09/23/2024
Gas Oil Liquids Daily
North America's Natural Gas, Crude Oil & Liquids
Daily News & Market Information Journal
Article Only File For Monday, September 23rd, 2024 Vol. 6160
Crude Oil Futures Slightly Lower Friday, China Gives Prices a Ceiling
Log Weekly Gain Rise After Fed Rate Cut and Rising Middle East Tensions
Crude oil futures for October delivery on the Nymex lost $ 0.03 or less than 0.1%, to settle at $71.92 per barrel on Friday, the more actively traded November contract fell $0.16, or 0.2%, to $71.00 per barrel. but booked solid weekly gains, boosted by the Federal Reserve’s decision to deliver a large interest-rate cut as well as a renewed rise in tensions in the Middle East after a series of pager and walkie-talkie explosions aimed at Hezbollah operatives in Lebanon. RBOB Gasoline futures for October delivery fell $0.0236 or 1.2% to settle at $2.0364 per gallon, while Nymex Heating Oil futures for October delivery declined $0.0105 or 0.5% to settle at $2.1615 per gallon on Friday.
Oil prices settled slightly lower on Friday but recorded a second straight week of gains, Signs of a slowing economy in China gave prices a ceiling. But for the week, Nymex crude oil settled up more than 4%. Prices have recovered after Brent fell below $69 for the first time in nearly three years on September 10th. "The market concluded that a sub-$70 level combined with hedge funds holding a record weak belief in higher prices of crude and fuel products would require a recession to be justified, a risk last week's bumper US rate cut helped reduce," Ole Hansen, head of commodity strategy at Saxo Bank, said. Prices rose more than 1% last Thursday, a day after the central bank's decision to cut interest rates by half a percentage point, but some analysts are worried about weakness in the labor market. "U.S. interest rate cuts have supported risk sentiment, weakened the dollar and supported crude this week," said Giovanni Staunovo, an analyst at UBS.
The Fed projected a further 50 basis points of rate cuts by the end of this year, a full percentage point of cuts next year and a further half-percentage-point reduction in 2026. "The Fed's decision to cut interest rates and some hangover from Hurricane Francine are the only two things that are propping up the market right now," said Tim Snyder, chief economist at Matador Economics. "The thought of another 50 to 75 basis points has markets hopeful for some degree of economic stability," he added. About 6% of crude production and 10% of natural gas output in the Gulf of Mexico were offline in the aftermath of the hurricane, the Bureau of Safety and Environmental Enforcement said last Thursday in its final update on the storm. Additional support for oil prices came from a decline in US crude inventories to a one-year low last week. Rising tensions in the Middle East, raising the risk of supply disruption, further boosted the oil market. Israel announced on Friday it killed a top Hezbollah commander and other senior figures in the Lebanese movement in an airstrike on Beirut as fears of a wider war rise. In China, refinery output slowed for a fifth straight month in August and industrial output growth hit a five-month low.
China also issued its third and likely final batch of fuel export quotas for the year, keeping volume in line with 2023 levels. "This move indicates that refinery margins are too weak to justify increased activity," StoneX Analyst Alex Hodes said in a note on Friday. Meanwhile, oil refiners in Asia, Europe and the US face a drop in profitability to multi-year lows. Brent rose 4% for the week and WTI advanced 4.8%, lifted by the Federal Reserve’s decision Wednesday to cut its key interest rate by 50 basis points, or half a percentage point. Crude jumped in Thursday’s session, alongside global equities, as worries over an economic hard landing abated. Oil prices were boosted from two sides last week: On the one hand, the Fed cut its key interest rate more than many had expected, raising hopes that a sharp drop in oil demand in the largest market would be avoided,/ Barbara Lambrecht, commodity analyst at Commerzbank, said in a note. Nymex Natural Gas futures for October delivery gained $0.086 or 3.7% to settle at $2.434 per MMBtu. ICE Brent crude oil futures for November delivery declined $0.39 or 0.5% to settle at $74.49 a barrel on Friday.
