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3 hours ago
Natural Gas Breaks Trend Low, Eyes on $2.00 Support
By: Bruce Powers | July 26, 2024
• Bearish signal as natural gas drops below $2.015; key support at $2.00 could lead to reversal or further decline.
Natural gas triggered a bearish continuation signal for the downtrend on Friday as it fell below the prior trend low of 2.015 to reach a new low of 2.00. Nonetheless, 2.00 was resistance back on April 10 and it could hold as support now with today’s test of that price area.
It doesn’t look like it given the breakdown to a new trend low that triggered today. However, it is possible that the 2.00 continues to hold as support and leads to a bullish reversal. Today’s price range was relatively narrow with a high of 2.08 and a low of 2.00. Whichever price level is triggered next will indicate the direction.
Break Below 2.00 Targets 1.92
A decisive break down below 2.00 will indicate a likely continuation of the bearish trend. Natural gas would then be heading towards the next lower support zone that is anchored around the 78.6% Fibonacci retracement at 1.92. The 1.94 price area can also be watched as it was resistance previously at the minor swing high on April 10 and may show support now. Notice that there is an unfilled gap that will be filled at 1.94.
Be aware that support from the month of May was seen at 1.91, a three-month low. If the current bearish retracement does not find support above 1.91, a monthly bearish continuation signal would be triggered on a drop below 1.91. If that happens then the next lower support zone from around 1.85 to 1.80 could be next on the agenda.
Weekly Bearish Signal Triggers Today
The decline today triggered a bearish weekly continuation as last week’s low of 2.015 was exceeded to the downside. Since the current week ends today natural gas is on track to close weak, near the lows of this week’s trading range. This is bearish behavior that increases the chance for a test of lower support levels.
If it ends the week below last week’s low a clearer bearish indication will be given. Regardless, this will be the sixth week in a row of lower weekly highs and lower weekly lows therefore signaling a bearish continuation of the decline.
Rally Above Today’s High of 2.08 Signals Strength
There remains a chance that the 2.00 support zone will hold and see demand increase. That scenario would be indicated on a rally above today’s high of 2.08. The 20-Day MA at 2.26 along with this week’s high of 2.27 would be the initial upside pivots.
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9 hours ago
Hammer Time. The Energy Report
By: Phil Flynn | July 26, 2024
If I had a hammer, I’d hammer in the morning. I’d Hammer in the evening and after oil got hammered it might be time to buy.
Oil prices got caught up in the tech wreck ignoring extremely bullish data. Yet as oil saw some stability in stocks, they put in a classic hammer candlestick formation that is viewed as a bullish. Reversal candlestick pattern that mainly occurs at the bottom of downtrends get those candlestick traders all excited.
Yet the fundamental traders also are seeing things that should be another reason the bears may start running for cover.
John Kemp and Reuters pointed out that, “U.S. crude oil inventories have depleted faster than normal over the last four weeks – squeezing hedge funds running short positions, keeping spot prices firm and the futures curve in a steep backwardation.” Kemp says that, “Commercial crude inventories across the United States depleted by 24 million barrels between June 21 and July 19, according to the Energy Information Administration (EIA). He says that the drawdown in crude stocks this year has been more than twice as fast as the average over the previous ten years.” Kemp points out that, “crude inventories were 8 million barrels (-2% or -0.15 standard deviations) below the seasonal average on July 19. He says that the recent draws more than eliminated a surplus of 6 million barrels (+1% or +0.12 standard deviations) four weeks earlier.
The draws were not a surprise to us, but we did think the draws would have started even sooner. We believe that even with a Chinese slow down, oil demand growth has exceeded production growth, helped along by OPEC plus product restraints.
Yet sometimes demand takes a back seat to macroeconomic concerns. Big pullbacks in the Nasdaq and industrial metals raised concerns about the possibility of a potential recession. Yet the stronger than expected reading on advanced GDP reduced those fears even after a much softer report on durable goods. Barrons reported that, “The U.S. economy powered through the second quarter, growing more than expected even as inflation resumed its path back to the Federal Reserve’s 2% target.
Inflation-adjusted gross domestic product grew at an annualized rate of 2.8% in the second quarter, according to an initial estimate the Bureau of Economic Analysis released Thursday. That was not only a significant rebound from the 1.4% pace logged in the first three months of the year, but it surpassed the 1.9% growth forecast by economists surveyed by FactSet.
MarketWatch reported that Durable-goods orders plummeted in June — but one sector was largely to blame. “The numbers: Orders for durable goods fell 6.6% in June, the Commerce Department said Thursday. It is the sharpest drop since the pandemic. Economists had forecast a 0.3% rise in orders for durable goods in June — products made to last at least three years. It is the first decline in durable goods after four straight gains and was driven by a 20.5% drop in transportation orders.
Nondefense orders plummeted 127%. Excluding the volatile transportation sector, orders were up 0.5%. Core capital goods orders, which exclude volatile sectors like transportation and defense, rose 1% last month after a 0.9% fall in May. And shipments of core capex orders went up 0.1% in June. In the Big picture: Business investment is struggling. Year-over-year, durable orders are down 10.3%. That’s the largest drop since June 2020.
Regardless, we still believe that the market has upside risks. We have been warning about this and the hedge funds are starting to get on board with our market outlook. John Kemp wrote that, “The depletion of crude stocks has been accompanied by an influx of investment money into futures contracts based on U.S. crude prices anticipating a further increase in prices.
Hedge funds and other money managers purchased the equivalent of 79 million barrels of futures and options in the NYMEX and ICE WTI contracts over the four weeks ending on July 16. Purchases were faster than for Brent, where fund managers bought the equivalent of 44 million barrels, according to records filed with regulators and exchanges. In consequence, fund managers had amassed a combined position of 239 million barrels (48th percentile for all weeks since 2013) in WTI compared with only 184 million (33rd percentile) in Brent.
The answer my friend, is not blowing in the wind or sun. Another sad story about the old energy transition. Bloomberg reports that, “French electricity grid limitations will constrain power exports from Monday for more than two months, threatening higher prices in neighboring countries. The curbs that run until October will impact exports to Belgium, Germany, Switzerland and Italy. Similar limitations this spring led to record spreads between France’s day-ahead power price and its neighbors.
France’s fleet of nuclear plants is the backbone of Europe’s power system, often supplying cheap electricity to other nations when renewable assets aren’t generating. Without French exports, they have to fall back on more expensive gas-fired generators.
Italy, which is already struggling as summer heat boosts cooling demand, will be the most exposed to upward price moves. French grid operator RTE said limitations will increase when exports toward its eastern borders exceed 8 gigawatts. There’s a chance that curbs will be needed even before that threshold — which will be updated on Sept. 8 — is reached. Italy is the most vulnerable, then Switzerland, followed by Germany and Belgium, RTE said.
Raising concerns that the golden age of high refining margins is over. Regardless refining merchants are still decent enough to make a pretty good profit the gasoline crack spreads are trying to bottom, and diesel spreads should pick up we have some strong seasonal tendencies for bull spreads in heating oil that kick into gear into the month of August.
High temperatures in August could turn around the natural gas market as well. Yet yesterday’s somewhat bearish weekly natural gas report didn’t really inspire a lot of new buying. Even though the increases were less than the 10-year average, it was higher than expected. The Energy Information Admintation reported that working gas in storage was 3,231 Bcf as of Friday, July 19, 2024, according to EIA estimates. This represents a net increase of 22 Bcf from the previous week. Stocks were 249 Bcf higher than last year at this time and 456 Bcf above the five-year average of 2,775 Bcf. At 3,231 Bcf, total working gas is above the five-year historical range.
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1 day ago
Natural Gas Falls to Retest Recent Support
By: Bruce Powers | July 25, 2024
• Natural gas continues its downtrend, risking further lows as key support levels are tested, while there is potential for a double bottom reversal if 2.16 can be recaptured.
Natural gas continued to weaken on Thursday, falling to a five-day low of 2.06 before seeing intraday support and a minor bounce. This puts it at risk of testing recent lows and possibly a continuation lower to test lower price targets.
Since a strong bullish breakout was seen on Monday natural gas has been weakening to the point where it reached a five-day low, while key support remains at last week’s low of 2.015. It has given up more than the upside seen on Monday’s breakout, a sign of weakness, and looks poised to test lower price levels.
Continuation Lower Will Target 1.92
If the 2.015 fails to hold as support natural gas could easily complete a 78.6% Fibonacci retracement at 1.92. It can be combined with the prior interim swing high at 1.94 to generate a potential support range from 2.015 to 1.92. Further down is the completion of a prior gap fill at 1.85. If that fails to turn natural gas back up the 200% extension of the falling ABCD pattern completes at 1.83. And that price level is close to the apex of the bottom symmetrical triangle pattern at 1.80.
Potential Double Bottom if Strength Returns
An alternative scenario to the continuation of the retracement is that the low today establishes a second bottom for a potential double bottom bullish setup. It is too early to tell if that is the case, but the next moves should provide some clarity. As noted above, a bearish signal is generated on a drop to a new retracement low. Today’s high of 2.16 can be used to indicate signs of strength that may lead to a double bottom upside breakout. The trigger from the double bottom would be a rally above this week’s high of 2.27.
Potential Bearish Weekly Chart on Deck
Unless there is a rally on Friday natural gas is on track to end the week with bearish shooting star candlestick pattern. This week is also an inside week as this week’s trading range is contained within last week’s range. That is a change from the prior sequence of five weeks with lower weekly highs and lower lows. Nevertheless, which price level is triggered next will provide the clue as to direction, either a continuation lower or a bullish reversal.
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1 day ago
Crude Oil Reversal Day Signals Strength
By: Bruce Powers | July 25, 2024
• Signs of a bullish reversal in crude oil emerge as it bounces from 77.06, reclaiming key levels and targeting a breakout above 79.45.
It is starting to look like crude oil may have found a bottom today, Thursday, as it generates a reversal day. A new retracement low of 77.06 was hit today before signs of support. That low completed a retest of support around the 61.8% Fibonacci retracement level at 77.32. Subsequently, buyers took back control and ran crude up to exceed yesterday’s 72.29 high.
At the time of this writing, it continues to trade near the highs of the day. If it closes in the top third of the day’s trading range a bullish hammer candlestick pattern will be established. Moreover, today’s rise recaptured the 200-Day MA at 78.84, providing an additional sign of strength in demand.
Bullish Signal Above 79.45
A bullish signal will be triggered on a rally above today’s high of 79.45. If weakness comes first, it will likely be used by traders to enter or add to positions in anticipation of the potential rally. Support is clear at today’s low of 77.06. Of course, if that 77.06 low is broken to the downside the bullish scenario is negated for now.
There is also a potential bullish setup forming in the weekly chart (not shown). If crude can maintain strength heading into this week’s close, a weekly bullish hammer candlestick pattern will be formed. Subsequently, a weekly bullish breakout would be triggered above this week’s high, which is currently at 80.35.
Symmetrical Triangle Breakout Could Trigger Soon
Crude oil attempted to break out above its downtrend line in early-July and failed, leading to the current retracement. This means that today’s low is probably the low before another breakout attempt occurs. This time crude may be successful. The trendline marks the top boundary of a large symmetrical triangle consolidation pattern.
It means that an upside breakout above the trendline could see a clear improvement in volatility to the upside. During the consolidation phase volatility had declined and it is reflected in the narrowing overall price range as the triangle formed. A price of 83.69 can be used currently as a proxy for the line. It comes from the most recent swing high.
Rising ABCD Pattern Targets 86.50 Initially
Since it is likely that today’s low ends the retracement, a new rising ABCD pattern has been added to the chart. An initial target of 86.50 is identified from that pattern. However, that is a target that is very likely to be reached as the CD leg of the pattern is 78.6% of the AB leg, rather than the 100% that is used more frequently. The 100% target from the pattern is up at 89.07.
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1 day ago
Shake The Dust. The Energy Report
By: Phil Flynn | July 25, 2024
Oil trade is having a hard time shaking off economic fears even after some very bullish petroleum data suggests that crude supply is tightening, and US oil production is plateauing. Confidence in the world’s largest economy is being shaken after Biden failed to seek reelection and the attempt on President Trump’s life. Pro Gaza and Hamas protests in Washington where they burned the American Flag and destroyed property while Israeli Prime Minister Benjamin Netanyahu gave a speech to congress and reports that Israel has put off ceasefire talks with Hamas were in the headlines yesterday. Even reports that China moved with another surprise rate cut was not enough to turn things around.
The People’s Bank of China on Thursday lowered the rate on its one-year medium-term lending facility to 2.3% from 2.5%—the first such cut it has made since August last year. It also injected 200 billion yuan, or about $27.54 billion, of liquidity into the market via the mechanism.
This comes against a backdrop of increasing threats to the US from our adversaries. Fox News said that, “In a press release from NORAD, the agency confirmed that they detected, tracked, and intercepted two Russian TU-95 and two PRC H-6 military aircraft operating in the Alaska Air Defense Identification Zone (ADIZ) on July 24. NORAD fighter jets from the United States and Canada conducted the interception. This comes hours before Biden was set to address the nation in his first public address since he announced he would not be running for a second term in office.
These fears along with signs that the US economy may be flirting with an accelerating economic slowdown will put more focus on today’s GDP reading,
Yet if you look at yesterday’s Energy Information Administration supply report, there are no signs of a recession as demand surged, inventories fell and US oil production flatlined.
The EIA reported that U.S. commercial crude oil inventories decreased by a more than expected 3.7 million barrels from the previous week. At 436.5 million barrels, U.S. crude oil inventories are about 5% below the five-year average for this time of year.
Total motor gasoline inventories decreased by a much more than expected 5.6 million barrels from last week and are about 2% below the five year average for this time of year.
Distillate fuel inventories also decreased by a much more than expected 2.8 million barrels last week and are about 9% below the five-year average for this time of year.
