Energy Market Update 9-26-2023

Crude is down 36 cents     November RB is down 2.7 cents    November ULSD is down 3.1 cents

Overview

Energy prices are weaker today as the dollar index has risen to its highest level since November, 2022 as the 10 year U S Treasury note's yield is the highest in 16 years. The German 10 year bond touched its highest yield since 2011 overnight. (Reuters) Hawkish statements suggesting interest rates staying higher for longer have been heard the past 2 days from the ECB President and 2 Fed Bank Presidents -thus underscoring the higher bond yields.

Russia's easing of some of its fuel export ban Monday hurt the distillates the most. Russia eased exports for bunker fuel for some vessels and exports of high sulfur content diesel fuel. Analysts expect the export ban to be completely lifted once the harvest is over next month. (Reuters)

U.S. oil refiners are expected to have about 1.7 MMBPD of capacity offline for the week ending Sept. 29, decreasing available refining capacity by 324,000 bpd, research company IIR Energy said on Monday. Offline capacity is expected to rise to 1.9 MMBPD in the week ending Oct. 6, IIR added. (Reuters) This has been cited for some of the crude weakness the past 2 days.

Gasoline prices at the pump in the U.S. today fell to $3.838, down 4.2 cents since peaking one week ago, as per data from the AAA.

Technicals

Momentum remains negative for the energies.

ULSD has fallen below the lows of the past 12 sessions. Support for November lies at 3.0949-3.0965. Resistance is seen at 3.2148-3.2161.

Spot Gasoil futures have fallen below support on the October daily chart at 953-954. Support lies at 924.25-924.50, then at 902.25-902.75. Resistance lies at 967.75-968.50.

RB for November sees support at 2.4519-2.4539 and then at 2.4260-2.4280. Resistance lies at 2.5134-2.5149.

WTI spot futures tested support at 88.29-88.37 overnight with a low of 88.19. Resistance above is seen at 90.79-90.83.

Natural Gas--November NG is down 8.5 cents

This WSJ commentary says it all : ""the fall season has started to bring cooler temperatures to the Lone Star state and other parts of the Southern Plains, and that’s making investors reluctant to buy the commodity."

TTF prices are giving back some of Monday's strong gains. TTF prices were underpinned Monday by news that Norway had delayed the restart of the Troll field. There will be further cuts to the Troll field's production, due to a delayed startup following a compressor test. Maintenance at Troll, Norway’s largest gas field, has just been extended by 10 days which removes about 1.3 billion cubic meter of supply and triggers gas withdrawals from storage. (Gas to Power Journal) In addition, further cuts at the Skarv gas field in Norway are taking place due to process problems. These outages will be lasting until early next month, according to network operator Gassco AS.  TTF prices have risen the past few sessions, even as European gas storage levels are nearly 95% full ahead of the winter. (FX Street)

The October NG options expire today. The $2.50 strike has 43.063 contracts outstanding on the CME.

A few weather models we have seen suggest shots of cold air and or storms in the Eastern half of the U.S. in the latter half of October.

Technically November NG has momentum pointing lower. Support at the recent double bottom at 2.832-2.834 has been pierced. Below the major low from June of 2.825, support lies at 2.770-2.775. Resistance comes in at 2.911-2.918.

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