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3 weeks ago
Natural Gas Nears Critical 50-Day MA Test Amid Rally
By: Bruce Powers | September 2, 2024
• As natural gas continues to rally, key resistance at the 50-Day MA looms, with a double bottom pattern hinting at further upside potential.
Natural gas continued to rally on Monday with a new trend high of 2.20. It is now very close to completing a test of resistance around the 50-Day MA, currently at 2.215. There is a chance that the moving average line may be exceeded, especially given today’s advance and the early successful test of support at the 20-day MA.
The 20-Day line was busted seven days ago and today will be the first day with a low above the 20-Day line. That is a sign of strength that needs further confirmation. Tuesday’s session may be more telling as both the United States and Canada are on holiday today and that takes liquidity out of the market.
Next Pivot, 50-Day Moving Average
Nonetheless, today’s price action looks like it may lead to the first touch of the 50-Day MA since July 2, the day natural gas fell below both the 50-Day MA and 200-Day MA on the same day. That is because they were crossing, the 50-Day line rising above the 200-Day. Note that the recent swing high, a key pivot, is also located at an intersection of the 50-Day MA crossing below the 200-Day MA. Moreover, the breakdown on July 2 also triggered a decline below a previous swing low that had significance of its own.
The same thing may be about to happen soon as natural gas looks poised to attempt to recapture the August high of 2.30. If it does, a breakout through the intersection of the 50-Day and 200-Day MAs will also occur. That would mirror what happened during the bearish reversal from the June 3.16 peak.
Double Bottom Pattern Forming
In addition, there is a double bottom bullish reversal pattern setting up in the daily chart of natural gas. A breakout of the pattern would also occur on a rise above the 2.30 swing high. Subsequently, a daily close above that level would confirm that breakout and put the price of natural gas back above both the 50-Day and 200-Day MAs. That would leave it in a strong position to eventually challenge potential resistance around the top trendline. Depending on when it is approached, there are two Fibonacci retracement levels for reference. The 61.8% retracement is at 2.87 and the 78.6% retracement at 2.89.
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3 weeks ago
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | August 31, 2024
• Following futures positions of non-commercials are as of August 27, 2024.
WTI Crude Oil: Currently net long 216.4k, down 3.6k.
West Texas Intermediate crude began the week strong with a rise of 3.7 percent at Monday’s high, but sellers showed up just under the 200-day ($77.71), with the average once again attracting offers on Tuesday. In the end, the crude finished the week down 1.7 percent to $73.55/barrel.
Monday’s high $77.60 did not quite test the top end of a months-long range between $71-$72 and $81-$82. WTI just bounced off the bottom of the range in the prior week. Odds favor a test – again – of the support in the sessions ahead.
In the meantime, US crude production in the week to August 23rd decreased 100,000 barrels per day from the prior week’s record output of 13.4 million b/d. Crude imports declined 92,000 b/d to 6.6 mb/d. As did stocks of crude and gasoline, which respectively fell 846,000 barrels and 2.2 million barrels to 425.2 million barrels and 218.4 million barrels. Distillate inventory, on the other hand, grew 275,000 barrels to 123.1 million barrels. Refinery utilization grew one percentage point to 93.3 percent.
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3 weeks ago
NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | August 31, 2024
Next Monday is Labor Day, which is a holiday in the United States. NY Crude Oil Futures closed today at 7355 and is trading up about 2.65% for the year from last year's settlement of 7165. This price action here in September is suggesting that this has been a bear market trend on the monthly 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.
From a perspective using 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 7535 and support forming below at 7352. The market is trading closer to the support level at this time. An opening below this level in the next session will imply a decline is unfolding.
On the weekly level, the last important low was established the week of August 19th at 7146, which was down 7 weeks from the high made back during the week of July 1st. We have been generally trading up for the past week from the low of the week of August 19th, which has been a move of 8.592%. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a weak posture.
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 neutral on our weekly Momentum Models warning we have overhead resistance forming and support in the general vacinity of 7167. Resistance is to be found starting at 7859. Looking at this from a wider perspective, this market has been trading up for the past 12 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 August, this market has held above last month's low of 7146 reaching 7146.
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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3 weeks ago
Natural Gas Eyes 50-Day MA Amid Bullish Signals
By: Bruce Powers | August 30, 2024
• A daily close above the 20-Day MA could reinforce a bullish trend for natural gas, with the 50-Day MA and 2.30 swing high as the next targets.
Natural gas rose on Friday to trigger a one-day continuation signal for the bull trend. Subsequently, resistance was seen at the day’s high of 2.17, leading to a pullback below the opening price of 2.145. At the time of this writing, it continues to trade below the open but a little above the 20-Day MA.
It has been flirting with the 20-Day line for several days. On Tuesday, natural gas closed at resistance of the 20-Day line and then clearly above it yesterday. If it can close above the 20-Day line today, a short-term bullish outlook can be maintained. Moreover, the week is set to end with a bullish green candlestick pattern, primed for upside follow-through next week
Watching for Progressive Signs of Strength
There needs to be additional signs of strength following yesterday’s bullish breakout above the 20-Day MA to add confidence that an advance may be sustainable. A daily close above the 20-Day line would provide a new piece of evidence for a continuing bullish scenario, while a close below the line puts short-term price behavior into question as a pullback could be coming. It would also increase the possibility of an eventual failure of the bull breakout of the moving average line. This is particularly the case when Thursday’s close was strong, near the high of the day.
