying to hold above support at 18208-26, tested with a low of 1.8220, below that support lies at 17975-18005. Resistance lies above at 18667-80.

ULSD August futures support lies at 18856-70 (the low is 18857), then 18687-18708 with resistance at 19076-89 (the latter is the high) then resistance is seen at 19280-19305.

Sept WTI sees resistance at 5682-83 and support at 5510-12.

NG is near unchanged in the spot futures as the technical picture is improving (see below). NG was said to have been boosted Monday by some forecasters calling for temps to heat up somewhat at the end of July into early August (WSJ).

Technically NG registered a key upside reversal on Monday, making a fresh low for the recent wave, but settling over the high of the previous session. The implication here is fresh sellers have dried up -or shorts are seeking to cover. We note that in 5 of the past 6 yrs, from 2013 to 2018, the NG spot futures contract bottomed for a while during the time between July 16th to August 8th. Thus, we are in the time period. The curve was supportive Monday as well with September gaining 1,5 cts on January in CME futures trading.

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.

Notice: 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 (609)-716-1500 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 LLC.