The EIA reported that US oil production has steadied coming in at 13.122 million b/d for the last 4 weeks. Couple that with the fact that rig counts are down 12% from a year ago according to Baker Hughes and it will be hard for us to add more production unless we get a more reasonable regulatory environment.
On the demand side, we soared in every major category lifting the four week moving demand totals. The EIA put demand over the last four-week period averaged 20.6 million barrels a day, up by 0.4% from the same period last year. Over the past four weeks, motor gasoline demand averaged 9.3 million barrels a day, up by 2.5% from the same period last year. Distillate fuel demand averaged 3.7 million barrels a day over the past four weeks, up by 3.2% from the same period last year. Jet fuel demand was up 3.8% compared with the same period last year as we saw record breaking TSA screening over the Fourth Of July holiday week.
The petroleum supply and demand fundamentals based on the numbers and based on the fact that China did another rate cut should be very bullish. The problem is macroeconomic fears and the fact that people are probably going to pull in their horns after the big sell off and the NASDAQ is weighing on price sentiment.
If you don’t think we’re on the verge of a major stock market crash this opportunity to start buying some bullish calls. If you do think we’re going to have a major stock market crash, it’s best to either stay away or buy some puts. My take is that we’re going to level the ship and the focus will return once again to the tight supply situation that we face globally so the US GDP shows signs of strength then the recession fears or economic slowdown fears may be tempered just a bit.
Today we get the Energy Information Administration (EIA) natural gas storage and the average estimate is for a 16 bcf increase. Bulls are cheering the return of the Freeport LNG plant. This comes as the EIA reported that natural gas storage injections remain below five-year average so far this summer.
The EIA says that injections into natural gas storage in the Lower 48 states since April 1 have totaled 950 billion cubic feet (Bcf), according to our July 18 Weekly Natural Gas Storage Report. So far this injection season (April 1–October 31), the amount of natural gas injected into storage (less withdrawals) is 15% (166 Bcf) less than the previous five-year average (2019–23) for the same period and 15% (172 Bcf) less than the same time last year.
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2 days ago
Natural Gas Potential Bullish Breakout for Natural Gas Above $2.17
By: Bruce Powers | July 24, 2024
• A bullish breakout for natural gas is likely if it rises above $2.17, with targets including the 20-Day MA at $2.33 and higher levels.
Natural gas weakened on Wednesday as it fell below Tuesday’s low yet remained within the trading range from Monday. Monday’s low was 2.09 and today’s low was 2.10. If it closes above 2.09 then a potential bullish setup will be established. There was one day of strong bullish momentum following Monday’s breakout above the internal downtrend line.
A wide range green candlestick with a strong close near the highs of the day’s range completed the day. The subsequent two-day pullback slowed the ascent as profit taking took hold, but natural gas retains a short-term bullish posture and is working on reversing the bearish retracement.
Breakout Above 2.17
A bullish breakout will be triggered on a decisive rise above today’s high of 2.17 and confirmed on a daily close above that price level. Natural gas should then be ready to test this week’s high of 2.27 and higher prices. The first area where resistance might be seen is around the 20-Day MA at 2.33. Notice that the 20-Day line is close to the higher downtrend line, which also marks dynamic resistance for the recent decline.
200-Day MA is a Target at 2.43
If natural gas can eventually rise above the downtrend line and stay above it, there it has a chance of reaching higher targets. The 200-Day MA would be next on the agenda, at 2.43 currently, while the 38.2% Fibonacci retracement is nearby at 2.45. Further, there is prior support and now potential resistance at 2.47. If those price levels can be exceeded to the upside, natural gas will likely test resistance around the 50-Day MA at 2.56 and the 50% retracement at 2.59.
Weekly Bullish Breakout Above 2.285
Last week’s high of 2.285 should also be watched as a rise above it will signal a bullish reversal in the weekly time frame. It would be the first time since the June peak of 3.16 that a prior week’s high had been exceeded and would be a key sign that strength is returning. A bullish weekly reversal would be confirmed on a daily close above last week’s high.
Also, this week’s price action is contained within last week’s price range. Since the week is more than half over there is a chance that it may end the week in the same position. If so, heading into next week, a bullish signal will be generated on a rally above this week’s high of 2.27.
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2 days ago
Crude Inventories Decline By 3.7 Million Barrels
By: Vladimir Zernov | July 24, 2024
Key Points:
• Strategic Petroleum Reserve increased from 373.7 million barrels to 374.4 million barrels.
• Domestic oil production remained unchanged at 13.3 million bpd.
• WTI oil settled near $77.50 after the release of the EIA report.
On July 24, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories declined by 3.7 million barrels from the previous week, compared to analyst consensus of -2.05 million barrels. At current levels, crude inventories are about 5% below the five-year average for this time of the year.
Total motor gasoline inventories decreased by 5.6 million barrels, compared to analyst forecast of -0.9 million. Distillate fuel inventories declined by 2.8 million barrels.
Crude oil imports declined by 166,000 bpd, averaging 6.9 million bpd. According to the report, crude oil imports averaged 6.8 million bpd over the past four weeks.
Strategic Petroleum Reserve increased from 373.7 million barrels to 374.4 million barrels as U.S. continued to buy oil for reserves.
Domestic oil production remained unchanged at 13.3 million bpd. Most likely, production will not grow in the near term due to the recent pullback in the oil markets.
WTI oil settled near the $77.50 level as traders reacted to the report. The report was bullish as crude inventories and gasoline inventories decreased, highlighting strong demand for energy. However, the market is worried about the problems of China’s economy, so it remains to be seen whether WTI oil will be able to gain upside momentum after the release of the EIA report.
Brent oil is trading near the $81.50 level as traders react to the EIA data.
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2 days ago
Phil Flynn: The Energy Report
By: Phil Flynn | July 24, 2024
Oil prices are bouncing back from a six-week low as the market tries to get the story straight. Should the oil market be concerned about weakening demand or evidence of rapidly tightening supply?
Oil prompt spreads in the market suggest tightening supply and a big drop in the US oil inventories as reported by the American Petroleum Institute (API) is feeding into that narrative.
Should the market buy into another report of a potential ceasefire between Hamas and Israel, or should they have learned by now that the likelihood of a ceasefire continues to be a long shot?
Should the market be selling off on expectations of a president Donald Trump victory or should we be preparing for the possibility of a Kamala Harris presidency which would include more than likely a ban on fracking in the most anti fossil fuel agenda surpassing even that of her predecessor the outgoing President Joe Biden?
On the one hand you do have some legitimate demand concerns
China’s economy is struggling and Europe Delivered some weaker than expected manufacturing data this morning. Euro manufacturing fell to 45.6 rating, well below the estimate of 46.1. The service sector wasn’t much better, coming in at a rating of 51.9%, well below the 52.9% expected. The composite was able to avoid a recession but still came in weaker than expected at 50.1.
Yesterday oil traders and algos seemed to react to a Bloomberg headline that exclaimed “Cheap Price for North Sea Oil Shows Demand Remains Muted! ! GS Caltex bought prompt Forties crude at very low price ! Sellers struggled to find buyers for unsold Forties cargoes!
Yet despite the selloff the Brent Time spreads still suggested that demand for oil is still exceeding supply.
In the US the API report confirms what the spreads have been saying all along, and that is demand is exceeding supply, The API report that as crude oil inventories fell by 3.9 million barrels last week. That was the sixth week in of row and declines and this week was joined by a more than expected 2.8-million-barrel drop in gasoline inventories and a more than expected drop of 1.5-million-barrel drop in distillate inventory.
We also had a report stockpiles of oil products at the UAE’s Port of Fujairah declined 8.3% in the week ended July 22, the first drop in three weeks as exports rebounded, according to Fujairah Oil Industry Zone and ship-tracking data.
The breakdown showed a 15% slump in middle distillates to 2.711 million barrels, the first drop in four weeks. Light distillates fell 8.5% to 6.236 million barrels, the first drop in three weeks, while heavy distillates decreased 5.9% to 9.415 million barrels. They all fell from five-week highs a week earlier.
This comes as a Canadian wildfire could impact as much as 388,000 barrels a day of oil production. Never a good time to lose Canadian oil output but because the United States imported a record amount of oil from Canada last week is coming at a bad time for US consumers.
The Biden Administration and the Democratic Nominee Kamla Harris are the most US oil and Gas administration in history. They have tried to make it harder and more expensive to produce fossil fuels unless you are talking about Fossil fuels in Iran or Venezuela.
Reuters is reporting that “India’s Reliance Industries (RELI.NS), opens new tab has received approval from the United States to resume importing oil from Venezuela despite Washington’s sanctions, a source familiar with the matter said on Wednesday. The United States in April re-imposed sanctions on Venezuela’s oil sector in response to President Nicolas Maduro’s failure to meet his election commitments but said some firms would be authorized to trade and operate in Venezuela.
Of course, the electric car push really hasn’t been that friendly for the environment as we know it takes almost three times the carbon emissions to produce an electric car than it does the internal combustion engine. So, it’s interesting to see how politicians are doubling down on what is ultimately a losing strategy
Bloomberg News reported in a must read that “Commission President Ursula von der Leyen is sticking to her guns on banning sales of combustion-engine cars by 2035.
Bloomberg Writes “But her ambitions clash with the realities makers of electric vehicles are facing. US, German and French manufacturers are suffering from soft demand and producing EVs up to 45% below initial expectations. Some, like Porsche and Mercedes-Benz, are abandoning sales targets for the segment, while the EU’s biggest battery producer is looking to broaden sales beyond the car industry. All eyes are now on von der Leyen, who is due to present her Clean Industrial Deal within 100 days of the start of her second term. The plan will aim to preserve climate goals while boosting the competitiveness of European manufacturing.”
Based on today’s EU economic data, what she is doing is not working.
The oil and product sell- off yesterday is partly due to the summer doldrums, We think the demand fears are overstated at least when you compare it to supply.
Ultimately if supply continues to fall prices are still vulnerable to upside price spikes this dip could be a good opportunity to lock in some hedges once again or at least present some opportunities for some great day trades.
Just can’t keep that natural gas market down. The Freeport LNG export terminal is coming back faster than expected and the possibility that we could see the most significant heat of the summer is starting to play into price.
Keeping an eye on the Fox Weather Channel ap, I’ve noticed that the Atlantic for right now has been extremely quiet.
That is almost amazing because some of the hurricane prognosticators were calling for a very active season. So even the market still recovers from the aftermath of Hurricane Beryl on the plus side it looks clear right now. Yet stay close to the Fox Weather ap for changes.
EBW analytics is warning that for natural gas “ the largest risk may lie in rebuilding speculator shorts, boosting chances for a sizable NYMEX short-covering rally even absent fundamental justification.
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3 days ago
Natural Gas Eyes Higher Targets After Bullish Breakout
By: Bruce Powers | July 23, 2024
• Natural gas consolidates after a bullish reversal, targeting higher levels with key resistances at 2.36, 2.43, and potential resistance zones up to 2.59.
Natural gas moved into consolidation on Tuesday following a bullish reversal on Monday. It is on track to complete an inside day today with a high of 2.27 and a low of 2.18, at the time of this writing. Today’s range is contained within the top half of Monday’s trading range, which is a sign of strength. In other words, the pullback today has been minor and has a good chance of resolving itself to the upside.
Bullish Reversal Triggers on Monday
On Monday natural gas showed strength as upward momentum kicked in triggering a bullish breakout of the internal downtrend line. The day ended with a wide range green candlestick pattern and a five-day closing high. This is bullish behavior that indicates there is likely more upside to go. A low volatility day following yesterday’s sharp move should be healthy for developing rally. Last week’s high of 2.285 is the next upside pivot.
First Upside Target is the 20-Day MA
There are a couple of initial higher targets that are well identified. Simplified, the 20-Day MA is at 2.36 and it can also be used as a guide relative to the top downtrend line. If that level is broken to the upside, the 200-Day MA comes into sight at 2.43. There are additional price target levels around the 200-Day line that generate an area of possible resistance. They include the 38.2% Fibonacci retracement at 2.45 and a prior swing low around 2.48.
Since the 38.2% retracement is generally considered a minimum potential retracement in Fibonacci analysis, it seems that the 2.45 level has a good chance of being hit. Certainly, given the relationship to the downtrend line, the 20-Day line should be reached at a minimum. Once there was an upside breakout of the internal downtrend line the higher trendline became a target.
Higher Target Zone up at 2.56
Subsequently, if an upside breakout above the 200-Day line can be maintained, the chance of reaching a higher target zone from around 2.56 to 2.59 improves. That price zone comes from the 50-Day MA and 50% retracement, respectively. Notice that an advance above the 200-Day line puts natural gas above the top downtrend line, one indication further confirming a bullish reversal of the recent bearish correction.
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3 days ago
Crude Oil Falls Below 200-Day MA, Faces Bearish Momentum
By: Bruce Powers | July 23, 2024
• Crude oil tests support at 61.8% retracement, falling below the 200-Day MA, with potential to reach 78.6% retracement at 75.3 before a bullish reversal.
Crude oil fell on Tuesday to test support around the 61.8% Fibonacci retracement with the day’s low of 77.50. That is the fourth day down in a row for crude and it included a breakdown below the 200-Day MA at 78.93. Although there was subsequently an intraday bounce, crude oil is set to close below the 200-Day MA for the first time since June 14.
This opens the possibility that crude may fall to the 78.6% Fibonacci retracement at 75.3 before finding strong support that leads to a bullish reversal. Notice that the prior retracement began from the April swing high and eventually found support a little above the 78.6% retracement.
Moving Averages Show Weakness
The purple 20-Day MA has turned down and the 200-Day line remains slanted down. These indications along with the clear bearish momentum that kicked in on Friday put the lower targets at risk of being reached. An internal upward sloping trendline has been added to the chart. Notice where it converges with the area around the 78.6% price zone. It can be used as an additional guide if that price zone is approached.