Double Bottom Breakout Potential
The price of natural gas looks to be heading to the 50-Day MA at 2.23 before it may encounter resistance. A key price level is the most recent swing high of 2.30 as it is part of the price structure of the downtrend. Once it is exceeded to the upside, a bullish trend reversal will be indicated. By then additional signs of strength will have occurred regarding the 200-Day MA, at 2.275 currently. In addition, an advance above the 2.30 swing high will trigger a bullish reversal of a double bottom pattern given that the second bottom was established this week.
A double bottom reversal pattern as it forms could see additional consolidation before a bullish breakout occurs. If resistance is seen around the price levels noted above, there could still be a bearish reversal and drop to lower price levels, and possibly the internal uptrend that is shown on the chart.
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3 weeks ago
Crude Oil Consolidates as Range Narrows Forming Symmetrical Triangle
By: Bruce Powers | August 29, 2024
• Crude oil tests key trendlines within a symmetrical triangle pattern, signaling a pending breakout that could determine the next major market move.
Crude oil continued to consolidate on Thursday between two trendlines that define a developing symmetrical triangle type consolidation pattern. The top internal trendline was tested as resistance today with the day’s high of 77.90 and it held. That high was also a successful test of resistance of the 200-Day MA (blue) as it was relatively close and follows Monday and Tuesday’s highs, which were each above the 200-Day line. The 200-Day MA is currently at 78.15. The high today also continues a series of lower swing highs that are marked by the declining trendline.
Fractal Nature of the Market
The developing small symmetrical triangle is a fractal of the larger pattern in crude. For over six months crude oil has been forming a large symmetrical triangle consolidation formation. Currently, the smaller triangle looks like it may test lower support levels before crude is ready to break out of that formation.
The lower trendline of the pattern also defines the low end of the larger symmetrical triangle. It is the closer price area that has larger implications if broken to the downside. An upside breakout through the internal downtrend line keeps crude inside the larger pattern and heading towards the top line of resistance of that pattern.
Long-term Crude Oil is Trending Up
An eventual breakout of the larger symmetrical triangle, either up or down, should see crude start to trend again. There is strong support that has defined the lower portion of the large triangle formation. Starting with the swing low in May 2023, support has been tracked by the 50-Month MA. It has been successfully tested as support numerous times since May 2023, including this month.
Although on some months crude traded below the 50-Month line, it closed above the line every month. It has not closed below the 50-Month line since January 2021. This is bullish behavior on the monthly chart. Further, the 50-Month MA crossed above the 200-Month MA in June and continues to trend higher. Meanwhile, for each of the past three months, crude has recognized support of the 200-Month MA and mostly traded above it.
Remains Above Long-term Downtrend Line
Further, the swing low in May 2023 found support around the long-term downtrend line that starts from the peak in 2008. The lower boundary line of the large symmetrical triangle starts there. Subsequently, the large symmetrical triangle that has been forming is also above support of the long-term downtrend line and the 50-Month MA. Given these long-term bullish indications it seems more likely that crude oil eventually breaks out and up from the triangle. However, a decisive drop below 72.24 gives a bearish signal and is likely to lead to lower prices.
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3 weeks ago
Comply And Repent. The Energy Report
By: Phil Flynn | August 30, 2024
I have said many times that this is not your daddy’s OPEC. Oil prices have another reason not to break out to the downside of the lower trading range as OPEC scofflaw Iraq has seen the errors of their ways.
Iraq is repenting and making amends by announcing compensation cuts for previous offenses against the OPEC quota. And it is not just lip service but an announcement that that had cancelled a 1.0-million-barrel spot crude sale but will also defer two other 1.0 million barrels sales. In fact, S&P Global reported that, “statement posted on OPEC’s website recently revealed that the OPEC Secretariat had received “updated compensation plans from Iraq and Kazakhstan for their overproduced volumes for the first seven months of 2024”. These overproduced volumes totaled around 1.440 million barrels per day for Iraq and 699,000 barrels per day for Kazakhstan, “according to assessments made by the independent sources approved in the Declaration of Cooperation”, the statement outlined. The statement highlighted that the “entire overproduced volumes will be fully compensated for by September 2025”.
A statement posted on OPEC’s website last month revealed that the OPEC Secretariat received compensation plans from Iraq, Kazakhstan, and the Russian Federation “for their overproduced volumes for the first six months of 2024”. So, worry about OPEC tapering off production cuts should be offset by OPEC cheaters repentance.
Vice President Kamla Harris also repented against her call for a fracking ban that she called for back when she first ran for President but had to bow out because hardly anyone voted for her. Now that she is the Democrat Nominee for President with hardly anyone voting for her, she now says in her first sit down edited CNN interview that she made it clear that she would not ban fracking. She seemed to suggest that you should not listen to what she says, and you should ignore the fact that she was the sponsor of the ‘Green New Deal” that she really did not mean this stuff. When she said she would ban fracking on her first day as President and somehow you should be clear on how she felt, even though she never said that.
