Morning Update 9/12/2018

Energies are higher as the API data was quite bullish for crude oil - but not for the products. Crude drew more than anticipated while products built more than anticipated. The markets are also being supported by some hurricane worries and the looming Iran sanctions. The Brent market has seen a move to backwardation in the CFD ( Contracts for Differences)market over recent days. Monday the week of Sept 17-21 was at a 9 ct contango to the week of Oct 15-19. The Sept 17-21 week is now at a 39 ct backwardation to the week of Oct 22-26 according to Platt's.

Today OPEC issued its monthly report. They reduced their 2019 demand forecast by 20,000 bpd from last month while raising their Non OPEC supply growth forecast for next year by 20,000 bpd. They see the demand for OPEC oil in the 4th quarter 1 mln bpd over the amount that OPEC produced in August. That output was 32.57 mln bpd - up 278,000 bpd from July. (Platt's/Reuters)

API                      Forecast         Actual

Crude Oil             -1,6/-2,7          -8,6

Gasoline               Unch/+0,4       +2,1

Distillate               +1,1/+2,3       +5,8

Cushing                n/av               -1,2

Runs                   -0,6/-0,9%        n/av.

Tuesday's rally was aided by firmer prices for Mediterranean crude oil in the wake of Monday's attack on the National Oil Co. offices in Tripoli,Libya and the worry that brings to the stability of Libya's oil system- although no actual disruptions of production and or loadings was heard.(Platt's)

Also on the positive side was the monthly report from the EIA,in which they lowered their US crude oil output forecast for 2019 by 180,000 bpd . In the report they also lowered their demand forecast in the US for 2019 by 40,000 bpd. 2018's demand and output numberswere left basically unchanged. They increased their price forecasts for WTI & Brent for 2018 & 2019. WTI expectation was raised by 1,2 % to 67.03 dlrs --2019's estimate was raised by 4,7% from last month's to 67.36 dlrs. 2018 Brent is seen averaging 72.84 dlrs -up 1,5% and 2019 was raised by 4,4% to $73.68 (WSJ)

There is some talk of concerns regarding product pipelines that run from the Gulf coastto the Northeast thru the Carolinas. Notable is the way station at Greensboro,NC on theColonial pipeline. Will there be wind damage, flooding issues, power outages??

Technically the energies are firm as their momentums try to swing to positive.WTI has risen over its 100 day moving average on the DC chart basis -that value lies at 6887.Resistance at 7036-43 is within sight -above which we see resistance at 7119-24. Support lies at 6902-08 then 6852-56-right by the mid bollinger (6859).

ULSD has resistance at 22712-21 then not until 22911-21. Support lies at 22454-63 ( the latter isthe low today.) -then at 22332-35.

RB support lies at 20057-65 then 19934-35-with resistance above seen at 20283 ( the low)-20290 then at 20435-46.

NG is up a further 3 cts as cash prices remain strong and a few factors related to the hurricane aresupportive.

The issue of outages in the Carolinas also may have boosted NG prices Tuesday as 12 ofthe nations' 99 nuclear reactors are in the Carolinas -- and here too concerns were raised about the nukes having to be taken down as precautionary measure in the event of loss of power to feed the units, as well as the need for them to be shut if winds reach over 73 mph.There is also a worry that the hurricane could disrupt up to 2 bcf/day of output in the US Northeast. (Platt's)

The EIA monthly report issued yesterday called for end of season NG storage to be 3,3TCF - which would be 14% below the 5 yr avge level - and would be the lowest since 2005.The EIA in the report raised their Q3 Henry Hub NG forecast by 5 cts to $2.93 - and Q4 by 6 cts to $3.14 (Platt's) --the Q4 strip as per CME values settled at 2.913 on Tuesday.

Technically NG is on firm footing - having held perfectly on a pullback to 2.785 - and with October futures rising over November - an occurrence we have never seen. This underscores in our opinion the strength in the Cash market and the need to fill storage ahead of winter - besides hurricane worries.

Resistance for the spot futures lies at 2882-84 then 2903-05. Support is seen at 2831-36 ( the low is 2826 overnight).Then support lies at 2812-24.Spot futures have risen above the 100 and 200 day moving averages. Those values lie at 2859/2841 respectively.