Energy Market Update 10-2-2024

Crude is up $2.06 RB is up 4.61 cents ULSD is up 6.11 cents

Overview

Energy prices are higher, scaling over yesterday's highs, as tensions remain high in the Mideast.

"Israel bars UN secretary general from entering country ": reads a Reuters headline. Israeli Prime Minister Benjamin Netanyahu vowed late Tuesday to retaliate against Iran, which he said "made a big mistake tonight and it will pay for it." Washington said it would work with longtime ally Israel to ensure Iran faced "severe consequences" for Tuesday's attack, which Israel said involved more than 180 ballistic missiles. Israel will launch a "significant retaliation" within days that could target oil production facilities inside Iran and other strategic sites, U.S. news website Axios reported on Wednesday citing Israeli officials. The Israeli military said on Wednesday that regular infantry and armored units were joining ground operations in southern Lebanon, stepping up pressure on Hezbollah, as Israel prepared to retaliate against a barrage of Iranian missile strikes. The addition of infantry and armored troops suggests that the operation has moved beyond limited commando raids. Iran said on Wednesday its missile attack on Israel, its biggest military assault on the country, was over, barring further provocation, while Israel and the United States promised to hit back. In a statement on state media, the general staff of Iran's armed forces said any Israeli response would be met with "vast destruction" of the latter's infrastructure.

It also said it would target the regional assets of any Israeli ally that got involved. The Iranian ballistic missile attack against Israel on Tuesday was larger, more complex and involved more advanced weapons than the strikes in April, experts said, putting greater stress on missile defenses and allowing more warheads to get through. (Reuters/MarketWatch)

API Forecast Actual

Crude Oil Unch/-1.3 -1.46

Gasoline -0.1/-0.4 +0.9

Distillates -1.5/-1.7 -2.67

Cushing n/av +0.7

Runs -0.5/-0.9% n/av

Saudi Arabia's oil minister said that oil prices could drop to as low as $50 per barrel if OPEC+ members do not stick to agreed-upon production limits, the Wall Street Journal reported on Wednesday. He is said to have singled out Iraq, which overproduced by 400 MBPD in August, according to S&P data, and Kazakhstan, whose production is set to rise with the return of the 720 MBPD Tengiz field.

An OPEC+ ministerial panel scheduled to meet on Wednesday is unlikely to recommend any changes to policy, allowing the group to start gradually increasing production from December, two sources from told Reuters. One source added that the meeting is likely to reaffirm the need for member countries to comply with their production targets under the deal.

Technicals

Technically the rally of the past 2 days has turned momentum positive for the crude oils and distillates on the DC charts.

WTI spot futures have resistance at the overnight high at 72.49 and then at 73.50-73.52. Support is seen at 70.44, just below the overnight low of 70.57. Next support is seen at 69.61-69.73.

RB for November sees support at 1.9750-1.9768. Resistance lies at 2.0347-2.0359 and then at 2.0549.

November ULSD sees support at 2.1992. The overnight low is below that at 2.1916. Resistance comes in at 2.2774-2.2785 and then at 2.2958-2.2978.

Natural Gas-- NG is up 7.9 cents

NG prices have risen to their best value since mid-June as some heat is seen returning to portions of the U.S. and the storage surplus is seen shrinking in tomorrow's EIA data. Also supporting NG could be the lower production figure seen Tuesday. The Mideast tension is also likely having a spillover effect with TTF prices having risen earlier today to a 6 week high.

TTF prices rose today to their best value since the spike high seen on August 12. Currently though TTF prices are lower on the day. The spot futures tested the DC chart's upper bollinger band. Resistance at 40.43/40.45 Euro/Mwh was tested with today's high of 40.545 Euro/Mwh. Above that resistance lies at the August 12th high at 42.90 Euro. Support lies at 36.41 and then at 34.68 Euro/Mwh.

Lower 48 output in the U.S. fell by 1.6 BCF/d to 99.8 BCF/d on Tuesday, following a first day of the month pattern, but this production number was expected to be revised higher, per Wood Mackenzie. (NGI)

Feedgas volumes have fallen in the past few days. Celsius Energy reports that LNG feedgas demand was revised sharply lower to 11.1 BCF/d in Monday’s late-cycle data, the lowest since July 19, due to drops in volumes to Cameron & Sabine Pass pants. Per Tuesday’s early-cycle data, feedgas was seen recovering to 11.9 BCF/d, still down -0.7 BCF/d from last year. The lower feed gas volume is due to maintenance being performed at the plants mentioned.

Evidence of the heat coming are the temperatures in Houston, that are seen as much as 10 degrees over average in the coming 2 weeks. Houston may set a record high tomorrow Thursday. Birmingham, Alabama will see temperatures as much as 10 degrees above average in the coming week. (weather.com)

More than 1 million customers in the Southeast were still without power Tuesday afternoon due to the effects of Hurricane Helene. (USA Today)

Technically NG has positive momentum that is getting overbought basis the stochastic indicator on the DC chart. It is overbought basis the DC chart's RSI indicator, which remains over 70. Resistance lies at the psychological $3.00 level, which was touched today. Above that resistance is seen at 3.045-3.050 from data from the November daily chart. Support comes in at 2.865-2.870.

Disclaimer

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