In fact, she pointed out that as Vice President she did not ban fracking. That is a bold statement considering that a Vice President does not have the authority to ban fracking in the first place. As President she could, like her current boss, offer a range of executive orders, like drilling moratorium, banning drilling on Federal lands ,and reverse all of Trump’s border policies and open the borders, but why would you think she would repeat the short sighted and dangerous policies? Just because she said her values have not changed, it does not mean she has the integrity to stand up for those values as her policies that she is touting do not seem to match her values. Unless her values are elected at any cost then it might make sense.
Oil prices are also trying to put the Libyan oil dispute in perspective even as the loss of Libyan barrels will become increasing more difficult to replace. As of yesterday, Libyan oil production was down 700,000 barrels of light crude per day. The market is hoping that the loss oil revenue to both of Libya’s political factions will bring a swift resolution to the political standoff but if not, get ready for a Labor Day price spike. Reuters reported that, “the move to shut off Libya’s main source of revenue comes in response to the Tripoli-based Presidency Council sacking Central Bank of Libya (CBL) chief Sadiq al-Kabir, prompting rival armed factions to mobilize. Prime Minister Abdulhamid al-Dbeibah, installed through a U.N.-backed process in 2021 and head of the Tripoli-based Government of National Unity, said this week that oilfields should not be allowed to be shut “under flimsy pretexts”.
On Tuesday, U.S. Africa Command General Michael Langley and Chargé d’Affaires Jeremy Berndt met Khalifa Haftar, the head of a force called the Libyan National Army that controls the country’s east and south.
Strong demand and the upcoming winter seem to turn the crack spreads around after its recent plummet. Refiners continue to refine oil at a breakneck pace and there’s an assumption that the crack spreads are still fat enough to keep the refiners occupied.
All of these stories should have oil testing the upper end of its trading range soon. We still believe with the supply situation tightening dramatically because oil supplies have fallen seven out of the last eight weeks, that we could see a major upside breakout in the very near future and while we may fail again in the $80.00 handle be prepared for an even higher move if we don’t see a quick resolution to the Libyan political oil crisis.
Natural gas prices have pulled back as the shoulders season approaches. As we get into the heart of the hurricane season the market is looking at the Atlantic and the potential to add a couple of storms that may or may not turn out to be an issue next week.
Yesterday the Energy Information Administration said that w working gas in storage was 3,334 Bcf as of Friday, August 23, 2024, according to EIA estimates. This represents a net increase of 35 Bcf from the previous week. Stocks were 228 Bcf higher than last year at this time and 361 Bcf above the five-year average of 2,973 Bcf. At 3,334 Bcf, total working gas is within the five-year historical range.
With the Atlantic heating up, oil trades need to download the Fox Weather ap to see how things develop.
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4 weeks ago
Natural Gas Breaks 20-Day MA, Eyes Stronger Resistance Ahead
By: Bruce Powers | August 29, 2024
• Natural gas continues to rise, closing above the 20-Day MA, and targets higher resistance zones, but faces challenges within an expanding triangle pattern.
Natural gas advanced slightly above Wednesday’s high on Thursday, reaching a high of 2.15. It generated a higher daily high and higher low and continues to trade near the highs of the day at the time of this writing. Today is set to end with natural gas closing above the 20-Day MA for the first time in six days. By recapturing the 20-Day line natural gas is showing strength and a recovery from this week’s low, and a slightly new trend low of 1.875.
Resistance Zone from 2.24 to 2.30
There are several initial upside targets for the bounce defined by a top price of 2.30 and starting with the 50-Day MA at 2.24. Within the price range is the 200-Day MA at 2.28 and the interim swing high of 2.27 from July 22. Be aware that as of this week’s low natural gas is forming an expanding triangle pattern.
The two boundary lines of the pattern are purple on the chart and point away from each other. This means that a breakout above the 2.30 swing high may see difficulty in following-through if natural gas subsequently finds resistance a little higher around the rising top line of the triangle.
Daily Close Above 200-Day Line Should Complete Bottom
Nonetheless, a daily close above the 200-Day line should put natural gas in a bullish position to approach higher potential targets, the first being the 38.2% Fibonacci retracement at 2.37. If that level can be surpassed the 50% retracement zone at 2.52 becomes the next higher target beginning with the interim swing low of 2.48 from May.
Trading Inside Large Symmetrical Triangle Pattern
Natural gas has been forming a large symmetrical triangle pattern since the April bottom. If it continues to strengthen, an eventual test of resistance at the top line of the triangle is likely. The 78.6% retracement at 2.89 can be used as a proxy for now. However, a little lower and above the 50% retracement is another potential resistance zone at 2.67 as that price would complete the 61.8% Fibonacci retracement.
Be aware that since natural gas is trading inside a consolidation pattern in the form of an expanding triangle, it is subject choppy trading until a decisive breakout of the pattern occurs.
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4 weeks ago
EIA Natural Gas Storage Build Of +35 Bcf Misses Analyst Estimates
By: Vladimir Zernov | August 29, 2024
Key Points:
• Working gas in storage increased by 35 Bcf from the previous week.
• At current levels, stocks are 361 Bcf above the five-year average for this time of the year.
• Natural gas received support in the $2.00 - $2.05 range.
On August 29, 2024, EIA released its Weekly Natural Gas Storage Report. The report indicated that working gas in storage increased by 35 Bcf from the previous week, compared to analyst consensus of +38 Bcf. In the previous week, the working gas in storage has also grown by 35 Bcf.
