Daily Energy Market Update 6-20-202

Liquidity’s Daily Market Overview

Energy prices have fallen back from the highs seen Thursday as the U.S. has delayed any decision on joining the Israeli-Iranian conflict. Additionally this morning a Senior Iranian official said Iran is wiling to discuss limitations on its uranium enrichment.  Iranian oil exports have continued unimpeded.

The White House said President Trump would decide whether the U.S. will get involved in the Israel-Iran conflict in the next two weeks, reducing speculation that the US would plunge into the conflict imminently.(Bloomberg) Reuters reports "U.S. special envoy Steve Witkoff and Iranian Foreign Minister Abbas Araqchi have spoken by phone several times since Israel began its strikes on Iran last week, in a bid to find a diplomatic end to the crisis, three diplomats told Reuters." The Iranian Foreign Minister supposedly said that Tehran would not return to negotiations unless Israel stopped the attacks.

The senior Iranian official also said that Teheran is unwilling to engage with the US as long as Israeli attacks continue. He further said that zero enrichment will undoubtedly be rejected. (Reuters)

The midday Thursday price highs were fueled by a few news items. Trump Sees Disabling Fordo Nuclear Site As "Necessary", read a CBS News headline. There were reports that senior US officials had said the administration was preparing for a possible strike on Iran in the coming days.(Bloomberg) "If the United States officially and operationally enters the war in support of the Zionists (Israel), it is the legitimate right of Iran in view of pressuring the U.S. and Western countries to disrupt their oil trade's ease of transit," a senior Iranian lawmaker, was quoted as saying by the semi-official Iranian Mehr news agency on Thursday.

European foreign ministers are holding talks with their Iranian counterpart in Geneva today. The aim of the talks between Iran and the Europeans, which the German source said are taking place in coordination with the United States, is to persuade the Iranian side to firmly guarantee that it will use its nuclear programme solely for civilian purposes. The German Chancellor has spoken out in support of Israel's attack and angered Tehran this week by saying the Iranians should de-escalate or face the threat of even greater destruction. (Reuters)

LSEG writes that Iran has continued loading and shipping crude oil. Iran is maintaining crude oil supply by loading tankers one at a time and moving floating oil storage much closer to
China, two vessel tracking firms told Reuters.  Loadings have so far been largely unaffected, the trackers said. Around ten tankers, carrying approximately 8 MMBBL of Iranian crude, are now stationed directly offshore China, analysts at Vortexa said, moving from the Singapore area where a further 20 MMBBL are located. TankTrackers' firms data shows that Iran’s oil exports have spiked since the nation came under attack from Israel on Friday. Iran is seen having exported an average of 2.33 MMBPD in the five days the attacks began June 13, according to data from TankerTrackers.com. That’s an increase of 44% compared with the average for the year through to June 14.

Citibank suggests that the impact of disrupted Iranian oil exports may be smaller than expected for prices, given those exports had already been falling and smaller China refineries have been purchasing less. Brent could spike to $90 a barrel in case of "major escalation in oil transit" from the Israel-Iran conflict, and a disruption of 3  MMBPD over several months, they say. (Market Watch)

The July WTI futures expire today.

Energy Market Technicals

Momentum remains overbought for the energies basis their August daily charts, especially that for ULSD.

WTI August futures saw the low of the 2 day session of 72.32 following the headlines from the Iranian official just a short while ago this morning. This comes after the market saw a fresh high for the recent rally near midday Thursday. There is a double top on the DC chart from yesterday and last Friday at 77.58 / 77.62 respectively. August WTI has resistance basis its daily chart at Thursday's high at 75.74. Support comes in at 71.33-71.39.

Natural Gas Market Overview

Natural Gas-- NG is up 9.5 cents versus the settlement from Wednesday
NG spot futures have risen this morning to the highest price since April 4th as record heat is set to invade the East Coast of the U.S. 

A brutal heat wave is in the forecast across the eastern United States, and it's expected to bring several days of record high temperatures at the start of the weekend and into next week. The National Weather Service has called it "the first significant heat wave this season." Temperatures are expected to soar more than 25-35 degrees above average in the Plains on Friday, CBS News reports. Potential daily record highs are also forecast for parts of the Rockies and Plains on Friday and Saturday, then temperatures well into the 90s will reach the mid-Atlantic and Northeast and linger into next week, CBS News adds. "Triple-digit heat indices will be common through next week, with oppressive humidity.", as per the National Weather Service.

On Thursday, TTF spot futures rose to their best value since April 2nd. The DC chart gap that existed from 40.500 to 40.840 was filled with Thursday's being Euro 41.900. Prices have fallen back as fears of an escalation of Mideast tension have eased. "Most of the price rally is risk premium driven, but lower Norwegian flows due to seasonal maintenance is also forcing additional spot LNG purchases which adds to the price pressure,” analysts at DNB say. However, they note LNG imports remain significantly higher year-on-year and are sufficient to balance the market and refill inventories. (WSJ) Technically the chart shows the spot TTF futures contract having tested the upper bollinger band for the 6th straight session. The momentum looks to be cresting and poised to turn lower.

Enjoyed this article?

Subscribe to never miss an issue. Liquidity’s Daily Energy Market Updates provide a comprehensive analysis of both the fundamentals and technical factors driving energy markets.

Click below to view our other newsletters on our website:

Ethanol Update 

Natural Gas Update

Fuel and Freight Daily Report

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