Market Update 9-10-2020

Overview

Energies are lower as API data disappointed. This comes on top of the EIA lowering their oil demand forecast for 2021 by 490,000 bpd in yesterday's Short Term Energy Outlook.

WSJ reporting though says that the EIA raised their WTI and Brent oil price forecasts for 2020 from last month's report by 1.3 and 1.2 % respectively. WTI is seen averaging $38.99, Brent $41.90 for 2020.

Fourth quarter Brent prices are seen averaging $44. The 2021 Brent forecast was lowered by 1 dlr to $49 from August's report. U.S. crude output is seen falling by 870,000 bpd this year. This compares to last month's decline that was set at 990,000 bpd. But the EIA says that US oil production for 2021 will be down 300,000 to 11.08 mln bpd. This is 190,000 more of a decline that they predicted in August.

RIN prices yesterday spiked to as high as 55 cts , the most since March 2018 as the Trump administration is not expected to extend biofuel waivers for small refineries. Rins settled back to 49.25 cts by the end of the day, up from 46.5 cts Tuesday. (Platts)

Reuters details that traders are booking floating storage as freight rates have dropped and the contangoes in the energy sector have deepened of late. Trafigura is said to have leased 5 VLCC's that can hold up to 2 mln bbls. BP picked up a tanker at the lowest rate seen for the year. At near $20,000, the rates are much lower than the rate of $120,000 seen in April when oil supply was much greater and the need for floating storage was greater. Diesel and Gasoil are also being loaded in floating storage,as demand has slipped due to virus lockdowns. poor weather with flooding in China and India reducing consumption, and the end of the driving season in the Northern hemisphere, as per Reuters reporting.

Reuters also describes how crude oil supply is ample with Nigeria seen still having unsold barrels from August due to less demand from China, which is said to be reselling crude cargoes received via term allocations.

API                    Forecast                         Actual

Crude oil            -0,5/-1.2                         +3.0

Gasoline            -1.9/-2.5                          -6.9

Distillate            -0.557/+0.3                     +2.3

Cushing                 n/av                           +2.6

Runs                 +0.8/+1.1%                     n/av

Technicals

Technically the energies are on better footing than 2 days ago basis their momentum, which is turning positive for RB and the crude oils. The energies confirmed their mean reversion setups from 2 days ago. But we would like to see settlements over certain levels to suggest that the worst has been seen.

For WTI a settlement over 38.50-38.75 would suggest that the worst is over. Resistance is seen at the 3845-54 area. Support lies at the double bottom from Tues/Wed at 3613-16.

Brent resistance above lies at 4120, while support comes in at 3931-37.

RB support is seen at 1.0933-38 then 1.0740-60. Resistance lies at 1.1350-60 then at 1.1550-57. There is currently a double top from yesterday/today at 1.1277-92.

ULSD support is seen at 1.0605 then at 1.0462-68 . Resistance comes in at 1.1130-50.

Natural Gas

Prices are down 5 cts in the front month futures as "tame" weather and ample storage weigh, N G I reports.

The market expects a build of 66.5 bcf in todays' EIA storage data. This compares to last year's +80 bcf ad the 5 yr avge +68 bcf.

Yesterday the EIA painted a rosy picture for NG for this winter and into 2021. They see LNG exports rising to 9 bcf/day for December thru February. They are seen rising to prepandemic levels by November.Tuesday feedgas supply was said to have been 5.3 bcf . The EIA left their end of season NG storage expectation unchanged from last month's report. They see end October level near 4,0 TCF. They see a monthly average Jan 2021 pricing of $3.40. Currently the Jan 2021 contract is trading near $3.32. It reached highs of $3.432-3.433 one week ago on the CME. For the year 2021 prices the EIA says that prices will average $3.19 , much higher than 2020's average forecast of $2.16. Demand though in 2021 will be hurt slightly by the steep rise in Ng prices. Demand is seen at 79.1 bcf for 2021 vs 2020's avge of 82.7 bcf.

Technically Ng still has negative momentum and has slipped below the mid bollinger on the DC chart. We see support at 2.302-2.306 and resistance at 2.465-68. With a longer view, there is a gap to fill on th DC chart from 2.227 to 2.197. Will fall like temps lead to prices pulling back that far???

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 LLC.