At current levels, stocks are 228 Bcf higher than last year and 361 Bcf above the five-year average for this time of the year.
Natural gas prices continued to rebound from session lows as traders reacted to the EIA report. EIA natural gas storage build missed analyst estimates of +38 Bcf, which may provide some support to natural gas markets.
The current demand for natural gas is high. Weather forecasts indicate that demand should be high during the weekend. However, demand is expected to decline next week, which may put pressure on prices.
From a big picture point of view, oversupply remains a key problem for natural gas markets. The market needs significant positive catalysts to gain sustainable upside momentum.
Technically, natural gas settled above the nearest support at $2.00 – $2.05. This support has already been tested several times and proved its strength. 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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4 weeks ago
China Continues to Weigh. The Energy Report
By: Phil Flynn | August 29, 2024
Once again very tight oil supply and very good demand is being overshadowed by China oil demand concerns. The latest worry is coming from UBS that is predicting that China’s GDP will miss its 5% target and grow at only 4.6% this year which was lowered from earlier forecast of 4.9% for 2025. Yet here at home the Energy Information Administration (EIA) showed petroleum draws across the board with gasoline inventories continuing to plummet at a breakneck pace. US gasoline demand is near a record high for this time of year hitting 9.307 million barrels a day as overall petroleum demand surged to 21.592 million barrels a day as we head into what is supposed to be a record-breaking Labor Day Holiday travel weekend.
Gas price going into Labor Day is at a three-year low that could see travel shatter some records. By air, the TSA is predicting that 17 million people will go through airport security, the busiest on record for the travel period. It is a fact that gas prices are down even as supply is less than a year ago and demand is higher. Part of that is slowing industrial usage in China and weaker demand for diesel.
The EIA put total demand at 20.6 million barrels a day, down by 2.9% from the same period last year. Gasoline demand averaged 9.1 million barrels a day, up by 1.1% from a year ago. Distillate demand, because of weak global demand, was down 3.6% while jet fuel demand was up 2.6% from a year ago.
Yet while gas prices are down supplies are getting tighter. John Kemp at Reuters reported that U.S. gasoline inventories have depleted much faster than normal since the middle of July. He says that gasoline inventories fell by 15 million barrels between July 12 and August 23, the largest seasonal draw since 2008. That is compared with a prior ten-year average of just -5 million barrels. So, enjoy the low gas prices because they may not last.
In fact, it’s probably time to revisit Exxon and their warning about a looming oil shortage. Exxon Mobil said that, “Our Outlook reflects oil production naturally declining at a rate of about 15% per year. That’s nearly double the IEA’s prior estimates of about 8%. This increase is the result of the world’s shifting energy mix toward “unconventional” sources of oil and natural gas. They warn that, “These are mostly shale and dense rock formations where oil and gas production typically decline faster. To put it in concrete terms: With no new investment, global oil supplies would fall by more than 15 million barrels per day in the first year alone. That means at that rate, by 2030, oil supplies would fall from 100 million barrels per day to less than 30 million – that’s 70 million barrels short of what’s needed to meet demand every day.
The Democrat presidential nominee was for total electrification of the US car fleet before she was against it, well at least we think she is and should maybe probably read the Exxon report. They say, “If every new car sold in the world in 2035 were electric, oil demand in 2050 would still be 85 million barrels per day. That’s the same as it was in 2010.”
Instead of the short-sighted assault on fossil fuels that has led to higher prices and global instability Exxon Mobil is calling for governments, companies, universities, and others to work together to achieve a transition that increases the supply of energy for everyone while steadily and thoughtfully reducing emissions. Given the need to do more and do it faster at a lower cost, progress will need to occur in parallel, supported by durable policies that are focused on: • More transparency to give the market more lead time to adapt to changes • Outcomes to keep the market focused on the best technologies to reduce the most emissions at the lowest price. Collaboration is key to finding the right application of technology to lower emissions in specific industries.
That’s why we believe governments should create a level field in which all technologies can compete without fear or favor so that the best choices emerge. Where no market exists and initial costs are high, incentives make sense to get things started. Butgovernment incentives cannot – and should not – be in place forever. To get to net zero, markets must be developed to encourage reduced emissions. “To get serious, three things are needed: supportive public policy, significant technology advancements, and a smooth transition from government subsidies to market-based mechanisms.”
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4 weeks ago
Natural Gas Tests 20-Day MA Amid Potential Bullish Breakout
By: Bruce Powers | August 28, 2024
• Natural gas shows signs of recovery but must clear 2.30 resistance to confirm a bullish reversal and target higher retracement levels.
Natural gas turned higher on Wednesday as it rallied to a high of 2.14 as it attempted to recapture the 20-Day MA (purple), currently at 2.10. The 20-Day line was exceeded intraday but natural gas is currently trading at or a little below that line, at the time of this writing. A daily close today above the 20-Day MA will be a slightly stronger indication than a close below the line. Certainly, resistance may continue to be seen around the 20-Day line leading to a pullback.
