Energy Market Update 7-21-2023

Crude is up $1.05    September RB is up 4.5 cents    September ULSD is up 6.18 cents

Overview

Chinese stimulus is in focus supporting energies today. Also, new accounts talk of tightening supplies. We detail such for products below based on a Reuters' analysis. product prices are leading the way up today.

On Friday, Chinese authorities unveiled plans to help boost sales of automobiles and electronics to shore up its sluggish economy. "The announcement remains short on detail but notions of China buying more cars gives rise in hope for oil investor bulls," one analyst wrote. This news comes on the heels of disappointment in China not lowering interest rates Thursday. Also, some comments seen today re the stimulus measures suggest disappointment at measures aiming ast the consumer market. The steps failed to impress investors who have been clamoring for stronger stimulus. (Reuters)

Gasoline prices at the pump in the U.S. this week have risen over those seen the month prior for the first time in a month. Today, the AAA says that the average retail rice for gasoline at the pump is $3.587, versus a price of $3.581 seen one month ago.

A Reuters analyst details how distillate supplies are low and will struggle to be replenished. This week's DOE data shows distillate supplies at 118 MMBBL, which is 21 MMBBL below the 10 year average. Besides last year's lower figure of 113 MMBBL, this year's supplies are the lowest seen since 2004. In Europe, distillate supplies are 30 MMBBL below their seasonal average. Without a drop in economic activity, U.S. distillate supplies will be hard pressed to rise seeing the low level in Europe and the fact that refiners are running as is at a high capacity level currently. The inability for distillate supplies to rise is due to the fact that 75% of U.S. distillate use is generated by trucking, railroads and manufacturing. Thus without a weaker U.S. economy, supplies will remain below average. The analyst adds that gasoline supplies are 13 MMBBL below their 10 year average.

Technicals

September RB has forged a fresh high seen since June 16,2022. September ULSD has risen to its best value since early March.

WTI has resistance at the recent high on the DC chart at 77.30-77.33. The 200 day moving average on the DC chart intersects at 77.20. Support comes in at the overnight low at 75.69-75.72.

September RB sees support at yesterday's high at 2.7087. Having pierced resistance in the 2.74 area from data from May/June 2022, the best next resistance we see is the high established in June,2022 near 2.81.

ULSD for September sees resistance at 2.7432-2.7444 then at 2.7645-2.7657. Support comes in at 2.6814-30. The low overnight is below that at 2.6614.

Natural Gas--August NG is down 2.6 cents

NG spot futures have "slipped" to quote WSJ commentary, but remain well on track for the first weekly gain in 4 weeks as demand and EIA data are seen as supportive.

NG rose Thursday after the release of a bullish EIA number, adding to the boost in prices this week seen due to heat demand and lower recent production level. The EIA reported a build of 41 BCF, which was 6-7 BCF below estimates seen. This puts total storage at 2.971 TCF, which is 575 BCF (+24.0%) over year ago level and 360 (+13.8%) over the 5 year average.

ERCOT is projecting further record power usage in Texas next week. (Reuters) Refinitiv forecasts U.S. gas demand, including exports, would rise from 105.7 BCF/d this week to 106.8 BCF/d next week. These estimates are down from those seen Tuesday of 108.6 BCF/d for both this and next week.

The increase in feedgas demand has been supportive this week. Refinitiv says that gas flows to the seven big U.S. LNG export plants have risen to an average of 12.8 BCF/d so far in July from 11.6 BCF/d in June.

TTF prices today have risen over 30 Euros/Mwh ($8.81/MMbtu) after hitting a low of 24 Euros/Mwh ($7.03/MMbtu) earlier in the week. ANZ Bank analysis says prices have risen due to supply disruption fears and strong demand as record heat engulfs much of Europe. (MarketScreener) Regarding supply disruption fears, Reuters quotes a trader saying : "tensions heating up on the Russian side with the mention of quotas for energy exports,". Reuters commentary adds that lower wind and solar generation have also supported TTF prices.

Technically NG has positive momentum as the recent high of 2.839 for spot NG seen end of June is in view. Resistance below that lies at the double top from Thursday/today at 2.786-2.789.The upper bollinger band ion the DC chart lies at 2.798. Support for August NG is seen at 2.692-2.696.

Disclaimer

This article and its contents are provided 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.

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