Market Update

 Energies are lower pressured by news of a partial cease fire by the Saudis with the Houthis in Yemen.(WSJ) Reuters quotes the IEA chief as saying that they are considering reducing their oil demand expectations should the global economy weaken further.

Overnight freight rates for VLCC's jumped nearly 20% after the US slapped sanctions on a Chinese shipping firm that has 7,5% of the world's fleet of supertankers. Bookings from the Mideast to Asia were affected with companies canceling bookings and seeking alternate ships. (Reuters)

Platts on Thursday carried a story with the following headline : ""Saudis spin confidence in Abqaiq recovery, but crude buyers want more evidence "" --the article mentioned that greater clarity regarding repairs to Saudi installations may be gleamed in the coming 2 weeks--first next week when OSP's are announced -they likely will rise due to tightness in supply--and then in the Oct. 10/11 period allocations will be announced for Nov loadings ..one tracking firm sees Saudi exports running 5.94 mln bpd since the 9/14 attack. They averaged 7.19 mln bpd from 9/1 to 9/13--and 6,97 mln in August.

Some risk premium may have been added to crude prices late Thursday when the US announced that they would send military personnel and equipment to Saudi Arabia. (Marketwatch)

U S equities rebounded late Thursday when the Chinese foreign minister said that the US has shown good will by waiving tariffs on some Chinese goods. He also said that China is willing to buy more US goods. (Reuters)

Technically momentum for the energies remains negative ---but somewhat supportive is the bounce off the lows made today--dec Brent filled its post saudi attack gap to 5984 with a low today of 5983.

Dec Brent support below lies at 5869-73 --resistance is seen at 6134-44

Nov WTI support at 5483-85 was tested with a low of 5475 below this support lies at 5421-26---resistance lies at 5605-11 then 5672-75.

RB failed to make a fresh low today --unlike crude and ULSD ---Dec RB has support at 15759-69 --the low today'

is 15789---resistance is seen at 16129-39 then 16253-67

NG is down 2 cts for Nov futures --now the spot contract month.

NG ended Thursday down by about 7,5 cts after a very large unexpected build was seen in the EIA storage data.

The build was 102 bcf --causing a swift drop of 6 cts in nearby spot futures pricing.

Storage is now +444 bcf/+16,1% vs last yr , but still -47bcf/-1,4% vs the 5 yr avge ---though one would expect some "stout' ( as one analyst suggested a week ago) injections in the coming weeks-and thus we should catch up to the 5 yr avge as Tudor, Pickering and EBW Analytics Group suggested a few days ago.

The question now being whether we will exceed the EIA forecast for end of season of 3,769 BCF ---current storage is 3,205 BCF.

The lower settlement Thurs. was the 8th in a row for the spot month contract --according to WSJ that is the longest such streak since 2012.

Technically, momentum is not oversold for the NG contract. The 50% retracement for the spot contract move from the August low of 2.029 to the recent 2.710 high is 2.370---October's low Thursday was 2.390 ---which one colleague said prompted him to cover short positions that he established near the high --he had been looking for a 50% retracement.

Nov futures support lies at 2390 then 2355-2360--with resistance seen at 2455-57.

Another colleague painted a less than rosy picture re NG with a longer view ---he sees U.S. NG producers still under pressure to come up with positive cash flow enough to support existing debt that comes due next year. He also suggested that hedges that producers had put on are starting to come off the books and that further hedges may be lacking to support producers' business.

He sees a possible shakeout of weaker producers in the US NG shale patch in the coming year --either thru bankruptcy or takeovers.

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