Energy Market Update 6-14-2024

Crude is up 35 cents RB is up 2.76 cents ULSD is up 3.38 cents

Overview

Energy prices are higher, with crude set to have its best week in 2 months on a stronger demand outlook.

BP is planning a major turnaround in the coming months at its 450 MBPD Whiting refinery in Illinois, according to an industry source. The refinery has struggled since a six-week power outage, which occurred in February. The company had no official comment on the turnaround plan. (Quantum Commodities/Reuters)

A stronger demand outlook has been proferred by the OPEC Secretary-General. OPEC does not see a peak in oil demand in its long-term forecast and expects demand to grow to 116 MMBPD by 2045, and maybe higher, the secretary general said on Thursday. This is contrary to the IEA's forecast of oil demand peaking by 2029, levelling off at around 106 MMBPD. (Reuters)

Russia's energy ministry said on Thursday that its oil production in May exceeded quotas set by the OPEC+ group of major oil producing countries, while pledging to meet its obligations. It did not provide production figures. The ministry said in a statement that the issue of overproduction would be resolved in June and targeted levels would be achieved. The excess production will be made up for during the compensation period until September 2025, the energy ministry also said on Thursday. (Reuters)

Eurocontrol says that European air travel in the week to June 9 was 6% above that seen a year ago. But, the number of average flights was still 3% below the 2019 level. (Quantum Commodities)

This week, updated forecasts from OPEC, the IEA and the EIA helped spark the rebound in oil prices, with all three pointing to a supply deficit at least until the beginning of winter, said the commodity strategist at Commerzbank.

Today is the last trading day for the LO/WTI options for July. No nearby strikes have enough open interest to suggest that the options expiration will have an effect on the futures settlement price today.

Technicals

Momentum is positive for the energies.

ULSD spot futures prices today have risen to their best value since May 1. The stepladder up chart pattern continues. July futures see resistance at 2.5550-2.5560. Support comes in at the overnight low at 2.4746-2.4756.

August RB support is seen at 2.4020-2.4036 and then at 2.3879-2.3886. Resistance lies at 2.4437-2.4452 and then at 2.4580-2.4600.

WTI spot futures have support at the double bottom from Thursday/today at 77.67-77.73 and then at 77.22-77.25. Resistance above comes in at 79.32-79.38 and then at the recent highs at 80.60-80.62.

Natural Gas- NG is down 3.0 cents

NG prices are lower today as the market weighs upcoming heat in much of the U S against some supply concerns that were raised this week, reflected somewhat in the EIA data seen Thursday. The tone we have seen suggests for now that the downside will be limited due to the forthcoming heat wave.

The EIA data disappointed Thursday with a build of 74 BCF and an addition to the previous week of 7 BCF. It was the 7th straight week of shrinkage in the surplus. This put total storage at 2.974 TCF, which is +364 BCF / +13.9% versus last year and +573 BCF / +23.9% versus the 5 year average. Next week's EIA storage data is seen continuing the shrinking of the gas surplus. A Reuters survey for next week is calling for a build of 69 BCF. This compares to last year's build of 92 BCF and the 5 year average build for the period of 83 BCF.

Forecaster Atmospheric G2 said near-record heat is expected in the eastern half of the US from June 18-22. (Barchart.com)

Mexico has imported 7.61 BCF/d over the past 10 days, according to NGI calculations. April pipeline imports averaged 6.82 BCF/d, as per NGI data. “The increase in demand can most likely be attributed to the increase of nearshoring industrial demand and an increase in electricity consumption across all categories as well,” said NGI markets analysis. United States to Mexico gas flows averaged 6.08 BCF/d year-to-date through April 24, up by 0.497 BCF/d from the same period last year, according to Wood Mackenzie data. The rise in imports in Mexico comes amid declining domestic production. Mexico’s natural gas production averaged 3.90 BCF/d in March 2024, down from 4.35 BCF/d in March 2023.

Technically NG spot futures have negative momentum. Below the current double bottom from yesterday/today at 2.898/2.903, we see support at 2.884 and then at 2.791-2.799. Resistance above comes in at 3.049-3.051 via the 60 minute July chart. Above that resistance is seen at 3.091-3.096.

Disclaimer

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