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- Daily Energy Market Update October 17,202
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December WTI is up 22 cents at $57.21 December RB is up 1.34 cents at $1.7738 December ULSD is up 0.53 cents at $2.1414
Liquidity’s Daily Market Overview
Crude prices have rebounded after President Trump offered some optimism on trade with China in a Fox News interview : "" I think we're gonna do fine with China, I get along great with him [...] We have to have a fair deal, it's gotta be fair." Energy prices fell overnight to multi month lows, as Presidents Trump and Putin have agreed to meet in the coming weeks. Also weighing on crude prices are this week's IEA report saying a supply glut is forthcoming. Also yesterday's crude oil build on the back of a large drop in refinery runs is seen having weighed. Additionally, trade tension between China and the US has been a negative backdrop over the past week.
Presidents Trump and Putin agreed on Thursday to another summit on the war in Ukraine, a surprise move that came as Moscow feared fresh U.S. military support for Kyiv. The meeting may be held within the next two weeks in Budapest. The development came as the Ukrainian President is headed to the White House today to push for more military support, including U.S.-made long-range Tomahawk missiles, while Washington is said to be pressuring India and China to stop buying Russian oil. (Reuters)
The DOE stats showed a build for crude oil stock of 3.524 MMBBL, which seems too high given the large drop in net crude oil imports seen in this week's data. The very large drop in demand via the sharp fall in refinery crude inputs of 1.167 MMBPD was offset by the drop in supply seen via the net crude imports having fallen by 1,754 MMBPD. Crude oil imports fell by 878 MBPD while exports rose by 876 MBPD; thus one could even make the case for a crude oil stockpile draw in this week's data with supply falling by almost 600 MBPD more than the decline in demand via the crude runs. The EIA added 426 MBPD of crude oil supply via its weekly accounting adjustment, equating to a supply increase of 2.982 MMBBL. Product demand fell on the week. Gasoline demand fell by 464 MBPD to 8.455 MMBPD , which is weaker than seen in the prior 2 years figures of 8.620 and 8.943 MMBPD. Distillate demand fell on the week by 113 MBPD to 4.233 MMBPD, which is almost equal to last year's demand of 4.212 MMBPD, but is below 2023 demand of 4.416 MMBPD. Gasoline supplies fell in the DOE data by 267 MBBLD, versus the API data showing a build of 2.9 MMBBL. Distillate supplies fell by 4.529 MMBBL, in line with the API draw of 4.79 MMBBL.
In the LO/WTI options, the December $56 and $51 put open interest on the CME rose quite a bit. The December $56/$51 put spread traded 95 cents with .22 delta December futures bought at $58.03. In one other trade seen, the $56 put was seen as a part of a spread with the $60 put being bought versus selling of twice as many of the $56 puts, for a cost of 45 cents.
The retail price for gasoline has fallen further today to $3.051, the lowest since December 31. One month ago the price was $3.200. “Americans appear to be on the cusp of seeing the national average drop below $3 per gallon and potentially stay there for the first time in years,” said Patrick De Haan, head of petroleum analysis at GasBuddy, earlier this week. “We could even see a handful of stations in places like Oklahoma, Texas, or even Wisconsin drop below $2 per gallon in the weeks ahead — something not seen since the pandemic,” wrote DeHaan. Waning demand, lower crude oil prices and a switch to the cheaper winter fuel blend are causes for the retail gasoline price drop. Citi analysts warn that weak “gasoline demand remains a key drag” heading into 2026 and 2027. “The weakness stems from improving vehicle efficiency, and a growing EV fleet, particularly in the US and China,” said a Citi analyst note on Wednesday. (Yahoo Finance)
The average retail price for diesel has fallen to its lowest price since June 19. The price today is $3.642. One month ago it was $3.707. (AAA)
Energy Market Technicals
Technically the December charts for the energies show momentum poised to turn upward from a near oversold condition. The energies tested support at the lows today.
December WTI support at 56.30-56.32 was tested today with a low of 56.15. Support below that is seen from the major low of May 5th of 54.85. Resistance lies at 58.63-58.72.
December RB support at 1.7410-1.7424 was tested with a low of 1.7407. Resistance comes in at 1.7889-1.7906 and then at 1.8088-1.8093.
December ULSD support lies at 2.0995-2.1020, which was tested with the overnight low of 2.1011. Resistance comes in at 2.1455-2.1466 and then at the double top of this week at 2.1888-2.1893.
Natural Gas Market Overview
Natural Gas ---November NG is up 0.7 cents at $2.946
NG spot futures are near unchanged, although overnight they fell to their lowest DC chart based price since the October futures expiration on September 26th. Weak weather demand is still weighing on prices. Storage is seen as ample, which is also a negative. But, record LNG feed gas volumes are seen limiting the natural gas price fall somewhat.
Meteorologists forecast the weather will remain mostly warmer than normal through October 31. (Reuters)
The EIA gas storage data issued Thursday showed a build of 80 BCF--which was basically in line with the news wire survey forecasts of +78/+81 BCF. Total storage rose to 3.721 TCF, which is +26 BCF/+0.70% versus last year's level and +154 BCF/+4.32% versus the 5 year average. Celsius Energy projects that the final 3 weeks of injection season for natural gas storage will add a further 207 BCF, thus making for an EOS storage total of 3.928 TCF. The EIA in their Weekly Update of 2 days ago projects an EOS of 3.907, based on a 5 year average daily rate of injection of 8.9 BCF/d. The EIA says that the 5 year average EOS is 3.753 TCF.
LSEG said average gas output in the Lower 48 states fell to 106.5 BCF/d so far in October, down from 107.4 BCF/d in September and a record monthly high of 108.0 BCF/d in August.
Bloomberg puts today's feedgas volume to LNG plants at 16.22 BCF/d versus a 30 day average of 15.68 BCF/d. The average amount of gas flowing to the eight big U.S. LNG export plants rose to 16.4 BCF/d so far in October, up from 15.7 BCF/d in September and a monthly record high of 16.0 BCF/d in April. (Reuters) The export strength highlights that without this outlet, domestic prices might have fallen well below $2.80, as per a comment seen from tradingnews.com commentary.
The next day Henry Hub cash versus futures differential widened Thursday by about 10 cents from Wednesday. Thursday's differential was seen at 23.8 to 28.8 cents, versus Wednesday's differential of 14.4/17.4 cents.
On Thursday in LN/NG options, the Feb $7.00/$8.50 one by two ratio call spread traded, with the $7.00 call buyer collecting 1 tick. Also, 5,000 lots of the Jan Feb one month 25 cent / 50 cent CSO call spread in LN/NG options traded Thursday at a cost of 3.8 cents. CME open interest data shows the 25 cent call being an opening position for the most part, while the 50 cent call open interest fell. Additionally in the Jan Feb one month LN (NG options) CSO, the 10 cent/5 cent put spread traded 2 cents. The underlying Jan Feb 1 month futures spread settled Thursday at 18.0 cents.
Technically, the NG spot futures have filled the gap on the DC chart to 2.944. Support at 2.911-2.916 was pierced with a low overnight of 2.893. Below that support comes in at 2.869. Resistance is seen at 2.999-3.000 and then at 3.062-3.067.
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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
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