Nymex Crude Oil Futures settled slightly lower on Friday but ended the week higher, supported by US interest rate cuts and declining stockpiles. The Fed’s decision to cut rates by 50 basis points boosted economic optimism. Additionally, a drop in US crude inventories and rising geopolitical tensions are propping up prices. However, weaker demand from China’s slowing economy and refinery output is capping significant gains. Analysts predict oil prices will remain in the $70-$75 range through the next quarter but could see declines in 2025.Traders take some profits off the table after the strong rebound from September lows. The crude oil market continues to see a lot of support at this point in time, as the market has been trying to recover for some time now. Ultimately, this is a market that will continue to see buyers in dips at this point in time. US crude inventories fell to their lowest level in a year, with stockpiles dropping by 1.6 million barrels last week. The decline was exacerbated by supply disruptions following Hurricane Francine, which reduced crude production and imports from the Gulf of Mexico. This tightening supply, coupled with the Federal Reserve’s rate cut, has helped oil prices recover from recent lows, pushing WTI up 4.02% for the week. The market sentiment remains cautiously bullish, with further upside depending on whether oil prices can break above this resistance cluster. The outlook for Nymex crude oil prices remains cautiously bullish. US supply tightness, coupled with geopolitical risks, could drive prices higher, particularly if light crude manages to break through the resistance at $72.21. A break below key support at $69.79 could trigger further downside toward $67.54.
The market could see further gains, especially if prices can break through the $72.21 resistance zone. However, downside risks remain, particularly with concerns over China’s slowing economy and the potential for further economic weakness globally. Traders should monitor key technical levels closely, as a break below $69.79 could signal a bearish shift, targeting the $67.78 area.A move below the $70.00 level will push WTI oil towards the support at $68.00 – $68.50. Nymex crude oil futures tested resistance at $69.79 to $72.21 but faced strong selling pressure, keeping prices inside this critical threshold. Light crude oil futures tested a key retracement zone between $69.79 and $72.21. Traders are focusing on how the market reacts to this range to determine its near-term direction. A breakout above the 50% retracement level at $72.21 could signal further upward momentum, but the market may encounter resistance at the cluster formed by the 50-day moving average at $72.75 and the 200-day moving average at $72.91. On the downside, if prices fall below the Fibonacci level of $69.79, it could lead to further weakness with $67.78 as the next downside target. Nymex Crude Oil settled at $71.92, down less than 0.1%, but holding just above its pivot point of $71.88. This level serves as a critical support zone, and as long as prices stay above it, the outlook remains bullish. The 50-day EMA at $69.74 provides additional support, reinforcing this bullish sentiment. Immediate resistance is seen at $72.40, followed by $72.95, with $74.24 as a more extended target if upward momentum continues. On the downside, key support is located at $68.45, and a break below that could lead to more selling pressure
Nymex Crude Oil Weekly Technical Analysis
Last week was very positive for the oil markets, as we are looking to move higher from a very low level. In fact, we are looking at the longer-term consolidation area and recognizing that we just bounced from the bottom. The crude oil market has rallied pretty significantly during the course of the week as we have reached the $72.548 level. This is an area that will continue to offer a bit of a barrier and if it can break above there, it’s likely that the market could really take off to the upside, perhaps reaching the $75.00 level. Short term pullbacks continue to offer buying opportunities, and the $67.50 level is a situation where it would have a lot of value hunters coming into the market. When you look at the last two years, we are basically showing a bit of a floor in this market that we respect.
After the US rate cut despite easing on Friday, oil prices closed the week higher for the second consecutive week. This comes after the U.S. Federal Reserve implemented a significant interest rate cut, bolstering market sentiment. The rate cut and declining global stockpiles have provided support for crude prices. Brent and West Texas Intermediate were up 3.7% and 4% on the week, respectively, as they recovered from recent lows when Brent briefly dipped below $69.00 for the first time in nearly three years. Analysts noted that the U.S. interest rate cuts have weakened the dollar and improved risk sentiment, contributing to oil’s recovery. However, analysts cautioned that while monetary policy changes support the market, it takes time for them to stimulate economic activity and increase oil demand.
Overnight Crude Oil Market Summary
Sunday Night Into Monday Morning
5:45 AM CST.