Trading Within Large Symmetrical Triangle Pattern
Crude oil has been trading within a relatively large symmetrical triangle. Now that a bearish retracement is in play there is a potential for it to fall and test support at the lower line of the triangle. It got close during the prior retracement. Nonetheless, at a minimum it increases the chance for a test of support around the slightly higher internal uptrend line, along with the 78.6% retracement zone.
Bullish Monthly Reversal Remains Valid
Regardless of short-term price behavior, gold triggered a bullish reversal on the monthly chart earlier in July. Whether this month closes weak or not, the bullish monthly signal remains valid, and it points to an eventual recovery in the price of gold and another challenge to recent highs of 84.74. Eventually, a breakout of the symmetrical triangle will occur, and the analysis currently looks to favor a bullish breakout.
If a bounce comes before a new retracement low, each of the moving averages will present a potential resistance level. Starting with the 200-Day line at 78.93, crude would then test resistance around the 50-Day MA at 80.03, and finally the 20-Day MA at 82.12.
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3 days ago
China Cuts Both Ways. The Energy Report
By: Phil Flynn | July 23, 2024
China cuts rates to try to support the economy at a time when the physical oil market tightens. The People’s Bank of China on Monday cut the seven-day reverse repo rate to 1.7% from 1.8%, and minutes and lending rates were lowered by the same margin at the monthly fixing. Oil got a bounce but faded. Yet there is still support because even as China’s economic outlook is uncertain, the oil market is tightening anyway. We have discussed the tightening physical market, and it is starting to get more attention.
Bloomberg News and Zero Hedge reported that, “oil prices may have been confined to a tight range this month, but an array of signals from the physical market suggest the next move could be a break to the upside.” Bloomberg is pointing out the same thing we mentioned last week and that was the spreads in the markets that suggest a growing oil global oil supply deficit.
Last week U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.9 million barrels from the previous week. At 440.2 million barrels, U.S. crude oil inventories are about 5% below the five-year average for this time of year. They write, “First of all, there are the time-spreads between monthly futures contracts, which have shown a strengthening premium on prompt deliveries over the past six weeks as US driving demand climbs toward its summertime peak. The so-called flat price of crude has lagged, pressured by concerns over the global economy, but sooner or later may need to catch up. They say “The entrenched premium on prompt supplies — known as backwardation — indicates that global oil inventories are depleting at the swift pace anticipated this quarter by forecasters like the International Energy Agency. This is substantiated by a hefty decline in US crude inventories, down by roughly 20 million barrels over the past three weeks.”
More than likely this week we will see those crude oil Inventories in United States fall even further. I expect to see at least a 3 million barrel draw on crude oil this week but there is some talk that the draw may be even larger. Last week U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.9 million barrels from the previous week. At 440.2 million barrels, U.S. crude oil inventories are about 5% below the five-year average for this time of year.
Biden may be out but his spending on green energy craziness continues. Reuters reports that, “The Biden administration on Monday announced 25 projects pitched by 30 different state, local and tribal governments that applied for $4.3 billion in grants created by the president’s signature climate law. The grants, which will be distributed to winners by early autumn, will support deployment of clean energy technology across sectors ranging from housing to agriculture. The U.S. Environmental Protection Agency (EPA) said it has reviewed nearly 300 applications that requested over $30 billion. The administration has said the selected projects when combined would reduce greenhouse gas pollution by as much as 150 million metric tons of carbon dioxide equivalent (CO2e) by 2030, or roughly 2 percentage points. The U.S. has pledged to slash its CO2e emissions by 50%-52% by that year.”
Yet will it really. So far, the projections by the Biden administration have missed the mark as far as reducing greenhouse gas emissions and by the green energy jobs that they promised. They have missed the mark on global energy security as the risk to move oil and gas is higher than it has been in decades.
On Monday Reuters reported that, “Russian Foreign Ministry spokeswoman Maria Zakharova on Tuesday accused Ukraine of using the issue of energy transit via its territory as a “manipulation button”, the TASS state news agency reported. Slovakia and Hungary said earlier this month that they had stopped receiving oil from Russia’s Lukoil through the Druzhba pipeline after Ukraine imposed a ban last month on the transit of resources from Lukoil via Ukrainian territory. A senior Russian oil industry source said on Tuesday that oil transit had not resumed.
Crack spreads are trying to improve but have been relatively weak over time. Products are looking a little bit better technically and the focus will be on demand today.
Natural gas is rising in increased demand expectations due to power generation, but producers are still struggling with an era of historic low prices. The Energy Information Administration reported that, “U.S. wholesale natural gas spot prices fell to record lows in first half 2024. The average monthly wholesale spot natural gas price at the U.S. benchmark Henry Hub fell by 20% to $2.56 per million British thermal units (MMBtu) between January and June of this year, according to data from Refinitiv Eikon. In January, the Henry Hub price averaged $3.18/MMBtu, then dropped to $1.49/MMBtu in March, marking the lowest average monthly inflation-adjusted price since at least 1997. In addition, prices from February through April 2024 were the lowest ever recorded for these months.
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4 days ago
Natural Gas Sharp Rally Targets Higher Resistance Zones
By: Bruce Powers | July 22, 2024
• Natural gas surged from its recent low, breaking an internal downtrend line and aiming for key resistance levels, indicating strong bullish momentum.
Natural gas accelerated an advance on Monday off the recent 2.015 swing low of 2.015. That low completed a 36.2% bearish correction. A five-day high of 2.27 was reached today before there were minor signs of resistance. Where natural gas closes Monday’s trading session will be telling. Slightly stronger demand will be indicated on a daily close above 2.19 rather than below that price level. Given the wide range green candle for today, natural gas looks like it will be testing higher potential resistance levels before this bounce is complete.
Bullish Momentum Points to Higher Targets Starting with 2.39
Today’s sharp rally triggered a breakout of the internal downtrend line, and the subsequent strong bullish reaction shows the market aware of the line. Once the internal downtrend line is broken, the higher trendline becomes a target. Since the purple 20-Day MA, currently at 2.39, recently converged with the higher downtrend line, it can be watched together with the trendline as a potential resistance zone. Moreover, the 20-Day line is quickly followed by a confluence of indicators showing potential resistance at a range from 2.44 to 2.48. It starts with the blue 200-Day MA at 2.44, and includes the 38.2% Fibonacci retracement at 2.45, then ends at an interim swing low of 2.475 from May 28.
The May 28 swing low had significance previously as it was part of the rising price structure of higher swing lows and higher swing highs. Once it was broken to the downside following the June 11 trend high, another bearish reversal signal was indicated. It happened to correlate with support around the 200-Day MA at the time.
Higher Target Zone Begins at 2.57
In case the 2.475 level is broken to the upside, the next higher price zone looks to be from 2.57 to 2.59. The first level is the orange 50-Day MA and the second is the 50% retracement zone at 2.59. Of course, if this higher price level is reached, natural gas will be back above the 200-Day line, 20-Day line and downtrend line, a sign of strength.
Weakness an Opportunity to Position for Upside Continuation
Given the above short-term bullish scenario pullbacks into today’s price range of 2.09 to 2.27 will likely be used by traders as an opportunity to position themselves for a continuation of today’s bounce. If last week’s low completed the retracement, then not only is the 20-Day MA an initial target, but today’s bullish momentum may be the beginning of an advance that eventually attempts another breakout of the top long-term downtrend line.
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4 days ago
Phil Flynn: The Energy Report
By: Phil Flynn | July 22, 2024
It looks like the democrats are the threat to democracy as the candidate that received the most votes in their primary is being forced to step down. Biden, the man who got the most votes in history in the last election and swept his party‘s nomination voting, is out of it. We did not hear that directly from him but in a press release he said among other things that, “while it has been my intention to seek reelection, I believe it is in the best interest of my party and the country for me to stand down and to focus solely on fulfilling my duties as President for the remainder of my term.”
Many people believe the reason why the president is stepping down is because he’s losing his mental faculties. Yet that raises questions as many Americans wonder why the democratic party and many members of the press covered for him when it was obvious he was in decline at time when geopolitical risks are rising. That is especially true for risk and policies that impact energy.
The Biden administration’s attempt to get back into the ill-fated Iranian nuclear deal is now looking like another major mistake. Secretary of State Blinken is warning that Iran now is now just 1 or 2 weeks from breakout capacity to produce nuclear material for a weapon. This comes after a policy approval that appeased the Iranian regime allowing them to sell more oil which hit near a six year high. That brought them billions of dollars.
The administration still failed get into the type of agreement that Joe Biden wanted while they argue that it’s all Trumps fault for pulling out of the JOCPA agreement in the first place . A deal that all expets knew would still allow Iran to get a nuclear weapon and also had allowed them to acquire ballistic missiles.
The reality is that after Trump pulled out of the deal that was a bad deal, he then put pressure on Iran and their oil revenue had fallen to a trickle. Now after the Biden appeasement, they rebuilt their oil and gas industry. They were able to send billions of dollars to support Hamas, the Houthi rebels and Hezbollah. Because of that the world has become a more dangerous place.
Now activity has raised the risk of a wider conflict after Israel was attacked and then struck back. The AP reported that, “The Israeli military said it intercepted a missile fired from Yemen early Sunday, hours after Israeli warplanes struck several Houthi targets in the Arabian Peninsula country. The Israeli airstrikes — in response to a deadly Houthi drone strike on Tel Aviv — were the first time Israel is known to have responded to repeated Houthi attacks throughout its nine-month war against Hamas. The burst of violence between the distant enemies has threatened to open a new front as Israel battles a series of Iranian proxies across the region.
Bloomberg reports that Rosneft PJSC’s major Tuapse refinery in southern Russia caught fire after a Ukrainian drone attack early Monday, regional authorities said.
Biden was the most anti fossil fuel and anti-US energy president in history. A president that called the US energy industry ‘price gougers and war profiteers’ and then tried to take credit for record breaking oil production. Of course it was the US energy industry that became more efficient and most of those innovations came before Biden.
Reuters reported, “U.S. energy firms this week added oil and natural gas rigs for the second time in three weeks, energy services firm Baker Hughes (BKR.O), said in its closely followed report on Friday. The oil and gas rig count, an early indicator of future output, rose by two to 586 in the week to July 19, its highest since late June. Despite this week’s rig increase, Baker Hughes said the total count was still down 83 rigs, or 12%, below this time last year.
The rig count that is sharply lower than it was a year ago it’s a signal that U.S. oil production may be peaking and it’s going to be a challenge for the next president to keep that production going in the right direction.
And if Vice President Kamala Harris is the standard bearer for the democrat party, the outlook may even be bleaker for US energy and innovation. Vice President Harris has been open coming out against fracking, she has made a career suing US oil and gas companies. She has also been very supportive of the policies that have appeased dirty oil producers like Iran and Venezuela. If you did not like Biden’ s energy policy, beware of Harris because she is even more radical
China’s economy may be weak, but they are breaking records for air travel. China flight stats reported a record breaking 3,024,798 flights. That is up 11.98% from a year ago and a new record high.
This comes as Bloomberg reported, “An uptick in purchases of Middle Eastern oil by Chinese refiners is helping to support the physical crude market, even as deep-seated concerns remain about the trajectory of the nation’s demand.” They say that companies including Unipec and PetroChina Co. have boosted spot purchases of September-loading Middle Eastern crude to arrive in September-October, according to traders and analysts. That comes as state refiners ramp up following maintenance, a new private refiner prepares to start operations, and more buying is expected for the nation’s strategic reserves.
We also must keep an eye on Canada and oil production shut-ins. Reuters reports, “Wildfires raging through the northern part of Canada’s Alberta have forced evacuations of three communities, a provincial body said on Saturday, as the oil-rich province continues to fight five different ‘wildfires of note’ in separate areas. Wildfires of note is often considered to be of significant threat to public safety, communities, and critical infrastructure. The evacuation orders have been issued across John D’Or, Fox Lake and Garden River communities in northern Alberta, covering close to 62,000 hectares and comprising 5,000 inhabitants.
The oil market today has been the flip flopping from positive to negative over the last 24 hours since the Joe Biden news. Our expectations are that we should find a bottom here as the global market is tightening. In the short term, we’re starting to see some hesitation to move higher. Until we get a clearer direction on which way the country is going to go, the market is looking at a Trump presidency as a potential negative to oil prices as he will allow increased oil and gas production.
Natural gas prices are holding in as demand continues to be strong.
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6 days ago
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | July 20, 2024
• Following futures positions of non-commercials are as of July 16, 2024.
WTI Crude Oil: Currently net long 316.9k, up 16.9k.
In May last year, West Texas Intermediate crude bottomed at $63.57, earlier having peaked at $130.50 in March 2022. After the May bottom, it then peaked at $95.03 last September – for a lower high. Another lower high was hit this April when the crude retreated after ticking $87.67. A falling trendline from the September high drew sellers two weeks ago at $84.52. This has been followed by back-to-back weekly declines, with this week down 4.3 percent to $78.64/barrel.
Inability to defend $81-$82, which marks the top end of a 10-point range, opens the possibility that WTI eventually heads toward $74, which is where a rising trendline from the May 2023 bottom lies. Early June, the crude bottomed at $72.48 before attracting bids.
In the meantime, US crude production in the week to July 12th was unchanged w/w at a record 13.3 million barrels per day; the level was earlier hit seven times from last December to February. Crude imports rose 277,000 b/d to seven mb/d. As did stocks of gasoline and distillates, which respectively grew 3.3 million barrels and 3.5 million barrels to 233 million barrels and 128.1 million barrels. Crude inventory, however, fell – down 4.9 million barrels to 440.2 million barrels. Refinery utilization decreased 1.7 percentage points to 93.7 percent.