Trend Resistance Zone from 2.25 to 2.30
Before natural gas can advance to test higher areas of potential resistance it first needs to first breakout above a potentially formidable price zone from around 2.25 to 2.30. It includes the recent swing high of 2.30 and an earlier interim swing high of 2.27. The price zone begins with the 50-Day MA (orange) at 2.25 and is joined by the 200-Day MA (blue) at 2.28. Whether upward momentum can continue in the near-term or the price of natural gas consolidates further with the recent price range.
Expanding Triangle Developing
As of this week’s new trend low, there is potential expanding triangle (purple) taking shape. It is a consolidation pattern where the price range expands rather than contracts, such as in a symmetrical triangle. As it expands false breakouts may be experienced either at the bottom or top of the pattern. Currently, the price range is from yesterday’s low of 1.875 to the 2.30 prior swing high.
Correction May be Complete
This week’s low of 1.875 had natural gas down by 40.65% from the June swing high of 3.16. That is a healthy correction that stalled around the 78.6% retracement zone (1.92). However, it exceeds all but one of the bearish corrections that have occurred since February 2023. The largest was a decline of 55.0% from the January swing highs. Also, notice that there is a bullish divergence with the relative strength index (RSI) momentum oscillator, which is a bullish indication.
If natural gas can get above the 2.30 swing high and stay above it, it will have a chance to eventually test resistance around the top trendline. Other interim potential targets are lower starting with the 38.2% Fibonacci retracement at 2.37, and the 50% retracement of 2.52.
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4 weeks ago
Crude Inventories Drop By 0.8 Million Barrels
By: Vladimir Zernov | August 28, 2024
Key Points:
• Gasoline inventories decreased by 2.2 million barrels.
• Strategic Petroleum Reserve increased from 377.2 million barrels to 377.9 million barrels.
• WTI oil climbed back above $74.50 as traders reacted to the report.
On August 28, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories declined by 0.8 million barrels from the previous week, compared to analyst consensus of -3 million barrels. 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 2.2 million barrels, while analysts expected that they would drop by 1.5 million barrels. Distillate fuel inventories increased by 0.3 million barrels from the previous week.
U.S. crude oil imports declined by 92,000 bpd, averaging 6.6 million bpd. Over the past four weeks, crude oil imports averaged 6.4 million bpd.
Strategic Petroleum Reserve increased from 377.2 million barrels to 377.9 million barrels as U.S. continued to buy oil for reserves.
Domestic oil production decreased from 13.4 million bpd to 13.3 million bpd. From a big picture point of view, it looks that domestic producers are not ready to push production towards 13.5 million bpd at current oil price levels.
WTI oil moved away from session lows as traders reacted to the EIA report. Currently, WTI oil is trying to settle above the $74.70 level. Traders are worried about demand in China, but falling crude and gasoline inventories may provide some support to the market.
Brent oil climbed back above the $78.50 level after the release of the EIA data.
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4 weeks ago
Tight Places. The Energy Report
By: Phil Flynn | August 28, 2024
Oil inventories continue to tighten even as crack spreads crack under seasonal pressure and hopes that Libyan oil production won’t be down for too long. Sadly, summer and the summer driving season, is coming to an end.
The American Petroleum Institute (API) reported a larger than expected 3.4-million-barrel drop in crude supply, coupled with a 1.86-million-barrel drop in gasoline supply and a 1.4-million-barrel drop in distillate.
Now one might think that the market would be concerned about the rapid tightening of oil supply, but the trade keeps pushing the short side betting that supplies will be adequate even if the line between supply and demand is razor thin and could flip into a major deficit if Libya’s oil supply stays off-line. Bloomberg reports that Libya’s oil output has almost halved this week as fields reduce operations amid a stalemate over who controls the country’s central bank. Output has fallen at least 400,000 barrels a day since eastern authorities ordered a shutdown of all production, according to people with knowledge of the situation. Cuts include at Sarir, operated by Arabian Gulf Oil Co., which was producing 145,000 barrels a day and has now shut down. Oil supplying the Ras Lanuf terminal has also dropped by at least 130,000 barrels a day.
The move to freeze all output and exports announced Monday by the eastern Libyan authorities came in response to a decision by the internationally recognized government in the west to replace central bank Governor Sadiq Al-Kabir according to Bloomberg.
While the democrat nominee for president seems to be for price controls and subsides, Iran’s president seems to be against it. Reuters reported that President Masoud Pezeshkian said in a video published on Tuesday that fuel subsidies made no sense in Iran, a major oil producer with a struggling economy that has faced protests in the past over price hikes. “There is no rationality in the fact that we buy gasoline with free market dollar prices, and we sell it with a subsidized price,” Pezeshkian, elected in July, said in a video broadcast by state media. Maybe Kamala will adopt that policy the same way she seems to be adopting President Trumps policies.
It also being reported that Iran’s supreme leader, Ayatollah Ali Khamenei, stated on Tuesday that there is no harm in engaging with its enemy, referring to the United States and issues related to Iran’s nuclear program. Obviously, he wants to try to cut a deal just in case President Donald Trump returns with his maximum pressure campaign.
And while the market goes up and down, the reality is it seems like crude is stuck in a trading range with 70 on the low end and the 80 on the high end. Product crack spread seems to suggest plummeting demand so it will be very important to keep an eye on the demand numbers when we get today’s Energy Information Administration report at 9:30a.