Crude Oil Edges Higher Overnight as Rate Cut Counters Weak Demand
Crude oil prices rose slightly higher Sunday night into Monday morning after last week's cut to US interest rates and a dip in US crude supply in the aftermath of Hurricane Francine countered weaker demand from top oil importer China. Brent crude futures for November edged up by 14 cents, or 0.19%, to $74.63 a barrel by 0815 GMT. West Texas Intermediate crude futures for November were up 16 cents, or 0.23%, at $71.16. Both contracts registered their second consecutive weekly gains last week after the Federal Reserve cut interest rates by half a percentage point, a larger decrease in borrowing costs than many expected. "Oil looks range bound despite the uplift to risky asset prices from an outsized policy rate cut by the Fed last week," said Harry Tchilinguirian, head of research at Onyx Capital Group.
"The market will look to flash purchasing managers' index (PMI) releases in Europe and the U. for economic direction, and if these disappoint, then there is likely to be downward pressure developing on oil prices." Euro zone business activity contracted sharply and unexpectedly this month as the bloc's dominant services industry flatlined while a downturn in manufacturing accelerated, a survey showed on Monday. A softer economic outlook from top consumer China capped further gains.
"There was some hope earlier this morning that some additional Chinese monetary stimulus is likely in the short term, but the latest PMI out of Europe switched market sentiment from positive to negative," said UBS analyst Giovanni Staunovo. "I would expect oil to benefit this week from a large US crude draw as a result of elevated US crude exports." However, heightened conflict in the Middle East could curtail regional supply. The Israeli military launched its most widespread wave of air strikes against Iran-backed Hezbollah, targeting Lebanon's south, eastern Bekaa valley and northern region near Syria simultaneously after nearly a year of conflict. "Geopolitical tensions in the Middle East have edged up a notch between Israel and Hezbollah, which could leave oil prices well supported on the risks of a wider regional conflict," said IG market strategist Yeap Jun Rong.
Geopolitical Risk Is Pushing Oil Prices Higher to Start the Week
But Uncertainty Remains
Crude oil prices started the week with gains as tension continued to escalate in the Middle East after Israel and Hezbollah exchanged missile strikes, but bearish sentiment in oil markets is far from being extinguished and prices fell back slightly after initial gains. Last week, Brent crude and West Texas Intermediate booked their biggest price gains since April, according to Bloomberg, boosted by the Fed’s decision to cut rates by 0.50% and news that Beijing plans more stimulus for the economy. Brent crude has added 9% since dropping to a three-year low earlier this month, Bloomberg noted.
Yet continued traders worry about the effectiveness of that stimulus on Chinese oil demand limited price gains, along with the fact that the so-called jumbo cut by the Fed was expected. With that largely priced in, which means traders will soon turn their attention back to demand, meaning China. “China has obviously been the key concern when it comes to demand, but there have also been reports of refiners in Europe cutting run rates due to poor margins,” ING commodity analysts wrote in a note last week. “Geopolitical tensions in the Middle East have edged up a notch between Israel and Hezbollah, which could leave oil prices well-supported on the risks of a wider regional conflict,” IG analyst Yeap Jun Rong told Reuters.
“However, price gains have been somewhat more measured, which may reflect some reservations over the actual impact on oil supplies, given that the Middle East conflict has been dragging on for some time now with little disruptions so far,” he added. “Crude may go into a holding pattern for a bit, consolidating last week’s gains,” Vandana Hari from Vanda Insights told Bloomberg. “Market cheer from the jumbo Fed cut is keeping sentiment aloft. But at some point, we could see crude under renewed downward pressure as the Fed glow fades and oil market attention returns to the soaring demand picture.”
US Drillers Cut Oil and Natural Gas Rigs for Fifth Week in Six
US energy firms last week resumed cutting the number of oil and natural gas rigs after adding rigs last week, with the count falling for a fifth week in six, Baker Hughes said in its closely followed report on Friday. The oil and natural gas rig count, an early indicator of future output, fell by two to 588 in the week to September 20th. Baker Hughes said that puts the total rig count down 42 rigs, or 7%, below this time last year. Baker Hughes said the number of oil rigs was unchanged at 488 last week, while natural gas rigs fell by one to 96.