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6 days ago
NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | July 20, 2024
NY Crude Oil Futures closed today at 7864 and is trading up about 9.75% for the year from last year's settlement of 7165. Presently, this market is currently trading below last month's close and it had been weak for the past 3 months and if the market continues to remain beneath the previous month's close of 8154, then it will be in a weak position just yet. This price action here in July is reflecting that this has been still a bearish reactionary trend on the monthly level. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 8452 intraday while it is still trading above last month's close of 8154.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Looking at the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bearish position at this time with the overhead resistance beginning at 8001 and support forming below at 7758. The market is trading closer to the support level at this time.
On the weekly level, the last important high was established the week of July 1st at 8452, which was up 4 weeks from the low made back during the week of June 3rd. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed beneath that low which was 8081. This was a very bearish technical indicator warning that we have a shift in the immediate trend. We are trading below the Weekly Momentum Indicators warning that the decline is very significant and we need to pay attention to the timing and reversals. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8452 made 2 weeks ago. Still, this market is within our trading envelope which spans between 6635 and 9279.
Looking at this from a broader perspective, this last rally into the week of July 1st reaching 8452 failed to exceed the previous high of 8767 made back during the week of April 8th. That rally amounted to only twelve weeks. Right now, the market is below momentum on our weekly models casting a bearish cloud over the price action as well as trend. Looking at this from a wider perspective, this market has been trading up for the past 6 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in April at 8767. After a four month rally from the previous low of 8070, it made last high in April. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in July, this market has held above last month's low of 7248 reaching 7248.
Some caution is necessary since the last high 8767 was important given we did obtain two sell signals from that event established during April. That high was still lower than the previous high established at 9503 back during September 2023. Critical support still underlies this market at 6760 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
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1 week ago
Natural Gas Price Stability Signals Support
By: Bruce Powers | July 19, 2024
• While in a downtrend, natural gas prices remain stable, needing to rise above 2.21 to signal strength and test the 200-Day MA at 2.44.
Natural gas prices remained relatively stable on Friday, up for the day and reaching a high of 2.14, which exceeded yesterday’s high. However, it remains in a downtrend and the past two days of price action are contained within Wednesday’s one-day trading range. Resistance for the day was seen at the internal downtrend line. That line marks the first line of resistance for the current bearish retracement.
Bear Trend Remains Dominate
The bear trend can be expected to continue until there are signs that sentiment is starting to change. Certainly, having found support at this week at a low of 2.015 shows potential for a bullish reversal but there are no signs of it yet. Given the current price pattern natural gas would need to rise above 2.21 and stay above it for an indication of strength that may be sustainable for at least a few days. If that happens a test of the 200-Day MA as resistance is a likely target as it is also marked by several other indicators. The 200-Day line is now at 2.44.
Above 2.21 Shows Strength
A rally above 2.21 would also put natural gas well above the internal downtrend line, a sign of strengthening. That would make the higher trendline a target. Notice that the purple 20-Day MA has converged with the internal trend line, and they are identifying a similar area of price. The 20-Day line is now at 2.41. That would put the target of the 20-Day MA slightly below the 200-Day line, as it is now. There are several other indicators identifying a similar price area as the 200-Day MA. Together, they create a potential resistance zone from 2.44 to 2.62.
Minor Bullish Sign in Weekly Chart
Natural gas is about to complete its fifth week in a row with lower weekly lows and lower highs. Also, this week it is on track to close at the highest price relative to the week’s trading range. In other words, relative to the week’s range, this week is set to close stronger than the prior five weeks. Not a big deal, but rather a small indication that natural gas is seeing some support off this week’s lows.
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1 week ago
All Charged Up. The Energy Report
By: Phil Flynn | July 19, 2024
Energy innovation is about to be unleashed after President Trump signaled that he would do away with Biden’s electric car mandate that had the government pick winner and loser and allow government resource to be used in a way that will not stifle the imagination and creativity. While some argue that Biden EPA regulations do not mandate electric vehicles at all, the reality is that it would make internal combustion engine cars more expensive and less reliable.
Biden’s Electric car push cost automaker billions of dollars in losses even with additional billions of dollars wasted of taxpayer money. The electric car push was ridiculous. It was a government policy that was designed by government bureaucrats to force Americans to change their habits and give up their freedom of choice. They tried to force Americans to buy a technology that was more expensive and less efficient than the cars they already had.
This I guess was supposedly to save the planet from what they believe is the ‘existential threat of climate change’ while failing to grasp that the production of these electric cars adds three-times their carbon emissions to produce than it would take to produce an internal combustion engine. Not to mention the challenge to the power grid to charge millions of the carbon intense produced cars.
It would take trillions of dollars in investment to meet that demand and it would take multiple nuclear power plants to make a dent in carbon emissions. Yet the reality is that more than likely the grid would be powered by natural gas and coal. Because wind and solar really would not be reliable enough to carry much of that increased load.
Nor did they have a plan to deal with the inevitable billions of dollars of cost to dispose of these car batteries when they reached the end of their life. Or a plan to deal with the shorter lifespan of electric cars that lose their value because no one wants to buy a used electric car because they know that when the battery goes, the cost to replace it will mean the car is headed to the junk yard.
This is a perfect illustration because the government with all of your tax money can’t make something happen that was never meant to be. By forcing their will upon the industry more than likely they stifled real innovation.
Now overnight a Microsoft outage gave markets a scare. What they are calling a global technology outage for Microsoft products is creating turmoil around the world. A Microsoft IT outage has caused airline and media groups, banks, and other businesses to basically get shutdown. United Airlines reportedly said that they were holding all aircraft at their departure airport. Reports of planes in the air are being asked not to land. Bloomberg is reporting now that the underlying cause of the outage has been fixed but said it is not a cyber-attack. Of course, that was the markets’ first thought. After the reports of the outage, the market sold off because of the type of world we live in. Oil and oil products fell on the news but are now stabilizing. Stock market also is trying to get a bid.
This comes with all the uncertainty surrounding the increase in oil products last week. The Brent crude spreads and the WTI spreads for oil or the signal in the very tight market this is very much in line with what we have been expecting. A major reduction in Russian exports it’s supporting this movement in the Brent crude time spreads. And with the US recount falling and the supplies of oil globally tightening, it will only be a matter of time before OPEC and its favorite coconspirator Russia will start waving the mission accomplished flag. If you believe what the markets are telling you the supply deficit is here, it’s happening right now before your very eyes
That means of course you should be hedged on both oil and gas products, especially in the winter months. Quantum Oil Daily said prices eased back after the ECB kept rates unchanged at its Thursday meeting, while Europe’s central bank continues to waver over the timing of the next rate cut.
Natural gas prices are still hanging in there. Still Bloomberg reports that, “natural gas traders are giving up on the idea that a sweltering summer will boost demand for the power-plant fuel and curb a massive US supply glut.
The spread between October and January gas futures — essentially a bet on how tight stockpiles will be heading into the northern hemisphere’s winter — has collapsed in recent weeks. By the end of October, inventories stored underground in depleted reservoirs, aquifers and salt caverns are expected to reach the highest since at least 2016, according to a government forecast.
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1 week ago
Crude Oil Bull Signal Above 84.69
By: Bruce Powers | July 18, 2024
• Crude oil's resistance at $83.69 marks a pivotal point. A breakout could confirm strength and lead to higher targets, with $87.90 in sight.
Crude oil rallied into resistance around the downtrend line on Thursday before pulling back from the highs. Resistance was seen from the day’s high of 83.69. That was slightly above the line. Crude remains in a corrective formation taking the form of a declining ABCD pattern of lower swing highs and lower swing lows. Thursday is on track to generate a second lower swing high. Therefore, a continuation of the correction is possible or a successful breakout above the downtrend line.
83.69 is Now Key Price Level
Since today’s high is part of the downtrend price structure, a rally above it will trigger a potential bullish reversal of the bearish correction and a breakout above the downtrend line. A daily close above each would confirm strength. Of course, today’s high carries greater weight than the trendline as it a primary trend structure. Once there is a daily close above 83.69, crude should be able to accelerate an advance as a trendline was broken and a breakout from a large symmetrical triangle will have triggered.
Potential Symmetrical Triangle Breakout
Crude has been tracing out the triangle for more than six months. This means once the trendline is busted to the upside, the potential for a sharp increase in demand that helps propel prices higher is a possibility. During the triangle volatility dies down, which is evident by the tightening swings. Since crude would be breaking out of two patterns, the trendline and triangle, it has a chance to see a noticeable pickup in demand following the breakout.
Higher Targets Start at 85.64
Following an upside breakout above 83.69, crude would first be heading towards the recent swing high at 84.74 (A). Higher initial targets include Fibonacci levels at 85.64 and 86.12. Nevertheless, once a daily close above 84.74 confirms strength, cruise has a chance to test the April swing high at 87.90. There is a good chance it could eventually get above that price level given the breakout of the symmetrical triangle.
Rising off Strong Support Zone
On the downside, support for the bearish correction was found at the recent swing low of 80.29. It completed a 61.8% Fibonacci retracement of the shorter upswing and was followed by a two-day rally. That low also completed a 38.2% Fibonacci retracement of the full upswing, beginning from the June swing low. Further, the 50-Day MA was a little lower at 80.00.
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1 week ago
Natural Gas Finds Temporary Support, Eyes Potential Rally
By: Bruce Powers | July 18, 2024
• Natural gas found support at 2.02 to 2.00, suggesting a potential rally if it holds, with key resistance at 2.44 and 2.47.
Natural gas found at least temporary support on Wednesday, that led to a bounce on Thursday. It is set to complete an inside day today with a high of 2.13 and a low of 2.02, at the time of this writing. Support was seen at 2.015 on Wednesday, the current low of the bearish retracement. That was right at a support zone identified from around 2.02 to 2.00. Today’s advance improves the chance that the 2.02 to 2.00 price zone could hold as support and lead to a higher advance.
Downtrend Line Marks First Line of Resistance
The internal downtrend line marks dynamic resistance for the current bear trend (retracement) as a rally above it will provide the first sign of strength that could lead to additional confirmation of strength. However, once today is complete, a rally above today’s high provides a short-term bullish indication. Upside follow through would then be key. Yesterday’s high was 2.21. It is fair to say that a sustainable bullish signal is not likely until natural gas rallies back above that high. That is as it stands now.
Initial Upside Target from 2.44 to 2.47
If a rally can get moving, an initial upside target for natural gas looks to be around 2.44. That begins a potential resistance zone up to 2.47, marked by several indicators. Both the 200-Day MA and 20-Day MA are at 2.44. A prior swing low support level, now potential resistance, lies around 2.47. Further, the downtrend line converges with this price area. But it doesn’t end there. The 38.6% Fibonacci retracement of the decline is within the zone at 2.45. Finally, notice that the most recent minor internal upswing caught resistance on July 9 at 2.45.
Below 2.00 Targets 1.92
Although there are reasons to suspect that the 2.02 to 2.00 price zone may continue to act as support, followed by a rally, the 61.8% Fibonacci retracement was exceeded to the downside on Monday. That opens the door to the 78.6% Fibonacci retracement at 1.92. The 2.02 to 2.00 price zone is derived from the completion of a descending ABCD pattern extended by the 161.8% golden ratio. It is anchored by a prior swing high from early-March at 2.00, which is also the top of a bottom symmetrical triangle pattern.
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1 week ago
EIA Natural Gas Storage Build Of +10 Bcf Misses Analyst Expectations
By: Vladimir Zernov | July 18, 2024
Key Points:
• Working gas in storage increased by 10 Bcf from the previous week.
• At current levels, stocks are 465 Bcf above the five-year average for this time of the year.
• The price of natural gas is trying to settle above the $2.10 level.
On July 18, 2024, EIA released its Weekly Natural Gas Storage Report. The report indicated that working gas in storage increased by 10 Bcf from the previous week, compared to analyst consensus of +28 Bcf.
At current levels, stocks are 250 Bcf higher than last year and 465 Bcf above the five-year average of 2,744 Bcf for this time of the year. High stocks have served as a major bearish catalyst for natural gas markets in recent weeks.
Natural gas prices gain ground as traders react to the encouraging report. Natural gas markets have been under pressure since early June as traders focused on high inventory levels and Freeport LNG outage.
Demand was strong due to hot weather, but it did not provide sufficient support to natural gas prices.
It remains to be seen whether current rebound would be sustainable as weather forecasts indicate that demand for natural gas would be moderate in the upcoming days.
From the technical point of view, natural gas prices received support in the $2.00 – $2.05 range as some traders were ready to bet that natural gas markets were oversold. In case natural gas manages to settle above the $2.10 level, it will head towards the nearest resistance, which is located in the $2.25 – $2.30 range.
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1 week ago
Let’s Get Physical. The Energy Report
By: Phil Flynn | July 18, 2024
As the polls turn on the Biden-Harris ticket, they may toast themselves and say “We’ll always have Paris” but a Trump-Vance ticket means the Paris Climate accord will have to go. I wonder if we can get our money back.
The Paris Climate accord is just one aspect of the failed Biden energy policy that is one of many reasons his popularity is plunging. Getting back into the accord was one of his sfirst executive orders Biden signed when coming into office effectively spending billions of dollars of taxpayer money before he moved into the White House.
Yet the accord’s failures are legendary and now is facing a global backlash from citizens in the countries where their leadership backs the accord. Despite the billions of dollars spent and the billions of dollars of lost opportunity, the accord has done almost nothing to make a real difference in global greenhouse gas emission that will hit a global all-time high this year.
This comes as EU News reported that, “12 EU countries are set to miss their national climate targets under the Effort Sharing Regulation (ESR), according to a study analyzing national climate plans. Another seven are at risk of not meeting their goals. If they don’t meet their required emissions reductions, they may have to pay financial penalties.
Which means the citizens of their countries will have to be taxed more for policies that have already made their lives miserable. The blowback from the failures of the Paris accord and its impact on global energy prices and its global energy security and the negative impact on people’s lives, is creating a popular global groundswell against these global elitist policies that enriches them and enslaves everyone else.
