Market update

Energies are higher helped by the large draw in crude in yesterday's DOE data, the supply outage in the Gulf of Mexico and yesterday's confrontation in the Persian Gulf between a British naval ship escorting a tanker and Iranian vessels.

UK warship stops Iranian attempt to ‘impede’ BP tanker Wednesday (BBC.com) British government says three boats tried to block its journey in Strait of Hormuz.

About 600,000 bpd of crude output in the Gulf of Mexico was said to be out yesterday as per data from the Bureau of Safety and Environmental Enforcement. This is roughly 1/3 of the total Gulf's crude output...Now the concern may be shifting to the refinery interests in the Gulf as flooding rains are expected as Barry is set to make landfall this weekend in the North Eastern portion of the Gulf... New Orleans got 8 inches of rain Wed --and some 15 more could fall due to the storm. The market is reminded of the refinery outages seen in the Gulf 2 years ago when a hurricane affected operations there.(Platt's/ Reuters)

Yesterday's DOE data was supportive for crude oil as the draw seen was 9,499 mln bpd --well above the forecasts for -2,4/-4,2 mln bbls. Crude imports fell by 283,000 bpd and crude exports rose by 58,000 bpd for the week. Refinery runs rose by 148,00 bpd --with Gulf Coast operating capacity rising to 98% , which is the highest since December (Reuters)....the one drawback for crude oil is that US crude production rose by 100,000 bpd to a total 12,3 mln bpd..... Gasoline stockpiles fell by 1,455 mln bbls pretty much in line with estimates seen calling for a draw of 1,2 to 2,0 mln...gasoline demand rose to 9,754 mln bpd ---up 262,000 on the week.

Distillate stockpiles rose by 3,729 mln --more than the expected +0,9 /+1,4 mln.

Distillate demand in the Midwest is seen remaining sluggish going forward as the recent flooding there will still have a negative impact on farming -with tillage of crops coming later than expected in the 3rd to 4th quarter and being lower than expected as less acreage was farmed this year. ....Midwest diesel values are said to be at a discount of 7,5 cts vs futures --the lowest since 2015 for this time of year. (Platts)

Meanwhile in Asia, gasoline values have ticked up on stronger demand and the outage of the PES refinery in Philadelphia. Aug/Sept spread in Asia has recovered 31 cts since the beginning of the month. (Platts)

Notable is preliminary data from the CME shows a very large open interest increase for RB futures from yesterday's activity which we believe are mostly new longs ---increases are showing in the Sept 2019 thru Jan 2020 contracts.

We reiterate the market's memory of the great impact that a hurricane had on refinery operations 2 years ago in the Gulf region.

Technically the energies are firm having breached recent resistance level and having moved firmly over their DC mid bollinges and having positive momentum.

WTI spot futures have resistance at 6092-94 ( the high of the session)-then at 6140-41 ---support lies at at 6028 (the July 1rst high) ( the low today is 6033)---then support lies at 5970-80.

Brent futures moved over the prior wall of resistance at 6675-85 ( testing it back again today on the low of 6676)-- support below that lies at 6576-79---resistance is above at 6814-23.

RB August futures have support at 19984-95 then at 19784-87--with resistance seen at 20253-59 ( tested with a high of 20378)--above this resistance is seen at 20400-12.

ULSD spot futures support lies at 19918-39 ( the low is 19876)--then support lies at 19775-76. Resistance comes in at 20200-15 ( the high is 20181)

NG is up about 2 cts --but is nearly 2 cts off its high seen this morning.

Output in the Gulf has been reduced by just about 1/2 BCF due to the shut ins.That is 18% of the Gulf's NG output.

Some see the impending storm as a possible drag on demand as so much rain and cloud cover may lower usage.

The heat though in much of the country is still in the forecast.

EIA data due out today is seen as a build of 73 bcf as per WSJ survey. This compares to last year's +55 bcf build and the 5 yr avge build of 71 bcf.

One colleague yesterday who believes that a short squeeze may be forthcoming suggested that NG could be heading to

2.65 ---this may be hard to achieve as we see chart resistance in the 2.54 area and as well there are key Fibonacci retracement levels even ahead of that ---the August daily chart has a .618 retracement level at 2.512 of the 2.745 to

2.134 move ; while the DC chart .618 move from 2.700 down to 2.159 would be achieved at 2.493

Technically NG spot futures remain firm --with support seen at 2.444-45 ( the low is 2.432)--then support lies at 2.418-26.

Resistance comes in at yesterday's high of 2.489---then at 2.514-2.516.

As has been the case the past few sessions-- preliminary CME data for NG futures shows a large drop in August open interest from yesterday's action -which we believe is related to the rolling and or liquidation of positions by index funds.

Despite the slight pressure on the August due to the rolling ...August gained on october yesterday and has done so further today ( now about 2,o cts Oct over---it peaked yesterday at 3,3 cts Oct over.)-- which we suspect is a function of good demand currently due to weather and the supply shut in in the Gulf.

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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.