The oil and natural gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due to a decline in oil and natural gas prices, higher labor and equipment costs from soaring inflation and as companies focused more on paying down debt and boosting shareholder returns than raising output. US oil futures were up about 0.6% so far in 2024 after dropping by 11% in 2023, while Nymex natural gas futures were down about 4% so far in 2024 after plunging by 44% in 2023. The CEO of EQT, the largest US natural gas producer, sees prices for the fuel remaining below $3 per MMBtu in the short term. EQT, which earlier this year curtailed production as prices fell to multi-year lows, expects curtailments to ease by next year on demand for LNG exports. Several rival US shale gas producers also cut drilling to stem overproduction.
Putin Seeks Greater Role for BRICS in Global Energy Dialogue
President Vladimir Putin called on Monday for a bigger role for the BRICS bloc on the world's energy markets as Russia seeks ways to counter Western influence. Russia, which is the world's second largest oil exporter and has the biggest reserves of natural gas, hosts the annual Energy Week International Forum later this week and it is expected to hold a meeting of BRICS' energy ministers. "It is obvious that in the new geopolitical realities, cooperation in the energy sector should serve to strengthen national economies, help solve priority social problems, and improve people's quality of life," Putin said in a letter to the forum's participants and guests.
"It is crucial to agree on common principles for our countries in the just energy transition, and outline ways to strengthen the role of BRICS in the global energy dialogue," he said about the forthcoming meeting of BRICS energy ministers. In the past, the forum was also attended by delegates from Saudi Arabia, the world's largest oil exporter. The Saudi energy ministry did not immediately reply to a question about whether or not Energy Minister Prince Abdulaziz bin Salman would attend the event. Putin's spokesman Dmitry Peskov said last week that the Kremlin would update on the forum's participants "in due course".
The bloc was founded as an informal club in 2009 to provide a platform for its members to challenge a world order dominated by the United States and its Western allies. BRICS has been expanded as countries, including Egypt, Iran, United Arab Emirates joined. After the BRICS expansion, the alliance accounts for 42% of the global oil and natural gas reserves. Saudi Arabia has not yet officially joined the BRICS, however, Russian Foreign Minister Sergei Lavrov has said that Russia had invited Saudi Crown Prince, Mohammed Bin Salman, to attend a BRICS summit in the city of Kazan next month.
TotalEnergies Set to Develop $9 Billion Suriname Oil Resources
TotalEnergies has started to scour the market for deepwater rigs and support vessels to begin development of massive resources discovered offshore Suriname, anonymous sources with knowledge of the tenders told Bloomberg on Friday. Exploration and resource development in the Atlantic Basin is now alive more than ever, following the huge developments offshore Guyana led by ExxonMobil and the plans of TotalEnergies to tap the discovered resources in Guyana’s neighbor, Suriname. TotalEnergies, which partners with APA Corp offshore Suriname, has already made several discoveries in the area.
The companies are expected to make as early as next month the final investment decision (FID) to develop part of the resources, according to Bloomberg’s sources. TotalEnergies has reportedly ordered a hull for a 200,000-bpd production vessel, the clearest sign yet that the French supermajor would be moving to develop the project. “They have reserved this hull,” Annand Jagesar, managing director of Suriname’s state oil company, Staatsolie, told Bloomberg. “You’re not going to pay a lot of money for that to have it sitting around,” Jagesar added. TotalEnergies and APA plan to make the final investment decision on the Block 58 project by the end of 2024, targeting first oil in 2028.
Crude oil discoveries in Suriname have opened access to some 2.4 billion barrels in reserves, Wood Mackenzie analysts have estimated. The consultancy also reported the South American nation holds some 12.5 Tcf in natural gas reserves. A total of nine offshore discoveries have been made in Suriname in the last six years but commercial development of any of them is still in the future. Suriname is often seen as a candidate for a repeat of Guyana’s oil boom since the two neighboring countries share one hydrocarbon basin. However, exploration efforts have taken longer in Suriname and the colossal success of Exxon with the Stabroek Block and its dozen discoveries has yet to be replicated in Guyana’s neighbor.