The Biden electric car mandate is also going up in smoke despite the billions of dollars wasted on a technology that is not equipped to replace the internal combustion engine. Not to mention the billions of dollars of losses that car makers suffered because the government tried to force them into building cars that no one wanted. Not to mention all the union jobs that will not be created because of Biden’s electric car fantasy.
Yet the Biden administration does not let failure or reality kill the dream! And he is willing to keep spending your money to try to make something happen that will not happen.
The Daily Caller wrote the Biden administration announced Thursday that it is spending billions of dollars more to help automakers mass-produce electric vehicles (EVs). The Department of Energy (DOE) is spending $1.7 billion to help manufacturers convert closed or struggling manufacturing facilities to produce EVs or EV components in eight states, including swing states like Pennsylvania and Georgia, as the American EV market struggles. The funding complements $12 billion the DOE unveiled in August 2023 to help major manufacturers retrofit plants for EV production, and the agency projects that the cash announced Thursday will allow for the retention of 15,000 union workers while creating nearly 3,000 jobs.
Of course, when has the Agency been right about any of their green job expectations. This latest taxpayer spending spree is just another desperate attempt to buy some green votes.
Those might be buying some more time after West TX intermediate futures failed to breakthrough $80.00 a barrel on the downside late in the day. The American Petroleum Institute reported that crude supplies fell by 4.44 million barrels which does suggest that the crude oil market in the United states is tightening and that is something that the market has been sensing. We have seen it in the spreads over the last couple weeks.
On the flip side of that, the report showed that distillate inventories rose by 4.92 million barrels. But let’s face it, the distillate worries, especially for heating fuels and winter-based fuels, are out of season. It’s important for the market to build those supplies because the United States is still well below average in distilling inventory.
The API did report an increase of 365,000 in gasoline supply. This comes as US Air travel remains near record highs. US air travel TSA total traveler throughput in million passengers – 7-day average 7.2% above 2019 level.
Russia is promising OPEC that they plan to make compensation cuts to make up for their previous cheating. They say they will make the cuts during the summer season when their domestic demand is weaker because they don’t have the Arctic chill to deal with, but it may be also because the Ukrainians keep hiding their energy infrastructure. Oil exports are now reportedly at the lowest level since January.
On the Internet, Houthi rebels are posting a tape of an attack on an oil tanker in the Red Sea. While nobody was seriously injured, it’s wrong that Houthi rebels can taunt the world with their lawlessness.
Natural gas is flat. This cones as Russia’s Novatek Slashes Gas Output at Sanctioned Arctic LNG 2. The Arctic LNG 2 project in Russia, which Western sanctions have hit in recent months, significantly reduced its production of natural gas in May as it hasn’t exported any LNG yet, a source with knowledge of output data told Reuters on Tuesday. Arctic LNG 2, in which Russian gas producer and LNG exporter Novatek has 60%, extracted 55 million cubic meters of natural gas in May, down from 215 million cubic meters in April, according to Reuters’s source. Located in the Gydan Peninsula in the Arctic, the Arctic LNG 2 project was considered key to Russia’s efforts to boost its global LNG market share from 8% to 20% by 2030-2035.
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1 week ago
Crude Oil Hesitates After Big Move
By: Christopher Lewis | July 18, 2024
• The crude oil market has ran into a significant amount of hesitation after a big move and has started to pull back a bit. With this, the market will be looking for a bounce just below. Will it get it?
WTI Crude Oil Technical Analysis
The West Texas Intermediate Crude Oil Market has fallen a bit during the early hours on Thursday as we are trying to sort out whether or not we are going to pull back and find buyers or if we have peaked again. I suspect at this point in time, there are buyers underneath because the cyclical nature of this market is that we should see plenty of strength through the summer. Furthermore, we have a lot of geopolitical conditions that warrant concern about supply. So, at this point in time, I do think this ends up being a buying opportunity. The $80 level of course has offered significant support. So that is something worth paying attention to.
Brent Crude Oil Technical Analysis
The Brent market fell to the $84 level in the early hours as it is trying to hang on to it. This was an area that’s been important multiple times, so we’ll have to see whether or not it holds. If it turns around and takes out the $85 level, then I think both grades of oil probably go higher. A drop from here could open up and move down to $83, where we had seen support previously.
Keep in mind both of these markets tend to feed off of each other so if one starts rallying, it will drag the other one up with it. Pay attention to the US dollar that probably has some say as well as the dollar strengthening drastically can sometimes, not always, but sometimes hurt crude oil. Either way expect volatility, but I don’t really have any interest in shorting at this point in the year.
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1 week ago
Natural Gas Tests Key Support After Sharp Drop
By: Bruce Powers | July 17, 2024
• Despite a sharp selloff to 2.02, natural gas could find support at 2.00, signaling possible buyer interest and a potential rebound.
Natural gas fell to a new retracement low of 2.02 on Wednesday. That put it in a position to test support around the next target zone from 2.02 to 2.00. The first price is the completion of a falling ABCD pattern with the CD leg of the decline extended by 161.8% of the AB leg. As of today’s low, natural gas has dropped by 1.14 or 36.2% from the most recent 3.16 swing high. Downward pressure remains and at the time of this writing, natural gas continues to trade near the lows of the day.
Lower Support Starts Around 1.92
If the 2.02 support zone fails to hold, a drop below 2.00 will have the price of natural gas heading towards the 78.6% Fibonacci retracement at 1.92. That price is given further significance as it confirmed by the gap up support level from late-April at 1.91.
Natural gas fell hard on Wednesday as it was down by as much as 0.16 cents or 7.5% for the day. It has established a wide price range for the day with a full body red candle. And it is on track to close weak, in the lower third of the day’s trading range.
Current Support May Lead to a Bounce
Nonetheless, it is possible that the 2.00 price area holds as support and attracts buyers. Today’s sharp selloff has occurred further into the downtrend and therefore, nearer to the end of the decline than it had been previously. A sharp drop near the end of a trend can sometimes signal capitulation as holders can longer take the pain of loss and finally sell. That creates a vacuum that allows for a potential sharp bounce.
Breakout Above Trendline Give First Sign of Strength
Unfortunately, on a daily chart there is no sign of strength until natural gas rallies above today’s high of 2.21. Of course, that may change in the coming days as alternative price levels may become apparent. Be that as it may, more aggressive investors and traders may key off intraday price patterns as they watch for signs of a bullish reversal from a key support zone. As noted previously, a rally above the internal downtrend line will provide a sign of strength, but trendlines are typically not too reliable on their own. Breaks through trendlines are more useful when confirmed by additional signs of strength.
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1 week ago
Here’s Looking At You, Kid. The Energy Report
By: Phil Flynn | July 17, 2024
As the polls turn on the Biden-Harris ticket, they may toast themselves and say “We’ll always have Paris” but a Trump-Vance ticket means the Paris Climate accord will have to go. I wonder if we can get our money back.
The Paris Climate accord is just one aspect of the failed Biden energy policy that is one of many reasons his popularity is plunging. Getting back into the accord was one of his first executive orders Biden signed when coming into office effectively spending billions of dollars of taxpayer money before he moved into the White House.
Yet the accord’s failures are legendary and now is facing a global backlash from citizens in the countries where their leadership backs the accord. Despite the billions of dollars spent and the billions of dollars of lost opportunity, the accord has done almost nothing to make a real difference in global greenhouse gas emission that will hit a global all-time high this year.
This comes as EU News reported that, “12 EU countries are set to miss their national climate targets under the Effort Sharing Regulation (ESR), according to a study analyzing national climate plans. Another seven are at risk of not meeting their goals. If they don’t meet their required emissions reductions, they may have to pay financial penalties.
Which means the citizens of their countries will have to be taxed more for policies that have already made their lives miserable. The blowback from the failures of the Paris accord and its impact on global energy prices and its global energy security and the negative impact on people’s lives, is creating a popular global groundswell against these global elitist policies that enriches them and enslaves everyone else.
The Biden electric car mandate is also going up in smoke despite the billions of dollars wasted on a technology that is not equipped to replace the internal combustion engine. Not to mention the billions of dollars of losses that car makers suffered because the government tried to force them into building cars that no one wanted. Not to mention all the union jobs that will not be created because of Biden’s electric car fantasy.
Yet the Biden administration does not let failure or reality kill the dream! And he is willing to keep spending your money to try to make something happen that will not happen.
The Daily Caller wrote the Biden administration announced Thursday that it is spending billions of dollars more to help automakers mass-produce electric vehicles (EVs). The Department of Energy (DOE) is spending $1.7 billion to help manufacturers convert closed or struggling manufacturing facilities to produce EVs or EV components in eight states, including swing states like Pennsylvania and Georgia, as the American EV market struggles. The funding complements $12 billion the DOE unveiled in August 2023 to help major manufacturers retrofit plants for EV production, and the agency projects that the cash announced Thursday will allow for the retention of 15,000 union workers while creating nearly 3,000 jobs.
Of course, when has the Agency been right about any of their green job expectations. This latest taxpayer spending spree is just another desperate attempt to buy some green votes.
Those might be buying some more time after West TX intermediate futures failed to breakthrough $80.00 a barrel on the downside late in the day. The American Petroleum Institute reported that crude supplies fell by 4.44 million barrels which does suggest that the crude oil market in the United states is tightening and that is something that the market has been sensing. We have seen it in the spreads over the last couple weeks.
On the flip side of that, the report showed that distillate inventories rose by 4.92 million barrels. But let’s face it, the distillate worries, especially for heating fuels and winter-based fuels, are out of season. It’s important for the market to build those supplies because the United States is still well below average in distilling inventory.
The API did report an increase of 365,000 in gasoline supply. This comes as US Air travel remains near record highs. US air travel TSA total traveler throughput in million passengers – 7-day average 7.2% above 2019 level.
Russia is promising OPEC that they plan to make compensation cuts to make up for their previous cheating. They say they will make the cuts during the summer season when their domestic demand is weaker because they don’t have the Arctic chill to deal with, but it may be also because the Ukrainians keep hiding their energy infrastructure. Oil exports are now reportedly at the lowest level since January.
On the Internet, Houthi rebels are posting a tape of an attack on an oil tanker in the Red Sea. While nobody was seriously injured, it’s wrong that Houthi rebels can taunt the world with their lawlessness.
Natural gas is flat. This cones as Russia’s Novatek Slashes Gas Output at Sanctioned Arctic LNG 2. The Arctic LNG 2 project in Russia, which Western sanctions have hit in recent months, significantly reduced its production of natural gas in May as it hasn’t exported any LNG yet, a source with knowledge of output data told Reuters on Tuesday. Arctic LNG 2, in which Russian gas producer and LNG exporter Novatek has 60%, extracted 55 million cubic meters of natural gas in May, down from 215 million cubic meters in April, according to Reuters’s source. Located in the Gydan Peninsula in the Arctic, the Arctic LNG 2 project was considered key to Russia’s efforts to boost its global LNG market share from 8% to 20% by 2030-2035.
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1 week ago
Natural Gas Set for Further Declines Amid Bearish Correction
By: Bruce Powers | July 16, 2024
• Natural gas remains in a bearish trend, with key support levels identified at 2.17 and 2.00 indicating possible further declines.
Lower prices look likely to remain on the agenda for natural gas given Tuesday’s bearish behavior. Although a new retracement low was not reached today, natural gas consolidated in a relatively narrow range inside day. The day’s trading activity was largely contained in the lower half of Monday’s trading range. This reflects continued downward pressure on the price of natural gas.
Accelerated Downtrend Remains Intact
The slope of the retracement accelerated following the June 26 high. Since then, price action has been contained below the lower downtrend line and the line has since been confirmed since by an additional touch with price. Therefore, the internal downtrend line can be used as a guide for initial trend resistance. The decline can be anticipated to continue until there is at least an advance above the trendline. So far, that has not happened, indicating that the downtrend remains in force.
Drop Below 2.15 is Bearish
A drop below yesterday’s low of 2.15 signals the likely continuation of the bear trend. The next lower support zone is identified around 2.02 to 2.00. Notice that an earlier bull breakout was confirmed on a rally above 2.00 on April 29. That was the top of a bottom symmetrical triangle consolidation pattern. Consequently, a full round trip will be completed at 2.00.
Since natural gas has gotten this close and given the continuing bearish signs, it seems very possible that 2.00 may be tested as support before the correction is complete. Nonetheless, this doesn’t mean it will be achieved. The market for natural gas will provide additional clues as it continues to evolve.
Interim Lower Target of 2.17
Prior to the 2.00 price target there is an interim target of 2.17. It is interim because the price level was resistance during a minor swing high on way up from the triangle bottom. As shown on the chart the 2.02 price level is indicated by a falling ABCD pattern. This pattern identifies symmetry between the two downswings. One labeled AB and the other CD.
An initial target from the pattern looks for a similar move in price for each leg of the pattern. Subsequently, additional targets can be found by incorporating a harmonic ratio to extend the completion of the CD target. A 127.2% ratio generated a target of 2.20, which was exceeded yesterday. Once that target failed to stop the decline, a second extended target was added. The extended target reaches its completion at 2.02.
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1 week ago
Crude Oil Nears Key Support Levels Amid Pullbacks
By: Bruce Powers | July 16, 2024
• Following a 61.8% retracement, crude oil approaches critical support at the 50-Day MA, with potential bullish signals on the horizon.
Crude oil continued to retrace its prior advance on Tuesday, with a new pullback low of 80.29. The decline completed a 61.8% retracement today at 80.46. Completion of a declining ABCD pattern is next on deck along with a likely test of support around the 50-Day MA (orange). Price symmetry between the AB and CD legs of the pattern match at the 80.10 pivot. Concurrently, a 38.2% Fibonacci retracement completes at 80.15. Meanwhile, the 50-Day line is down around 79.88.
