Energy Market Update 8-30-2023

Crude is up 32 cents     October RB is down  1.43 cents        October ULSD is down 3.77 cents

API data showing a large crude draw is supporting crude, but the products are lagging as the API data showed supply builds.

API              Forecast          Actual

Crude Oil      -2.0/-2.9        -11.486

Gasoline       -1.3/-1.35        +1.4

Distillate     -0.5/+0.114       +2.46

Runs           +0.1/+0.2%        n/av

Cushing        -1.135            -2.23

Hurricane jitters were also said to be supporting prices as Idalia is hitting Florida as a category 3 storm. (NBC News)  Some non essential personnel were evacuated from platforms in the U.S. Gulf yesterday, but production is said to have not been affected.

Yesterday's U.S. job openings and consumer confidence data was seen as supportive as they lessen concerns over further interest rate hikes. Job openings fell to their lowest level in 2 1/2 years. Consumer confidence in August fell to 106.1 from a July reading of 114 and a forecasted 116 level. Consumers are worried about inflation, especially in groceries and gasoline. (Reuters)

A military coup in Gabon has elicited some concern over their crude oil exports. They exported 160 MBPD to Asia between May and July. (Reuters)

The Turkish energy minister "signaled supplies" from the pipeline to Ceyhan are "close to resuming". (investing.com)

Saudi OSP's for October are seen rising to the highest level for the year as Saudi Arabia is seen extending their 1 MMBPD production cut into October. The flagship A-Light grade is expected to be raised by 45 cents, as per a survey from Reuters. Reuters reporting adds that the rise in Dubai/Mideast grade crudes versus Brent and WTI is making hauling crude from the Atlantic Basin and Americas more economical for Asian refiners.

The Indian Oil minister said that they will but oil from anyone who offers it at the " lowest possible price". (Reuters)

Technicals

Crude oil momentum is positive, Rb's is negative, while that for ULSD is neutral.

We wonder if ULSD will be supported by the strong diesel price at the pump seen in the U.S. That price today is $4.437, which is up 6 cents in the past 2 days and up 40 cents versus one month ago. ULSD October's chart shows resistance at 3.1928-3.1935. Support for October is seen at 3.1164-3.1181 and then at 3.0850-3.0860.

RB October support lies at 2.5359-2.5364 and then at 2.5050-2.5080. Resistance is seen at 2.5860-2.5875 and then at 2.6005-2.6010.

WTI spot futures see support at 80.59-80.61 and resistance at 82.43-82.47.

Natural Gas--NG is down 1.2 cents

October NG is near unchanged now, after rallying overnight as heat is seen lingering in much of the U.S. into September. NatGasWeather says that there will be " much hotter than normal US pattern next week." Dallas will see temperatures back over 100 degrees in the 15 day forecast. Their temperatures will be 7 to 11 degrees above average.

The up move in NG prices came even as there will be demand destruction in the Southeast as a result of Hurricane Idalia.

The pattern seen Tuesday of a sharp shift in the values of the winter strip versus the front end contracts has continued today. On Tuesday, December through March fell by 7.1 to 7.9 cents, while October ended the day down 3 ticks. This reminds us of the comment we wrote last Thursday : "Another colleague suggests that the winter strip is valued too greatly against the front. He says that October/December should narrow to 86 cents. Current value is near 95 cents." October December ended the day Tuesday at 84.3 cents, narrower by 6.8 cents.

Power generation from fossil fuels in the EU hit a record low in the first half of 2023, due to lower electricity demand and "persistently high oil and gas prices", as per a UK based energy analysis group. Coal and gas are too expensive, they say. A "massive push" in solar & wind is needed to support the economy in Europe. Fossil fuels generated 33% of power demand in the first half of 2023-down 17% from a year ago. Lower EU industrial output and emergency measures over the winter were said to be behind the drop. Wind and solar power generation in the EU surpassed total fossil fuel generation in May of this year. (Platts)

TTF prices are a touch higher now, after retreating overnight after Tuesday's lower close, as concerns of a full work stoppage at Chevron's Australian facilities have abated. ING analysis says that the union's notice of strike does not guarantee strike action. The parties are set to resume negotiations between now and the September 7th action date. (Quantum Commodities)

Technically NG has positive momentum. There is a rollover gap from the September expiration. That gap currently lies from 2.650 to 2.599. Support is seen below that at 2.568-2.575. Resistance comes in at 2.746-2.750.

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.

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