Shell to Shut Production at Two Oil Facilities in Gulf of Mexico
Shell said on Sunday that it would shut production at its Stones and Appomattox facilities in the Gulf of Mexico as a precautionary measure in response to a tropical disturbance. "We are in the process of safely pausing some of our drilling operations, and currently have no other impact on our production across the Gulf of Mexico," the oil major said, adding that it has also begun evacuating non-essential personnel from its assets in the Mars Corridor. The National Hurricane Center said that the system located near the Gulf of Mexico has a 50% chance of becoming a hurricane in the next 48 hours [ As of Sunday evening ]. "Environmental conditions appear conducive for development of this disturbance, and a tropical depression or tropical storm is likely to form during the next few days," the Miami-based weather forecaster said.
According to a Reuters report on Sunday Shell stated, "We are in the process of safely pausing some of our drilling operations and currently have no other impact on our production across the Gulf of Mexico." The National Hurricane Center's website is only tracking one weather disturbance in the Atlantic, the remnants of Tropical Depression Gordon. This disturbance was registered on the NHC site as having maximum sustained winds of 30 miles per hour and a five mile per hour northern movement. In a statement posted on its site last month, NOAA warned that “atmospheric and oceanic conditions continue to support an above normal 2024 Atlantic hurricane season”, highlighting that there is now a “90 percent probability of this result”.
Understanding Petroleum Product Supplied
EIA Proxy for Consumption
EIA does not directly survey petroleum consumption; instead, the EIA calculates a similar concept called product supplied from our surveys that span the US petroleum industry. Although The EIA uses petroleum product supplied interchangeably with petroleum consumption, the two are not identical. Consumption is the same as purchases by end users at the final point of sale, such as gasoline from the pump. The EIA surveys 1,000 of the more than 100,000 US retail gasoline stations to estimate retail gasoline prices. They gather information about motor gasoline and other petroleum products by surveying a more limited number of respondents in the primary supply chain—refiners, blenders, importers, pipelines, and bulk terminal storage operators—before the products are moved to distributors and retailers. By surveying the entire population of these primary suppliers, we determine the volume of refined petroleum inputs and production, imports, inventories, and shipments available for domestic consumption. Most petroleum products leave the primary supply chain when they are sold to distributors, retailers, and end users and are consumed not long after they are produced and moved through primary suppliers.
How do we calculate product supplied?
The EIA uses product supplied as a proxy for consumption because it measures volumes of petroleum products that leave the primary supply chain prior to distribution. Using the example of finished motor gasoline, we define product supplied as:
Net production (from refineries, blenders, and biofuels plants) + imports + supply adjustment - primary storage inventory change - exports
The EIA calculates that, in 2023, finished motor gasoline product supplied in the United States came from 9.65 million bpd of finished net production by refiners, blenders, and biofuels plants plus 118,000 bpd of imports. Disposition of finished motor gasoline included a 3,000 bpd increase in primary inventories and 816,000 bpd of finished motor gasoline exports. Disposition accounts for how crude oil and petroleum products are transferred, distributed, or removed from the supply stream, including stock changes, refinery inputs, exports, and products supplied for domestic consumption.
The EIA also include a supply adjustment, a balancing item that reconciles product supplied of finished gasoline with the supply and disposition of its two major components, motor gasoline blending components (MGBCs, derived from petroleum) and fuel ethanol (a biomass-based fuel typically derived from corn in the US). MGBCs and fuel ethanol are not used in engines individually, but they are blended into gasoline to meet specifications for octane, sulfur levels, and other standards. Because we collect supply and disposition of these products from several surveys, survey and statistical errors lead to natural differences between supply and disposition. The adjustment serves as a balancing item, which reduced finished motor gasoline supply by 7,000 bpd in 2023.
Taken together, 8.95 million bpd of finished motor gasoline was consumed in the US during 2023 because this was the amount that left the primary supply chain and remained in the United States.
What is the difference in product supplied among EIA publications?