Next Key Support at 50-Day MA
The 50-Day MA is rising and it may be closer to the 80.10 price area before it is reached. It presents a formidable support area given signs that the uptrend from the early-June swing low of 72.73 has been showing improvement. In mid-June, crude busted up through the 50-Day line for the first time since falling below it on May 1. As it pulls back crude is on track to test it as support for the first time since June upside breakout.
200-Day MA is a Little Lower
If the 50-Day line fails to hold as support, the 200-Day MA is a little lower at 79.00. And it matches a 127.2% extended downside target for the ABCD pattern at 79.07. Notice that a 78.6% Fibonacci retracement is also nearby at 79.80. Further, the 50% retracement of the full uptrend, starting from the June low, is at 78.74.
Bull Trend Should Continue Once Pullback Complete
Once the retracement is complete and demand improves, signaled by a bullish reversal, crude is anticipated to be set to continue to advance above the recent swing high of 84.74. That high ended in a 16.5% rally. However, there may be more upside to go. A second possible trendline breakout is first indicated on a rally above the most recent interim swing high of 83.88.
An advance above that price level puts crude back above the downtrend line and in sight of challenging the 84.74 (A) swing high. Rising above 84.74 should see upside momentum improve as it also signals a bullish breakout of a large symmetrical triangle showing in crude oil.
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1 week ago
Rational Energy Policy. The Energy Report
By: Phil Flynn | July 16, 2024
Many in the US oil and gas industry are cheering President Trump’s Vice Presidential pick JD Vance as a sign that the United States might be headed back to a rational energy policy. Industry leaders have been frustrated by the Biden administration’s unfounded and unfair attacks but really worry that the policies that the Biden administration has put in place is not only creating the energy crisis of the future, but also leaving our country in a situation that will not allow us to compete in the global economy but also damage our national security.
It has been the crazy and vindictive Biden energy policies, including the cancelation of the Keystone XL pipeline, the short sighted electric car push, drilling moratoriums or energy decisions based on diversity, equity and inclusion, and a slew of incomprehensible executive orders that has put the US energy industry in a bad situation. The industry is looking forward to having adults back in the room. They look forward to having an administration that understands the vital nature of the US oil and gas industry. They look forward to an Administration that will work with them instead on shunning them and work against them. The Industry wants an energy policy that is working to provide cleaner energy and have an energy policy that is based on realities and not in aspirational politics.
Vance is an energy realist. He understands that to power the future economy and to increase our National Security, the US, the cleanest producer of fossil fuels, will have to continue to lead the way to meet the undeniable demand for fossil fuels in the future.
Maybe oil prices today are lower in deference to the fact that the Trump Vance ticket looks like it’s destined to win in November but really, it’s probably more being impacted by the fact that we’ve passed the 4th of July holiday and weak China demand and a rising dollar.
Leave it to the Fed Chairman Powel to cool off oil prices. Reuters reported that Federal Reserve Chair Jerome Powell said on Monday the three U.S. inflation readings over the second quarter of this year do “add somewhat to confidence” that the pace of price increases is returning to the Fed’s target in a sustainable fashion, remarks that suggest a turn to interest rate cuts may not be far off. “In the second quarter, actually, we did make some more progress” on taming inflation, Powell said at an event at the Economic Club of Washington. “We’ve had three better readings, and if you average them, that’s a pretty good place.” What we’ve said is that we didn’t think it would be appropriate to begin to loosen policy until we had greater confidence” that inflation was returning sustainably to 2%, Powell continued. “We’ve been waiting on that. And I would say that we didn’t gain any additional confidence in the first quarter, but the three readings in the second quarter, including the one from last week, do add somewhat to confidence.”
After that last comment, the dollar seemed to rise and if the markets seem to interpret them while the Fed is still on track to cutting rates, it’s not going to happen as early as July. Not that many people thought that was going to happen anyway. After Mr. Powell spoke the price of the dollar went up and oil went down.
China oil demand seems to weigh on prices as well but even as the market is focused on short term fundamentals, the bigger picture for oil continues to look very bullish. We continue to expect to see a supply deficit leading to bigger drawdowns in the future and the market seems less concerned about that today as we head to the option expiration for the August crude future tomorrow. And while the market seems to be a little bit weak starting today, perhaps the American Petroleum Institute inventory numbers can change that momentum.
We’re expecting another drawdown in crude supplies of 3 million barrels, and we also expect the inventories of both gasoline and diesel will fall by three million barrels as well. Refinery runs should be unchanged. There is some concern that we will see some impact from the Hurricane Beyrl in the numbers. That may be another reason why we are seeing some hesitation to buy in.
Natural gas is up a little bit this morning and trying to hold its ground after some fundamentals that normally would be very bearish.
Reports show that the Freeport LNG export project in Texas canceled at least four scheduled shipments because of Hurricane Beryl, according to Bloomberg News. Extended power outages in Texas also should have hurt demand and now there are some worries on the production side. Maybe once again producers will produce us into a glut.
Celsius Energy tweeted that with natural gas prices now seemingly on the fast track back to $2/MMBTU, commodity traders may reinforce producers to re-institute production shut-ins to restore S/D balance. So far, we have not seen this with output holding near multi-month highs just shy of 102 BCF/d.
Yet despite all these fears technically the market seems to be holding in there. It’s almost as if the market’s looking ahead to what they believe will be record demand for natural gas.
The anticipation of record liquefied natural gas exports in the United States and more hope that it will increase in the years ahead. Now the industry has renewed hopes that US LNG exports will support prices and create jobs. Now the real possibility that a Trump Vance ticket will mean that the United States will dominate the exporting clean liquefied natural gas to the world. That will lead to reducing coal emissions and help reduce carbon faster than any wind turbine or solar panel ever could.
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2 weeks ago
Natural Gas Sellers Dominate as Support Levels Break
By: Bruce Powers | July 15, 2024
• Sellers dominate natural gas as it falls to 2.16, testing and breaking support levels, with potential further declines if it closes below 2.17.
Sellers continued to dominate trading in natural gas on Monday as it further retraced the previous advance. Natural gas fell to a new retracement low of 2.16, at the time of this writing, and it continues to trade near the lows of the day. It entered a potential resistance zone starting at 2.23 but has so far seen no slowdown in the descent. The price zone has a lower border around
Lower Target Price Zone Fails to Stop Descent
Two Fibonacci targets were tested as support, and they failed to stop the decline. A descending ABCD pattern completed at 2.20. The target comes from an extended version of the pattern where the second decline marked by CD is 127.2% the distance in price for the first leg down, from point A to point B. The 127.2% Fibonacci ratio is derived from square root of 1.618 (the golden ratio) multiplied by 100. Further, a 61.8% Fibonacci retracement completed at 2.18. The low of the potential support zone as highlighted on the chart was 2.17.
Close Below 2.17 Points to Lower Prices
Since the bottom of the support zone has been broken to the downside the next lower support zone is at risk of being reached. Nevertheless, support zones are areas of possible support. If a daily close occurs today above 2.17, natural gas may have a chance to bounce in the short-term.
Otherwise, a daily close below 2.17, points to lower prices in the near-term. There looks to be an interim price level around 2.09, from a prior internal swing high. But the next key lower price zone where support may be seen is down to around 2.00. That is an even number and where the recent rise in prices began.
Lower 2.00 Support Zone
The initial bullish advance off the confirmed an upside breakout of a symmetrical triangle bottom consolidation pattern at 2.00. That was the top of the triangle pattern where a rise above further confirms the bull breakout. There is also the completion of another lower target for an extended falling ABCD pattern at 2.02. In this case, the extension utilized the 161.8% ratio to identify a lower target for the CD leg of the decline. Lower still is the 78.6% Fibonacci ratio at 1.92.
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2 weeks ago
Act Of God. The Energy Report
By: Phil Flynn | July 15, 2024
US and global political turmoil averted by what can only be described as an act of God. The assassination attempt on President Donald Trump came at a critical time in world history as people of reason question the institutions of the United States after criminal attempts to take down President Trump.
They used fake FISA warrants against US citizens, fake Russian collusion investigations that was started by the Hillary Clinton campaign and admission by both the CIA and FBI that they had abused their powers. The weaponization of the Justice Department to go after Donald Trump while downplaying proven crimes by his political opponents has created disorder in the government and distrust among its people.
This has been aided and abetted by major parts of the mainstream press that has conspired with the government to push knowingly false narratives against President Trump and has openly allowed him to be unfairly demonized to the public. Biden, who once said that when you are President ‘words matter’, said that it was time to “put Trump in a bullseye” and sadly someone took that literally. That, along with many in his party, called Trump a threat to democracy.
Now an unrepentant press continues to attack President Trump. They refuse to acknowledge widespread voter fraud and withheld evidence from the January 6thdebacle that would have kept innocent Americans out of jail. The press continues to spew their venom. They failed to confirm the validity of the Hunter Biden laptop that contained evidence of real crimes.
While an act of God saved Donald Trump, sadly one supporter who was probably derided by some as ‘extreme MAGA’ was killed. We need to pray for a hero retired firefighter Corey Comparator who was killed during the attempted assassination as he tried to shield his family from the assassins’ bullets. We also need to pray for America and pray for our leadership in their quest for power is enough. Pray for America.
Oil prices and commodity prices have enough information so on the Sunday opening, no risk premium was put in. Oil dipped Friday on China’s oil demand concerns but as far as oil demand, India is trying to pick up where China left off.
Oil dipped Friday on a report that China’s oil products imports slumped 33.2% from May to a 20-month low of 2.97 million mt in June, data from the General Administration of Customs showed July 12, as independent refineries cut feedstock fuel oil purchases. Independent refineries’ fuel oil imports fell 15.2% on the month to 939,000 mt in June, S&P Global Commodity Insights data showed.
The average utilization rate of independent refineries in Shandong was 52% in June, the lowest since the pandemic first struck the country in 2020, according to local information provider JLC. The utilization rate was previously lower at 43.8% in February 2020.
This comes as the Wall Street Journal reports that, “China’s economy slowed sharply in the second quarter, piling pressure on the country’s leaders to act more aggressively to rev up growth as they gather in Beijing to chart the course of the economy over the next half-decade.
Gross domestic product expanded 4.7% in the second quarter compared with the same quarter a year earlier, China’s National Bureau of Statistics said Monday. The result was weaker than the 5.3% growth rate recorded in the first quarter and lower than the 5.0% figure expected by economists polled by The Wall Street Journal.
On a quarter-to-quarter basis, growth more than halved, sliding to just 0.7% versus a revised 1.5% previously. The world’s second-largest economy is losing momentum thanks to a festering property slump, tepid consumer spending and rising trade tensions with the rest of the world. Yet in India oil demand contuse to grow. Jodi reported that India crude imports rose by 510 kb/d and was up 8.1% y/y
In the BP Outlook they say that Idia’s oil consumption is projected to rise to 7 million barrels per day (mbd) by 2030 from 5 mbd in 2022 in the ‘current trajectory’ scenario of the latest BP’s Energy Outlook.
China’s oil consumption is projected to rise to 17 mbd from 14 mbd in the same period while the oil demand in the US is expected to decline to 18 mbd from 19 mbd. India will remain the world’s third-largest oil consumer in 2030, behind the US and China, as it is today.
Iraq admitted it was cheating on its OPEC production cuts but they promised to do. S&P global reported that Iraq acknowledged it produced 184,000 b/d over its OPEC+ quota in June, based on secondary sources estimates, and pledged to compensate for its excess output by a September 2025 deadline under the latest OPEC+ agreement by making additional cuts of equivalent volume.
Now OPEC’s second largest oil producer has habitually pumped cruder than allowed for under its OPEC+ quota, drawing the ire of other members, but said in a statement that it will adhere to the 4 million b/d limit for the coming months. Iraq has not yet publicly revealed its compensation plan.
“Iraq affirms its complete commitment to the agreement and to the voluntary adjustments, and will compensate for any overproduction since the beginning of 2024,” the statement from Iraq’s oil ministry said.
Iraq in June cut output by 60,000 b/d to 4.22 million b/d, according to the latest Platts OPEC+ survey from S&P Global Commodity Insights, one of seven secondary sources used by the producer alliance to monitor member production.
The OPEC+ joint ministerial monitoring committee, co-chaired by Saudi Arabia and Russia, is scheduled to meet online Aug. 1. Among its duties, it assesses member compliance with quotas and can also recommend changes to OPEC+ production policy. The full 22-country OPEC+ alliance is scheduled to meet Dec. 1.
The oil spreads continued to look pretty strong and while oil seems to be based on WTI to build the base, the focus is going to be on demand for products.
Gasoline demand week to week has been erratic but it’s been slowly creeping above the four-week moving average for this time of year as gasoline prices have remained somewhat stable this summer it should improve the demand prospects as we head towards the end of summer can’t up demand for gasoline seems to be something that the market is starting to talk about.
Global markets are increasingly pricing in a supply deficit and that should keep products supported this week we are looking for draws of 3,000,000 barrels in crude oil 3,000,000 barrels in distillate inventories, and three-million-barrel drop in gasoline. Refiners have been running at a high pace and we expect them to continue with refinery runs unchanged from the week before.
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2 weeks ago
Crude Oil Continues to See Support
By: Christopher Lewis | July 15, 2024
• The crude oil markets overall look well supported, and I think at this point in time we are going to continue to see the overall sideways but positive attitude.
WTI Crude Oil Technical Analysis
The West Texas Intermediate crude oil market has initially pulled back just a bit overnight, but it looks as if it is well supported between the $80 level underneath and the $81 level, which is where we find ourselves near the open of open CRI trading.
With that being said, I think the market is likely to continue to see an overall consolidation and therefore I do think we break higher. Whether or not it ends up being a massive move higher is completely open to debate. But right now, I think we are in the midst of forming some type of double bottom. And of course, you have to pay close attention to the $80 level because it has proven itself to be important. And of course, it’s a large, round, psychologically significant figure.