Meanwhile Reuters is reporting that, “A Ukraine drone attack sparked a fire at an oil depot in the Kamensky district of Russia’s southern region of Rostov, its governor said on Wednesday, confirming media reports that several tanks were on fire.”
Gas markets are already looking ahead to winter. The heat wave is going to give into shoulder season. In Europe there’s still concerns about tight supplies if we get a cold winter one of the key things to remember for natural gas in Europe is that we haven’t had a real challenging winter and that has kept the market somewhat well supplied. Yet as the tensions between Russia and Ukraine continue, the possibility of a fuel shortage in Russia is still real. Of course the market price does not care until it happens.
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4 weeks ago
Natural Gas Extends Losses, Testing Critical Support Levels
By: Bruce Powers | August 27, 2024
• Despite a six-day decline to $1.875, natural gas shows potential for a bullish reversal if it surpasses $1.97, with resistance at $2.02 and $2.09.
The bears remained in control of the price of natural gas on Tuesday as it continued a bearish correction and fell to a new trend low of 1.875. It also dropped below a key trendline support indicator. In early-August natural gas found support at a swing low of 1.88. That low led to a bullish breakout of a falling wedge pattern. However, the target for the wedge is the beginning of the pattern and it was reached on August 14 at 2.27. Natural gas is on track to close weak on Tuesday, in the lower half of the day’s range. A daily close below 2.27 will show greater weakness than a daily close above that price level.
Down for Six Straight Days
Nevertheless, natural gas has been falling for six straight days. It may run out of bearish momentum and yet find support that leads to a bullish reversal around the lows. There are no signs of that yet, but a rally above today’s high of 1.97 may signal a bottom and could lead to a test of higher price levels. Following a rally above today’s high natural gas will be heading towards this week’s high of 2.02, followed by the 20-Day MA at 2.09.
Break Below 1.875 Support Targets Lower Prices
On the downside, a decisive decline below today’s low of 1.875 signals a continuation of the bear trend. Whether the downside momentum stalls or accelerates at that point remains to be seen. Supportive of a bearish continuation are the moving averages. Notice that the orange 50-Day MA broke below the blue 200-Day MA yesterday, a sign that the decline is weakening.
The first area to watch for support would then be around a prior interim swing high at 1.85 from April 23. A little lower is the 88.6% Fibonacci retracement of the larger uptrend that began from the April swing low at 1.58. Depending on when it is reached the 88.6% level will likely be nearby potential support represented by the lower uptrend line.
Despite today’s bearish behavior, natural gas is on track to close above the prior swing low of 1.88. That may provide little comfort to the bulls, but it does provide a small indication that buyers may be returning.
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4 weeks ago
Crude Oil Price Forecast: Breakout Above 200-Day MA Likely
By: Bruce Powers | August 27, 2024
• Crude oil consolidates between key moving averages, with potential for a bullish breakout targeting $81.96, though risks of a deeper pullback remain.
Following two sharp rallies in the past two days, crude oil consolidates and trades inside day on Tuesday. It has been trading roughly between resistance around the 200-Day MA (blue) and support near the 20-Day MA (purple). At the time of this writing, the high of the day was 78.58 and the low 76.46. Nevertheless, crude is primed to breakout above the 200-Day line and trendline with a rally above Monday’s high of 78.73.
Double Bottom Test of Support
Crude oil looks to have completed a second bottom with last week’s swing low of 72.71. Notice that it generated a higher swing low relative to the prior low at 72.24 in early-August. Each low also successfully tested support around the lower rising trendline that makes up the boundary of a large symmetrical triangle formation. Given the two bullish reversals from the bottom triangle line it is now likely that crude rises to test resistance of the triangle, which would be at the top boundary line. This doesn’t mean it will be reached, just that the chance it will has improved.
Upper Trendline Now a Target
There is a rising ABCD pattern shown on the chart in purple with an initial target of 81.96. That is where the rising CD leg of the pattern matches the price appreciation seen in the first AB leg up. Notice that the target is also around the top downtrend line. The prior advance from the early-August low retraced a little over 61.8% before hitting resistance at 80.33 (B) and falling.
That high was also around the 50-Day MA (orange), now at 79.35. Therefore, a rally above this week’s high of 78.73 is a bull breakout of both a trendline and the 200-Day MA. Resistance may first be encountered around the 50-Day MA and a breakout above that line will provide an additional sign of strength, improving the chance for crude to head towards the August swing high.
Support at 76.17 Needs to Hold
Nonetheless, the bearish correction may not be complete and a deeper pullback below today’s low of 76.46 may yet occur. The 20-Day MA is at 76.49 and Monday’s low was 76.17. Therefore, a drop below 76.17 will signal a bearish continuation of today’s weakness.
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4 weeks ago
Shock Therapy. The Energy Report
By: Phil Flynn | August 27, 2024
Oil prices seemed shocked that a real oil supply disruption could raise prices while Exxon Mobil is warning of a coming oil shock unless the world ups its investments in fossil fuels. Risk of oil shortages and risks of war rising and falling are dominating the oil trade.
The Libyan supply disruption was a major factor in yesterday’s oil surge. The market realized that light crude is harder to come by. The politically based shutdown of the Libyan oil fields could create an oil price shock if it is extended for weeks. Yesterday Libya’s eastern or parallel government said it would shut down all oil production and exports nationwide, over the status of central bank’s Gov. Siddiq al-Kabir.