The EIA publishes the most definitive set of finalized petroleum statistics in the Petroleum Supply Annual. This report revises any errors or missing data for the previous calendar year. The EIA releases this report every August.
Our Petroleum Supply Monthly (PSM) provides comprehensive and more timely petroleum statistics. The EIA releases the PSM report on the last business day of the month, and it provides statistics for the month two months before. The PSM report derives its data from surveying all companies that produce, import, transport, or hold in storage any petroleum product in the US. They do not survey exports but instead receive export statistics from the US Census Bureau.
The Weekly Petroleum Status Report (WPSR) provides even more timely but less comprehensive information than the PSM because the WPSR surveys fewer respondents. Whereas the PSM surveys the entire primary supply chain, the WPSR surveys the largest respondents only, covering around 90% of the latest monthly volume for each supply source. The WPSR product supplied data can experience large week-to-week swings, partially because of sampling errors from surveying only a subset of the PSM respondents and partially because imports or exports can quickly change depending on when cargoes clear US Customs. We recommend data users analyze the four-week moving average of product supplied to better understand underlying trends in US petroleum consumption.
Because calculating product supplied involves several components, each component can be subject to sampling error, measurement error, and timing differences. Sampling errors can occur for each supply or disposition component and can result in differences between the WPSR estimate and the reported product supplied for the month in the PSM. Differences can also arise because we estimate weekly export data for petroleum products using unedited weekly export statistics from US Customs and Border Protection. Usually, the WPSR product supplied is within +/-2% of the PSM. Over longer periods, these differences can average close to 0%, as they did from 2018 through June 2024.
They rely on PSM and WPSR data for other EIA publications and forecasts. They use the terms petroleum consumption and petroleum product supplied interchangeably in these reports, such as the Monthly Energy Review, Short-Term Energy Outlook, and Annual Energy Outlook, to label the data consistently with other fuel consumption such as natural gas, coal, nuclear, renewables, and electricity.
Absent significant errors, omissions, or natural disasters, The EIA never revise the data published in the WPSR. Historical WPSR estimates of product supplied become less relevant when we publish the PSM because we capture the remaining data that they did not survey in the WPSR. PSM data can serve as a definitive historical benchmark and the WPSR as a near-term estimate of recent history. The unrevised historical WPSR data are still useful, however, particularly for users that wish to understand weekly variability in petroleum market activity among all primary supply chain components.
What other motor gasoline consumption data sources are available?
The Federal Highway Administration publishes monthly data on vehicle miles traveled (VMT) and a motor fuels report that displays motor gasoline sales by state. Although the report on VMT is published with a similar lag as the PSM (about two months), data users would have to make assumptions about vehicle fuel efficiency to determine motor gasoline consumption. The motor fuels report tracks motor gasoline consumption closely with the PSM but can lag between six and nine months. Commercial data providers such as Oil Price Information Service (OPIS) and GasBuddy offer estimates of gasoline consumption from retail gasoline stations they sample.
Nymex / Natural Gas Futures
Friday, September 20th, 2024
03-Month Average - 2.7817 +0.1194
06-Month Average - 3.0358 +0.1256
12-Month Average - 3.0657 +0.0951
18-Month Average - 3.2859 +0.0778
Nymex Natural Gas Futures settled higher on Friday, building on last Thursday’s reversal. Warmer-than-expected conditions persisted in southern regions, particularly Texas and the Gulf Coast, supporting cooling demand late into the season. This heat is expected to linger into early October, potentially boosting short-term demand. However, moderate temperatures across the northern US and the West suggest lower heating demand, leading to a mixed overall demand outlook. Traders are closely monitoring tropical weather developments. The National Hurricane Center is tracking disturbances that could impact Gulf Coast production and demand. Additionally, cooler temperatures in Texas and the eastern US, contrasted with heat in the West and Plains, are influencing market dynamics. The EIA reported a net increase of 58 Bcf for the week ending September 13th, while matching some estimates, fell significantly below the five-year average of 80 Bcf. Total storage now stands at 3,445 Bcf, 194 Bcf higher than last year and 274 Bcf above the five-year average. The market briefly dipped below the 50-day moving average before buyers stepped in, recognizing value at pivots of $2.252 and $2.214. Friday's closing was above the 50-day moving average at $2.284, and approaching the main top at $2.436. The natural gas market continues to see a lot of upward pressures, as the markets continue to see a lot of cyclical trading. Ultimately, this is a market that does this every year, and therefore it is likely that we are going higher. Natural gas broke out of a double pattern on a move above 2.$30 last Wednesday, and it is now showing signs that it is ready to follow through to the upside. The advance also triggered a breakout on the higher time frame monthly chart. This is significant as all higher time frames (daily, weekly, monthly) are bullish. The next monthly target is $2.600, the peak from July.