Brent Crude Oil Technical Analysis
The Brent market looks very similar with the $84 level offering support, and it has a lot of the same factors. The first thing, of course, is the cyclicality of the market being very strong in summer most of the time. So that’s something that you have to pay attention to.
But we also have a lot of geopolitical tensions that could flare up. I understand that there are some concerns about refineries in Russia being targeted, and that does influence some of the supply of crude oil around the world. All things being equal, I do think that this is a market that continues to find buyers on dips, but how far have we gone to the upside? I think that remains to be seen in the short term. I think this is just a market that is very rangebound and looks likely to remain at least somewhat elevated through the rest of the summer.
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2 weeks ago
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | July 13, 2024
• Following futures positions of non-commercials are as of July 9, 2024.
WTI Crude Oil: Currently net long 300k, up 5.4k.
In May last year, West Texas Intermediate crude bottomed at $63.57, earlier having peaked at $130.50 in March 2022. After the May bottom, it then peaked at $95.03 last September – for a lower high. Another lower high was hit this April when the crude retreated after ticking $87.67. A falling trendline from the September high drew sellers last week at $84.52. This week, WTI gave back 1.1 percent to $82.21/barrel.
Inability to defend $81-$82, which marks the top end of a 10-point range, opens the possibility that WTI eventually heads toward $74, which is where a rising trendline from the May 2023 bottom lies.
In the meantime, US crude production increased 100,000 barrels per day week-over-week to 13.3 million b/d, matching a record which was hit eight times from last December to February. Crude imports rose 213,000 b/d to 6.8 mb/d. As did distillate stocks, growing 4.9 million barrels to 124.6 million barrels. Stocks of crude and gasoline, however, fell – down 3.4 million barrels and two million barrels respectively to 445.1 million barrels and 229.7 million barrels. Refinery utilization increased 1.9 percentage points to 95.4 percent.
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2 weeks ago
NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | July 13, 2024
This market made a new high today after the past 2 trading days. The market opened higher and closed lower. The immediate trading pattern in this market has exceeded the previous session's high intraday reaching 8374. Therefore, this market closed below the opening print while also closing down from the previous closing.
Clearly, this market is still above the critical support point at this time, which lies at 8215. Initial support lies at 8199. Our underlying pivot providing some support lies at 8198 and a close below this level will warn of a shift to retest support. Presently, the projected extreme resistance stands at 8540.
Additionally, our central point cyclical study models also ended in a bearish mode for the closing warning that the upward momentum is subsiding. Given the fact that we have made a new high and this study just turned down today, caution is advised that this may prove to be a temporary high and a break of today's low of 8210 would tend to confirm that possibility. During the last session, we did close above the previous session's Intraday Crash Mode support indicator which was 7958 settling at 8262. The current Crash Mode support for this session was 8091 which we closed above at this time. The Intraday Crash indicator for the next session will be 8162. Remember, opening below this number in the next session will warn that the market may enter an abrupt panic sell-off to the downside. Now we have been holding above this indicator in the current trading session, and it resides lower for the next session. If the market opens above this number and holds above it intraday, then we are consolidating. Prevailing above this session's low will be important to indicate the market is in fact holding. However, a break of this session's low of 8210 and a closing below that will warn of a continued decline remains possible.
Intraday Projected Crash Mode Points
Today...... 8091
Previous... 7958
Tomorrow... 8162
This market has not closed above the previous cyclical high of 8452. Obviously, it is pushing against this resistance level.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Focusing on our perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 8163 and overhead resistance forming above at 8248. The market is trading closer to the resistance level at this time.
On the weekly level, the last important high was established the week of July 1st at 8452, which was up 4 weeks from the low made back during the week of June 3rd. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed lower. We are still trading above the Weekly Momentum Indicators so we have not undermined critical support as of yet. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8452 made 1 week ago. Still, this market is within our trading envelope which spans between 6658 and 9310.
Looking at this from a broader perspective, this last rally into the week of July 1st reaching 8452 failed to exceed the previous high of 8767 made back during the week of April 8th. That rally amounted to only twelve weeks.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend. Looking at this from a wider perspective, this market has been trading up for the past 5 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in April at 8767. After a four month rally from the previous low of 8070, it made last high in April. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in July, this market has held above last month's low of 7248 reaching 7248.
Some caution is necessary since the last high 8767 was important given we did obtain two sell signals from that event established during April. That high was still lower than the previous high established at 9503 back during September 2023. Critical support still underlies this market at 6760 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible.
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2 weeks ago
Natural Gas Eyes Bullish Retracement Amid Key Reversal
By: Bruce Powers | July 12, 2024
• Natural gas dipped to 2.25 before reversing above 2.34, indicating a potential bullish retracement toward resistance zones at 2.45 and beyond.
Natural gas dipped briefly to a new retracement low of 2.25 earlier on Friday before buyers took control and drove it back above yesterday’s high. It is on track to confirm a reversal day if it can close above yesterday’s high of 2.34. At the time of this writing, natural gas continues to trade near the highs of the day.
Buyers Show Interest
Today’s low was just shy of reaching of potential support zone for around 2.23 to 2.17. Nonetheless, a likely strong daily close and a key reversal day shows buyers stepping up. That may lead to a bullish retracement to test potential areas of resistance. If natural gas stays within the downtrend (retracement) price structure following a bounce, a test of the lows and possibly the slightly lower support zone may yet occur.
Resistance Zone from 2.45 to 2.475
A key price zone to watch for resistance is around the 200-Day MA, which is now at 2.46. That moving average can be watched together with the previous swing low of 2.475 as they are close to each other. Moreover, the most recent minor swing high of 2.45 is a little lower than the 200-Day line. It has some significance as it was the first day in eight days down that exceeded the previous day’s high.
An advance above 2.45 improves the chance that natural gas can challenge resistance around the 200-Day MA. It would show strength as the 2.45 swing high makes up part of the downtrend price structure of lower swing highs and lower swing lows. A daily close above the price level would confirm strength and improve the chance for a continuation higher. The next higher potential resistance zone looks to be from the 50-Day MA at 2.56 and up to the 20-Day MA at 2.59.
Higher Target Goes From 2.56 to 2.59
Notice that the 50-Day line continues to rise, and it is approaching the 20-Day line. Also, the 20-Day line is falling and has converged with the 38.2% Fibonacci retracement at 2.60. In general, in Fibonacci analysis, a minimum retracement to at least the 38.2% retracement is common. On June 28 support was found around the same price area as the 38.2% retracement. However, that support level didn’t last long as the next day natural gas continued to fall. A downtrend line for the current decline has been added to the chart to provide additional guidance during an advance.
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2 weeks ago
Crude Oil Continues to Look Seasonally Bullish
By: Christopher Lewis | July 12, 2024
• The crude oil market initially fell during the course of the week but turned around to show signs of life as we are forming hammers. That being said, this is a market that I think is cyclically bullish this time of year, and therefore I think it’s probably only a matter of time before we rallied.
WTI Crude Oil Weekly Technical Analysis
The crude oil market in the West Texas Intermediate Grade initially pulled back a bit during the trading sessions that made up the week, but the 50 week EMA seems to be offering support. It’s interesting because we are in the middle of one of the most bullish times of year, and therefore we have to keep in mind that there’s a cyclical trade going on as people travel more during this time of year.
Ultimately, if we can break above the $86 level, it could send this market much higher, perhaps to the $90 level, and that wouldn’t surprise me at all. In the meantime, I think every time we pull back, traders will be looking to pick up a little bit of value in this market as we have been forming a very long term bottoming pattern.
Brent Crude Oil Weekly Technical Analysis
Brent, of course, looks very much the same as $85 has offered support. A breakout to the upside here could open up the $90 level, which of course is a large, round, psychologically significant figure. If we pull back from here, the $80 level could be a, significant support level as well.
But all things being equal, this is a market that I think we are trying to form some type of, rounding bottom maybe, but ultimately this is a market that should continue to find plenty of value hunters out there to take advantage of this setup. I have no interest in shorting either grade of crude oil.
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2 weeks ago
Time After Time After Time. The Energy Report
By: Phil Flynn | July 12, 2024
If you’re lost, you can look, and you will find me, Time after Time. If you fall, I will catch you, I’ll be waiting, Time after Time. Joe Biden looks lost and could be running out of time as time and spreads on oil may signal another problem for our befuddled president.
The time spreads in the oil market are showing that the market for oil is starting to tighten. Refiners that are running close to full capacity are bidding up barrels to keep up with demand and that signals that even after yesterday CPI came in cold, oil and gas prices may again start to heat up. That is causing widening backwardation that seems to confirm predictions by reporting agencies of a growing supply versus demand deficit.
This week the Energy Information Administration said that the global oil supply deficit was 500,000 barrels a day in the first half of the year and will increase to 700,000 barrels a day in the second half of the year.
OPEC data suggests that the EIA numbers on a supply deficit might be conservative. They say that world oil demand should rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. That means that OPEC supply will fall short of expected demand by 1.5 million bpd in August. The shortfall widens to 2.2 million bpd in the fourth quarter.
Now, after a soft CPI report and the odds of a September rate cut is being priced in, takes away one of the constant bearish fears from the oil market. Well prices have been held back because of a very strong dollar in the expectation that the Federal Reserve would not be able to cut interest rates this year. Now with this weakening data on the CPI and if the producer price index firms today, the likelihood that the Fed will cut rates will keep oil buoyant.
Reports that the Department of Energy is seeking bids to buy back up to 4 million barrels of oil for the strategic reserve. It’s coming at a time when we’re already seeing supplies tighten. Maybe the Biden administration wants to buy back oil for the Strategic Petroleum Reserve (SPR) while the buying is good because they are fearful of a price hike. They probably fear more criticism for the way that they use SPR in part for their political piggy bank.
Oil is also getting support from mixed Chinese data that suggests that some of the doom and gloom surrounding China’s oil demand expectations might be overstated. The Wall Street Journal reported that China’s exports grew more than expected in June, while imports fell unexpectedly in another sign of weak domestic demand. Outbound shipments rose 8.6% from a year earlier in June, up from May’s 7.6% increase, the General Administration of Customs said Friday. The result beat the 7.8% growth expected by economists in a Wall Street Journal poll. Economists project that China’s exports will stay strong for a while as buyers and sellers rush to front-load shipments before more punitive measures on Chinese goods are imposed by Western governments.
However, imports dropped 2.3% in June. That compared with a 1.8% increase in May and the 3.2% growth expected by the economists surveyed. That brought June’s trade surplus to $99.05 billion, the highest since at least 1994, according to figures from local data provider Wind dating back to August 1994.
Retail gasoline prices, which hit a higher level than a year ago yesterday, have pulled back a bit as Hurricane Beryl’s impact on demand may be greater than its impact on supply. There’s still a lot of focus on refinery restarts in the aftermath of the storm but it seems that hurricane’s barrel impact on gasoline prices will be short lived. Still, keep up with the latest developments by downloading the Fox Weather app.
Retail gas prices are at 353.8 down a little bit from yesterday and down slightly from year ago levels.
Natural gas prices that have held up well in the face of hurricane Beryl’s but couldn’t overcome a surprisingly bearish weekly inventory report. Natural gas producers just can’t help themselves and continue to creep up on the production side.
EIA said that, “Working gas in storage was 3,199 Bcf as of Friday, July 5, 2024, according to EIA estimates. This represents a net increase of 65 Bcf from the previous week. Stocks were 283 Bcf higher than last year at this time and 504 Bcf above the five-year average of 2,695 Bcf. At 3,199 Bcf, total working gas is above the five-year historical range.
Lower-48 state dry gas production Thursday was 100.3 bcf/day (+0.1% y/y), according to BNEF. Lower-48 state gas demand Thursday was 78.1 bcf/day (+4.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 11.1 bcf/day (-13.9% w/w), according to BNEF
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2 weeks ago
Natural Gas Approaching Key Support Zone Starting at 2.23
By: Bruce Powers | July 11, 2024
• Natural gas fell below 2.27 support, targeting the 2.23-2.17 price zone. A bearish weekly close looms.
Natural gas fell on Thursday and triggered a continuation of the bearish retracement. It dropped below the previous retracement low of 2.27 and looks to be heading towards the next lower support zone that starts around 2.23. Resistance at 2.17 from the early-February high marks the lower edge of the price zone. However, that range is an estimate and there is no assurance that it will stop the descent. Nonetheless, there is reason to believe that it might.
Targets 2.23 to 2.17 Support Zone
Within the 2.27 to 2.17 price zone are two additional indications on the daily chart that support the identification of that price zone. First, there is a descending ABCD pattern where the CD leg of the pattern has been extended by 127.2% of the initial AB decline. It reaches the target at 2.20. In addition, there is a 61.8% Fibonacci retracement that completes at 2.18.
Since today is Thursday, if natural gas stays around current price levels or lower heading into the weekend, it is set to end with another bearish weekly candlestick pattern and a close near the lows of the week. Regardless, this week will complete the fourth sequential week of lower weekly highs and lower weekly lows. As of the 2.26 low today, the price of natural gas has declined by 28.4% from the June swing high of 3.16 (A).
Challenging Below 200-Day MA
If support is seen in the price zone that leads to a bullish reversal, rallies will first need to contend with possible resistance around the 200-Day MA, currently at 2.46. It represented resistance earlier this week and may do so again. Given how persistent the current correction has been to date, there is a chance for a bounce up into resistance, followed by a turn back down.
Either way, if the 2.17 price area is decisively broken to the downside, the initial bullish breakout from the top of a bottom symmetrical triangle pattern could eventually be challenged as support. That price level is at 2.00 and highlighted on the chart with a red box.
The current retracement followed a failed attempt to break out above the downtrend line in early-June. That created a lower swing high and kept the downtrend price structure in place. Failed moves can lead to fast moves and that looks to be what we’ve been seeing in natural gas since the June high.