Reuters reported that the Benghazi government is not internationally recognized but controls most of Libya’s oilfields. The Tripoli-based National Oil Corporation, which controls oil resources, and the internationally recognized Tripoli government, have not yet confirmed the news. Because this dispute is based on politics, there is a sense by the market it could be resolved. If it is not, then get ready for a price shock.
Exxon Mobil is warning of a “catastrophic” risk of failing to invest in new oil projects. AFP reported that Exxon says that global oil demand is unlikely to fall by 2050 despite progress on renewable energy, the US oil and gas giant ExxonMobil said Monday, pointing to rising population and demand for energy worldwide. ExxonMobil said it, “sees a plateau in oil demand beyond 2030, remaining above 100 million barrels per day through 2050.” This would be roughly in line with oil demand last year of 102.2 million barrels per day, according to the International Energy Agency. The figure is significantly higher than projections from its competitor BP, which predicted earlier this year that oil demand would decrease to around 75 million barrels per day by 2050 on its current trajectory.
In its report, ExxonMobil estimated that around four billion people around the world do not currently have access to the energy they need. The company said that the global population expected to rise from eight billion to almost 10 billion by 2050, meeting the world’s basic energy needs “will drive a projected 15% increase in total energy use worldwide between now and 2050,” the company said. “Renewables will play an important role,” it added. “So will oil and natural gas.”
ExxonMobil estimates that oil and natural gas will still make up more than half of the world’s energy mix by 2050, even as the proliferation of electric vehicles reduces the demand for gasoline at the pump. “The large majority of the world’s oil is and will be used for industrial processes, such as manufacturing and chemical production, along with heavy-duty transportation like shipping, trucking, and aviation,” the company said.
Despite this, ExxonMobil still expects global carbon emissions to decline by around 25 percent by the middle of the century, thanks to greater energy efficiency, more renewables, and the introduction of new “lower-emission technologies” like carbon capture and storage.
While oil prices soar, crack spreads are still weak hitting the lowest level since February 2021. That is a warning sign but it seems out of whack on what we are seeing on the supply side. I expect to see a drawdown in crude supplies of 3 million barrels. Gasoline supplies in distillate supplies should also fall by three million barrels, respectively. Refinery runs should remain steady. Despite the weak crack spread, gasoline demand was close to a record last week. Diesel demand was weaker than normal. If the demand numbers continue to hold up, the crack spread should recover.
War threats are also up and down. Reuters reported that Russia launched several waves of missile and drone attacks targeting scores of Ukrainian regions and killing at least four people, Ukraine’s military said. This came a day after Moscow’s biggest air attack of the war on its neighbor.
They also reported that the chairman of the Joint Chiefs of Staff, Air Force General C.Q. Brown, says the near-term risk of a broader war in the Middle East has eased off slightly after Israel and Hezbollah exchanged cross-border fire without further escalation. Let’s hope and pray.
Natural gas would see an injection of 33 BCF. The record heat index numbers including portions of the Midwest are not enough to keep the market strong because we’re headed quickly into shoulder season. Still we expect to see record demand and we should be very thankful that some of the Biden administration’s rules on power plants haven’t gone through yet because if it did, there would be people collapsing from heat stroke today.
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4 weeks ago
Natural Gas Reaches Key Support, Eyes Reversal
By: Bruce Powers | August 26, 2024
• Natural gas hit new lows, breaking key Fibonacci levels, with support possibly forming. A rally above 2.02 could signal a potential bullish reversal.
Lower prices were on the agenda for natural gas on Monday as it fell to a new retracement low of 1.94 before finding intraday support. Monday’s decline exceeded the 78.6% Fibonacci retracement at 1.97 and completed a descending ABCD pattern that is extended by the 161.8% golden ratio at 1.95. Those two price targets were mentioned previously, and they represent a maximum potential retracement before the chance of a bearish continuation to challenge support around recent lows of 1.88 increases.
Rising Trendlines Confirms Support Zone
Notice that a rising trendline starting from the April swing low identifies potential support around today’s low. Combined with the 161.8% ABCD target, natural gas has reached a price level where support may be strong enough to turn the price of natural gas back up. But first let’s look at the potential for further downside. A decline below today’s low of 1.94 will signal the possibility for a deeper bearish retracement.
The 88.6% retracement at 1.93 identifies the next lower target. If that price level fails to lead to a bullish reversal, the early-August swing low around 1.88 becomes a target and the potential for a bearish continuation below that price level increases. Also, notice that the orange 50-Day MA is beginning to dip below the blue 200-Day MA. This is a sign of weakening and the significance will depend on the follow-through to the downside or whether a bullish reversal takes command.
Bullish Reversal Above 2.02
On the upside, a potential one-day bullish reversal will be triggered on a rally above today’s high of 2.02. If triggered to the upside natural gas would next be heading towards potentially minor resistance around last Thursday’s low of 2.03, followed by the 20-Day MA at 2.105. The 20-Day line is key relative to the current chart pattern for natural gas. It maintained support for only a limited time recently following a rise back above the line on August 8. This week’s decline is a failure of support at the 20-Day line, and it follows months since June 26 when natural gas dropped back below the 20-Day MA.