Natural gas rallied to a new trend high of $2.460 on Friday and triggered the continuation of the bull trend. A bullish trend continuation signal was generated on a move above the prior trend high of $2.440. Natural gas managed to settle above the $2.400 level and gained additional upside momentum, breaking out to new highs. With technical patterns aligning, it is set to target key levels in the near term, starting with $2.520. A move above $2.450 will push the nearest resistance towards the $2.550 – $2.60 range. Further up is a target zone from $2.650 to $2.670. Resistance remains at $2.482, with a breakout above this level potentially triggering a rally toward the longer-term target of $2.757. If prices break below $2.252, a retest of the $2.021 support level may follow. The next higher target zone runs from $2.520 to $2.540 and includes the 50% retracement. Given the improvement in bullish momentum this next target zone could be reached quickly. Keep an eye on the rise in the 20-Day MA as it is close to crossing above the slower moving 200-Day MA, now at $2.230. The $2.650 price level is the 127.2% extended target for the rising pattern that is on the chart, and $2.670 is the completion of a 61.8% Fibonacci retracement. Natural Gas settled at $2.434, up 3.7% for the session, and above the daily pivot point of $2.387. Immediate resistance lies at $2.460, with further targets at $2.482 and $2.540 if bullish momentum picks up. On the downside, key support is found at $2.280, with additional levels at $2.220 and $2.160, which could signal a potential sell-off if broken. The 50-day EMA at $2.300 offers short-term support, while the 200-day EMA at $2.220 reinforces a broader support zone. As long as prices stay below the pivot point, bearish sentiment could dominate, but a break above $2.482 signals renewed bullish momentum.
Nymex Natural Gas Weekly Technical Analysis
The week has been very strong for the natural gas market, as the traders continue to look at the overall situation through the prism of buying value when it appears. The natural gas markets initially pulled back just a bit during the early hours last Monday, but the rest of the week has been relatively strong as the market has reached the $2.460 level. Nymex. natural gas futures ended last week with a slight uptick, marking the third consecutive weekly gain. The market displayed resilience, maintaining support around $2.252 on the weekly chart, a critical pivot point. As traders assessed technical charts, supply-demand fundamentals, and weather forecasts, volatility emerged ahead of key resistance levels. A trade through $2.436 would signal a trend change. While resistance may emerge at $2.482, breaking this level could propel prices towards the major 50% level at $2.757 and the 200-day moving average at $2.802. Current price action suggests strong support at the 50-day moving average and pivot levels. At this point in time, we are starting to trade cyclical trade. And that generally means that we are trying to price in the cold temperatures later this year. I do think natural gas continues to go higher, although it’s also worth noting that we’ve had three very strong weekly candlesticks in a row, and we could very well go looking to the $3.00 level. but expect to see a lot of volatility and a lot of choppiness, but I do think we continue the overall grind to the upside.
Russia’s Fuel Exports Rise by 10% in September
Russian petroleum product exports jumped by 10% in the first half of September compared to August as diesel and fuel oil shipments recovered from last month’s multi-month lows, data from analytics firm Vortexa compiled by Bloomberg showed on Friday. Refining rates in early September improved from August and so did exports of diesel and fuel oil. Russia’s total exports of refined oil products by sea averaged about 2.2 million bpd between September 1st and 15th, according to the data compiled by Bloomberg. This average volume was nearly 10% higher in the first half of September compared to the month of August. Exports of diesel and gasoil totaled about 807,000 bpd in the first two weeks of September, a rise of around 10% from August. Last month, seaborne exports of Russia’s diesel and gasoil had slumped to their lowest level since October 2023.