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2 weeks ago
Crude Oil Rally Targets 89.23 Amid Bullish Momentum
By: Bruce Powers | July 11, 2024
• Crude oil triggered a bullish reversal today, targeting 89.23 and a likely second breakout above trendline resistance.
Crude oil looks to be in the process of completing a bottom from a bearish retracement from yesterday’s low of 80.96. That swing low successfully tested support at the prior interim swing high of 81 from May 29. Also, a 50% retracement was completed at 81.23. A strong intraday rally followed generating a green reversal candle and a strong daily close. The close was in the top quarter of the day’s range and back above the 20-Day MA (purple).
That was a quick recovery following a dip below the 20-Day line earlier in the session. Further, notice that the area around an earlier long-term downtrend line retained support. The line was kept on the chart for this purpose. It provides an additional indication for support on weakness.
Bullish Reversal Above 82.81 Triggers
A bullish reversal triggered today with an advance above Wednesday’s high of 82.81. Crude continues to trade near the highs of the day at the time of this writing, following a successful test of support at the 20-Day MA earlier in the day’s trading session. Notice that both today and Tuesday, crude found support around the 20-Day MA. It will be a slightly stronger close above 82.81 rather than below it. Nevertheless, the bullish reversal sets the stage for crude to challenge the recent swing high of 84.74.
Second Breakout Above Trendline may be Next
An upside breakout through the top trendline that triggered last week failed to follow through leading to this week’s retracement. Today’s bullish reversal may be the beginning of a rally that could trigger a second breakout that may see greater success. Notice that resistance around the downtrend line was tested over four days but demand was not strong enough to take it forward. Furthermore, last week’s high completed a relatively aggressive 16.5% rally in 23 trading days. In other words, it was extended and overdue for a retracement.
Bull Trend Continues Above 83.01
Going forward, a rally above today’s high, currently at 83.01, will trigger a continuation of the rally off yesterday’s low. There are two trendlines the cross around 83.80 and that area may present some resistance. Nonetheless, a decisive breakout above last week’s high of 84.74 triggers a continuation of the bull trend that began from the early-June swing low.
Measured Move Targets 89.23
Taking into consideration previous measured moves in crude (marked on chart), it looks like crude has the potential to reach the 89.23 price area before this rally is complete. That price level would complete a 23.1% advance and match the lowest performance of the earlier strongest rallies, since the March 2023 swing low. Notice that 89.23 is within a larger Fibonacci confluence zone target.
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2 weeks ago
Change The Peaking Subject. The Energy Report
By: Phil Flynn | July 11, 2024
When things are not quite going your way, it is probably a good time to try to change the subject. Or the peaking subject anyway. In other words, try to misdirect people away from the fact that things are a shambles and try to change the narrative. Look over there, nothing to see here. Pay no attention to that man behind the curtain.
For example, let’s take BP, that once stood for British Petroleum and then later “Beyond Petroleum” and then back to BP again. The same company that brought you the “Deep Water Horizon” Is now making a daring prediction that oil demand might “peak” next year at a time when the company is struggling and on a downward spiral.
Let’s forget for a minute that all the major reporting agencies like the Energy Information Administration, OPEC, and the International Energy Agency all see oil demand breaking records. At least for the moment the headlines BP might get might be more about their crazy peak demand prediction instead of the company’s dismal performance. Is it any wonder when a company can’t decide what its core business is?
Javier Blass at Bloomberg pointed out that, “Six months since BP appointed a new CEO with the promise of “growing the value”, its market cap has slumped to a 2-year low of ~£75 billion. BP is a shadow of the mighty oil behemoth it once was — and living on borrowed time. He writes that, “Murray Auchincloss had a clear message to his shareholders days after becoming chief executive officer of BP Plc: “I’m focused on growing the value of BP.” Nearly six months since his promotion, however, the promised improvement is nowhere to be seen.
BP’s market value this week fell to a two-year low of roughly £75 billion ($96 billion). Worse, the company is worth today about the same as it was 25 years ago, when oil changed hands at $10 a barrel, rather than today’s price of more than $80 a barrel. BP is a shadow of the mighty oil behemoth it once was. It would be unfair to blame Auchincloss — who celebrates six months on the job next Wednesday — for all the problems. Some predate him.
Yet it’s not just BP that is trying to redirect our attention away from the reality in front of our eyes, but the Biden administration as well. Perhaps one of the most shortsighted and nonsensical pushes from the Biden Administration is the impossible task of trying to electrify our nations electronic fleet. Obviously, this is more evidence that this administration does not follow science.
Yet even though almost half of the people that have been sucked into buying electric cars want to go back to gasoline and based on sales hardly anyone want an electric car, the Biden administration wants to continue to waste billions to push this electronic albatross on the American people. Now its latest action to cover for the fact that they have spent billions of dollars on a few car chargers and in a pathetic attempt to try to win some voters in swing states where he is way behind, he plans to double down on this electric car fantasy.
MarketWatch reported that, “The Biden administration has announced $1.7 billion in grants that aim to help convert closed or at-risk automobile facilities into plants that make electric vehicles or EV parts, with the effort due to aid 11 factories across eight states. The grants — which stem from Democrats’ Inflation Reduction Act of 2022 — are slated to include $500 million for a General Motors GM, +0.58% plant in Michigan, $89 million for a Harley-Davidson HOG, +1.35% factory in Pennsylvania, $78 million for a Blue Bird BLBD, +2.38% school-bus factory in Georgia and $208 million for Volvo VOLV.A, 0.81% truck-manufacturing facilities in Maryland, Pennsylvania and Virginia.
Michigan, Pennsylvania and Georgia are among the seven swing states that look poised to decide the 2024 White House race.
Grant money is also due to go to facilities in Illinois, Indiana and Ohio, with Cummins CMI, +2.01% and Chrysler parent Stellantis STLA, +3.34% among the companies benefiting. The Biden White House said in a statement that the new grants are all subject to negotiations, and that the Department of Energy could rescind the grants as reported by MarketWatch.
Yet we know this electric pipe dream is nothing more than smoke and mirrors. Electric vehicles are not as friendly to the environment as the Biden administration would have you believe.
To have the ability to try to power the grid to charge millions of electric cars and at the same time try to meet the real needs of the economy of the future, which is an artificial intelligence and data centers, makes this task close to impossible. Unless we start building a lot of nuclear power plants and spend billions to increase the reliability of the grid. But we won’t have that cash if the Biden administration keeps wasting in on this electric car obsession. Of course, that won’t stop the Biden administration from spending our money if they think they can win a few votes.
In their attempts to save the planet from greenhouse gases the reality is that the demand for oil and gas is just going higher. Even according to the International Energy Agency (IEA) that once famously said that we could stop investing in fossil fuels is now projecting oil demand growth and not a peak next year.
The IEA, normally one of the most pessimistic and usually the most incorrect on global oil demand today said that, “World oil demand growth slowed to only 710 kb/d in 2Q24, its lowest quarterly increase in over a year. Oil consumption in China, long the engine of global oil demand growth, contracted in both April and May, and is now assessed marginally below year earlier levels in 2Q24. That stands in stark contrast to annual gains of 1.5 mb/d in 2023 and 740 kb/d in 1Q24. Demand for industrial fuels and petrochemical feedstocks was particularly weak.
By contrast, second-quarter delivery data of gasoil and naphtha for OECD economies came in higher than expected, potentially signaling a budding recovery in Europe’s ailing manufacturing sector. While the bounce temporarily pushed quarterly OECD demand growth back into positive territory, non-OECD countries will account for all this year’s global gains. World oil demand growth expectations for 2024 and 2025 are largely unchanged at 970 kb/d and 980 kb/d, respectively. (so, no peak predicted).
No peak for OPEC either. Reuters reported that, “OPEC stuck to its forecast for relatively strong growth in global oil demand in 2024 and next year, saying on Wednesday that resilient economic growth and air travel would support fuel use in the summer months. The Organization of the Petroleum Exporting Countries, in a monthly report, said world oil demand would rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.
The Energy Information Administration (EIA) also is not predicting an oil demand peak and on Tuesday raised its forecast for the growth of global demand for oil during the current year to 1.10 million barrels per day, and in 2025 by 300 thousand barrels per day to 1.80 million barrels per day.
The EIA also gave oil a bounce as refiners ran wild suggesting more supply draws for crude once refiners recover from Hurricane Beryl.
EIA said that U.S. crude oil refinery inputs averaged 17.1 million barrels per day, which was 317 thousand barrels per day more than the previous week’s average. That means refineries operated at extremely strong 95.4% of their operable capacity last week.
Crude oil inventories did fall last week by 3.4 million barrels and our 4% below the five-year average for this time of year.
Instead of selling oil from the reserve it’s interesting to note that the Biden administration announced a plan to buy 4 million barrels back for the reserve. Of course if prices go up, they’ll probably release some more oil from the reserve again.
The EIA did also report that gasoline inventories fell 2,000,000 barrels from the week before and are 1% below the five-year average. Distillate inventories increased by 4.9 million barrels but are still 8% below the five-year average.
The EIA did see demand stay solid as total products supplied over the last four-week period averaged 20.9 million barrels a day, up by 3.0% from the same period last year.
Gasoline demand that 9.3 million barrels a day last week that’s up 0.4% from the same period of last year and that’s the first time the four-week moving average moved above last year’s levels and we also saw distillate fuel inventories average 3.7 million barrels a day and that was up 4.4% from the same period last year.
So don’t let peak demand fears keep you awake be prepared for a significant tightening of supplies of both oil and products later in the year. Today of course we’re going to have to look at the consumer price index to give us a bit of an idea of where the feds head might be but ultimately use this weakness to put on your winter hedges.
Natural gas prices are still holding in pretty spectacularly even in the aftermath of hurricane Beryl. We think it would be a good idea to put on some long-term strategies for natural gas and get ready for winter because even in the dog days of summer, winter isn’t that far behind.
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2 weeks ago
Natural Gas Remains Bearish as Resistance Holds Strong
By: Bruce Powers | July 10, 2024
• Downturn following test of 200-Day MA resistance is short-term bearish behavior and improves chance of testing lower support zone.
Natural gas followed through to the downside on Wednesday after Tuesday’s rally encountered resistance around the 200-Day MA. Yesterday’s low of 2.33 was exceeded to the downside before natural gas found support at the day’s low of 2.29, which led to a bounce.
Today’s price action did little to comfort bulls as a downtrend is well in place and today’s decline following yesterday’s test of potentially significant resistance is bearish behavior. Until there is a clear change in character natural gas remains bearish and a test of support at the next lower target zone continues to be the next likely scenario to unfold.
Confluence of Indicators Point to 2.23 and Lower
There is a confluence of price levels that appear from around 2.23 to 2.17. That is not too much lower than the current retracement low of 2.27. The range provides a potential support area given the confluence of indicators pointing to the price range. Two key levels include the 61.8% Fibonacci retracement at 2.18 and the completion of a falling ABCD pattern at 2.20. Each method is looking to identify a harmonic price level associated with prior swings highs and lows. The target from the ABCD pattern is an extended target using the 127.2% Fibonacci ratio.
Bullish Sentiment Begins to Dominate Above 2.46
An alternative to the bearish scenario unfolds with a rally above Tuesday’s high of 2.45, along with the 200-Day MA at 2.46. An earlier initial indication of strength would be seen in a rally above today’s high of 2.385. However, an advance above 2.385 puts the price of natural gas heading back up into potential resistance around the 200-Day line. And resistance may be seen again.
Once the 200-Day line is exceeded, a potentially significant near-term barrier to a continuation higher is resolved. It would set the stage for a rally up to the 50-Day MA at 2.55 and the 38.2% Fibonacci retracement at 2.61. A little higher will be a price range from around 2.67 to 2.71. That range consists of the 20-Day MA and 50% retracement, respectively.
20-Week MA Further Confirms Support Zone
Regarding the next lower potential support zone, in addition to four price levels that identify the price range there is also confirmation of the range on the higher time frame weekly chart. The 20-Week MA is present on the weekly chart (not shown) at 2.19. Also, the 50-Week MA is a close match with potential resistance around the 200-Day line. It shows potential resistance at 2.49.
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DiscoverGold
2 weeks ago
Crude Oil Inventories Declined by 3.4 Million Barrels
By: Vladimir Zernov | July 10, 2024
Key Points:
• Gasoline inventories decreased by 2.0 million barrels from the previous week.
• Strategic Petroleum Reserve increased from 372.6 million barrels to 373.1 million barrels.
• WTI oil is trying to settle above the $82.00 level.
On July 10, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories decreased by 3.4 million barrels from the previous week, compared to analyst consensus of -3.0 million. At current levels, crude inventories are about 4% below the five-year average for this time of the year.
Total motor gasoline inventories declined by 2.0 million barrels from the previous week, compared to analyst forecast of -0.5 million barrels. Distillate fuel inventories increased by 4.9 million barrels.
Crude oil imports increased by 214,000 bpd, averaging 6.8 million bpd. Crude oil imports averaged 6.7 million bpd over the past four weeks.
Strategic Petroleum Reserve increased from 372.6 million barrels to 373.1 million barrels as U.S. continued to buy oil for reserves.
Domestic oil production increased from 13.2 million bpd to 13.3 million bpd. This is an important development which shows that current prices provide sufficient incentives to boost production.
WTI oil made an attempt to settle above the $82.00 level as traders reacted to the EIA report. Interestingly, rising domestic oil production did not serve as a beraish catalyst for WTI oil in the near term. Traders focused on falling crude oil and gasoline inventories, which indicate that demand is strong. A move above the $82.00 level will push WTI oil towards the nearest resistance at $83.50 – $84.50.
Brent oil settled near the psychologically important $85.00 level after the release of the EIA data.
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mick
1 week ago
