Energy Market Update 6-26-2024

Crude is up 46 cents      August RB is up 1.43 cents       August ULSD is up 2.24 cents

Overview  

Energies are higher as the themes of geopolitical tension and expected summer demand support the market. The rise in prices today comes even as the dollar has strengthened a bit overnight, and more importantly API data showed builds in crude oil and gasoline versus expectations for draws.

API              Forecast        Actual

Crude Oil     -0.2/-3.0       +0.914

Gasoline      -0.9/-1.29     +3.843

Distillate      -0.2/-0.62     -1.178

Cushing         n/av           -0.350

Runs           Unch/+0.3      n/av

The average retail gasoline price in the U.S., as per the AAA, stands at $3.494 today, which is the highest price in 3 weeks.

The Houthis said on Tuesday they used a missile to hit a vessel in the Arabian Sea. (Reuters) This comes after multiple attacks by Houthis on shipping in the region in recent days.

U.S. crude oil imports last month rose to a nearly two-year high as refiners scooped up heavy crudes from Canada and Latin America to process into fuels for summer driving season. Imports of crude oil rose to 3.1 MMBPD in May, the highest since July 2022, data from ship tracking service Kpler showed. Imports so far this month have remained strong, at around 2.9 MMBPD to date. The rise in imports from Canada is due to the opening of the Trans Mountain pipeline, as detailed prior. "U.S. refiners bought excess crude oil to mitigate the loss of Mexican crude," said a Vortexa analyst.  (Reuters)

ExxonMobil has said it might have to suspend operations at its 240 MBPD Gravenchon refinery in France due to striking workers blocking access to the plant. The refinery makes up around 20% of total French refining capacity.  Workers have been blocking access to the site since Friday. The strike is in response to ExxonMobil's decision to shut down a steam cracker at the refinery. (ING)

Brent crude prices have touched their "summer peak" of $86 per barrel, according to projections revealed today from analysts at Goldman Sachs. But, they add that "U.S.-led strong summer traveling activity" and strong global jet demand is continuing to support the benchmark contract. Goldman also cited the "persistent" geopolitical risks in the Mideast and Russia that "remain on the market's radar."  (Investing.com)

Technicals

Momentum is overbought on the August RB chart. WTI DC chart based momentum is negative. ULSD has neutral momentum at a near overbought condition.

WTI spot futures have resistance at the double top from Friday/Monday at 81.78-81.79 and then at the recent high at 82.41. Support comes in at 80.23-80.30 and then at 79.77-79.80.

August RB sees resistance at 2.5218-2.5228, which was almost tested overnight with a high of 2.5202. Above that resistance comes in at 2.5366-2.5380. Support lies at the double bottom of yesterday/today of 2.4803/2.4812. Below that support is seen at 2.4675.   

ULSD for August has light support at the 2.5200 area and then at 2.500-2.5025. Resistance lies at 2.5644 and then at 2.5809-2.5812.

Natural Gas -- August NG is down 6.4 cents

NG prices are lower as the market's focus the past 24 hours pivoted back to rising supply.

Tuesday's price pullback may have been a function of supply having risen to a level not seen in a while. Total domestic production has rebounded after bottoming out around 98 BCF/d in late April. Output could be taking another leg higher after Monday was revised higher by 1.6 BCF/d to 102.0 BCF/d, the first it has reached that threshold since early March, according to Wood Mackenzie data. Tuesday’s initial estimate was 99.4 BCF/d, Wood Mackenzie data showed. (NGI)

Reinforcing the increase in volume is the estimate from LSEG, which said gas output in the Lower 48 U.S. states rose to an average of 98.5 BCF/d so far in June, up from a 25-month low of 98.1 BCF/d in May. On June 12, LSEG said June output to that point was averaging 97.7 BCF/d.

Adding to the supply narrative is news of flow rising on the newly opened Mountain Valley Pipeline (MVP). Flow on the pipeline has risen to 0.69 BCF/d, or 35% of the capacity on the line of 2.0 BCF/d. (Celsius Energy)

Some blame for the Tuesday price retreat was laid to gas prices at the Waha hub in West Texas having turned negative for the first time since May as pipe maintenance trapped gas in the Permian Shale. The Permian Highway was expected to move 2.5 BCF/d Tuesday/Wednesday, versus the capacity of 2.7 BCF/d. Next-day gas prices at the Waha hub fell to negative $1/ MMbtu on June 24, down from a positive 22 cents on June 21. (Reuters)

LSEG forecast average gas demand in the Lower 48, including exports, will slide from 103.0 BCF/d this week to 100.3 BCF/d next week. Those forecasts were a total of 3.5 BCF/d lower than LSEG's outlook on Monday.

Today is the last trading day for the July NG futures.

Technically August NG has negative momentum. Support at 2.793-2.796 has been tested overnight with a low of 2.793. Below this we see support at 2.737-2.743. Resistance comes in at 2.881-2.888 and then at the double top from Monday/Tuesday at 2.951/2.953. 

Disclaimer

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