Fuel oil exports, for their part, saw a 13% increase in the first half of September. At 749,000 bpd, fuel oil exports hit their highest level so far this year, according to Vortexa’s data compiled by Bloomberg. In recent months, Russia has had higher-than-expected maintenance and repairs at its refineries after Ukraine stepped up early this year with its drone attacks on the Russian refining capacity. In addition to unplanned repairs to fix damages from the drones, some refineries underwent planned maintenance, which dragged down Russia’s fuel output and exports earlier this year. In August, the Russian government said that it is extending its ban on gasoline exports from October to the end of December 2024, as it seeks to keep domestic supply stable amid seasonal demand and scheduled repairs at refineries. While fuel exports appear to be recovering this month, the value of Russia’s crude oil exports has plummeted by nearly 30% since the end of June as falling international benchmark prices are depressing the value of the cheaper Russian crude grades, Bloomberg has estimated.
Chinese Court Declares Another Sinochem Refinery Bankrupt
A Chinese court on Friday declared bankrupt a third refinery owned by state oil and chemical group Sinochem, a court document showed. The Changyi city court also ended reorganization procedures at the refinery, Shandong Changyi Petrochemical. Earlier last week, court rulings were made against two other refineries owned by Sinochem: Shandong Huaxing Petrochemical Group and Zhenghe Group Co Ltd. The court documents did not specify what would happen to the refinery's assets. Sinochem did not immediately respond to a request for comment. Located in eastern China's refining hub of Shandong, the three plants have a combined crude oil processing capacity of 380,000 bpd, or about 3% of China's national refinery output. Reuters reported in July that Sinochem had shut two of its three Shandong refineries, Zhenghe and Changyi, for indefinite maintenance amid high crude oil prices and weakness in the refined fuel market. Shandong-based independent refineries operated at an average of 56.4% of their capacity in August, 10 percentage points below levels a year ago as weak fuel demand depressed processing margins, local consultancy Sublime China Information said.
India’s Crude Oil Output Fell in August
India’s crude oil production in August fell by 3.4% on the year to 2.4 million metric tons, equal to some 17.6 million barrels. Fuel production was also down, more modestly, the Economic Times reported. The bulk of the August crude output came from Oil and Natural Gas Corporation, the state-owned major, which accounted for a share of 1.6 million tons. Crude oil processing in India in August fell 1.9% on the year to 21.5 million tons. As a result of the decline in domestic production, crude oil imports to India jumped by 6.4% in August, driving a 3.3% increase in oil imports over the period between April and August, as the country’s economy continues expanding.
The price of August oil and natural gas imports also rose on the year, from $9 billion in 2023 to $11.4 billion this year. The increase, per the Indian Petroleum Ministry, was driven by higher liquefied petroleum gas and lubricant imports. The world’s third-largest crude oil importer, India, relies on imports to cover more than 85% of its petroleum consumption, which is growing in lockstep with the economy and refinery expansion plans. Over the past two years, India has become a key buyer of Russia’s oil, which is selling at a discount because of the sanctions and embargoes on Russian crude exports to Western countries.
Given India’s sensitivity to oil prices, the development was only to be expected. The country is set to become a driver for 35% of future energy demand, too, according to petroleum minister Hardeep Puri. Speaking at the Gastech conference in Houston this month, Puri said “If you say that global demand is increasing by one percent, ours is increasing by three times that. In the next two decades, 35% of the increase in global demand will come from India.” At the same time, the official said that India wants to succeed with the energy transition as well. “We will manage and succeed…on the green transition,” Puri said. “That’s the part with which I am most satisfied.”
Financial Summary 09/20/24
* The TSX 300 Index rose 1.07 to 23,867.37
* The US Dollar climbed 0.12 to 100.74
* The Dow gained 38.17 to 42,063.36
* The S&P 500 decreased 11.09 to 5,702.55
* The Nasdaq lost 65.66 to 17,948.32
* October NYMEX added 0.16 to 71.00
* Canadian-US Exchange up 0.0002 to 1.3565
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