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4 weeks ago
Crude Oil Continues to Rally
By: Christopher Lewis | August 26, 2024
• The crude oil market rallied quite nicely in the early hours of Monday, as the market is very strong with several different reasons for it to go higher. War threats, Libyan slowdowns, and a host of other issues continue to plague the market at the moment.
WTI Crude Oil Technical Analysis
The West Texas Intermediate crude oil market has broken above the $76.50 level, and now looks as it might try to get to the $78,50 cents level. Libya holding production has put a charge into the market, but there’s also a lot of concern out there about the Middle East flaring up into further conflict, and that, of course, is a very real possibility.
With that being said, I think you have to look at this through the prism of a market that will continue to be very noisy, but I think it continues to be more or less a buy on the dip type of scenario. The $75 level underneath should offer a certain amount of support, and I do think that it is probably only a matter of time before we see this market just simply hang about and try to build up enough inertia to break out of the larger consolidation barrier.
Brent Crude Oil Technical Analysis
Brent markets look very much the same, although they are closer to threatening their resistance at the $81.50 level. If we can break that, then the market could very well pick up another $6 based on the measured move, but we’ll have to wait and see. That would be somewhere around $87.50. I do think that each pullback ends up being a buying opportunity, because quite frankly, when you look at a long-term chart, we had tested pretty significant support, so oil just got too cheap.
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4 weeks ago
Pivot Point. The Energy Report
By: Phil Flynn | August 26, 2024
The Fed Pivots while Israel attacks, and Libya shuts down oil production. The pieces are falling into place for a monster oil rally that could have a significant impact on the US Presidential Campaign.
Oil prices stated their move Friday after Fed Chairman Jerome Powell admitted it was time to change course and embark on a rate cutting campaign, yet geopolitical risk factors also exploded as Israel on Sunday, conducted what they called a preemptive strike over southern Lebanon to thwart an attack from the Lebanese Islamic group Hezbollah
The Wall Street Journal reported that after a heavy exchange of fire early Sunday between Israel and Iran-backed Shiite militia Hezbollah, the regional military powers signaled a desire to avoid a spiral that could lead to a wider Mideast conflict. Hezbollah launched hundreds of rockets and drones at Israel as around 100 Israeli warplanes struck targets in Lebanon in a move Israel said was intended to pre-empt a Hezbollah attack. The exchange was a significant show of force but initially appeared to result in few casualties and limited damage.
Reuters reported that “Iran does not seek to increase Middle East tensions, Foreign Minister Abbas Araqchi told his Italian counterpart Antonio Tajani, adding that its response to the killing of the Hamas chief in Tehran would be “definite and calculated”.
According to Reuters, no agreement was reached during the Gaza ceasefire talks on Sunday. The meeting, held in Cairo, saw neither Hamas nor Israel agreeing to the proposed compromises. Sunday’s strikes exemplify the failure of ceasefire negotiations and will likely lead to broader regional conflicts.
In recent weeks oil prices have downplayed geopolitical risks because there has been no major disruption of supply. That could change.
Bloomberg News is reporting that “Libya’s eastern government said it will shut down all oil production and exports, after its Tripoli-based rival moved to replace the leadership of the central bank.
The “force majeure” applies to all fields, terminals and oil facilities, the eastern authorities said Monday in a statement on Facebook. Brent crude prices jumped as much as 2.2% to above $80 a barrel.
A row over who leads the central bank, the manager of billions of dollars of energy revenue, has been brewing for over a week now, deepening political divisions and threatening a UN-brokered peace deal. The internationally acknowledged government in the country’s west has been seeking to replace the governor Sadiq Al-Kabir, who has refused to step down. A government delegation entered the regulator’s offices today to take over, according to local media. The country produced a total of about 1.15 million barrels a day of oil last month, according to data compiled by Bloomberg. Since then, the biggest oil field called Sharara, which was pumping nearly 270,000 barrels daily, has halted. The east is home to the Sirte basin where most of Libya’s oil reserves and four of the country’s oil export terminals are located.”
So the oil market cannot any longer ignore these risks because it is taking away real barrels of oil. Now the Fed must ignore higher oil because they were lied to about the labor markets and has fallen behind the curve. With a weak jobs market and higher oil it will be a chore to keep the landing soft.
Look to put on hedges and stayed hedged as the supply squeeze is developing.
Nat gas pulling back as we face the last heat wave of the summer. EBW Analytics reports that “The NYMEX front-month contract initially added 15.5¢/MMBtu (+7%) early last week to climb as high as $2.278 before a bearish EIA storage surprise sent prices plummeting lower to retest support at the $2.00/MMBtu psychological level intraday Friday. Natural gas may still see moderate upside into the 30-45 day window as extended supply shut-ins alleviate storage containment fears-opening the door to an eventual seasonal rally higher. Near-term, however, bearish risks are predominant into September expiry.
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4 weeks ago
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | August 24, 2024
• Following futures positions of non-commercials are as of August 20, 2024.
WTI Crude Oil: Currently net long 220.1k, down 19.5k.
Range traders are having a field day. For months, West Texas Intermediate crude has been rangebound between $71-$72 and $81-$82. It just bounced off the bottom of that range.
Most recently, on the 5th this month, WTI bottomed at $71.67 intraday. A week later – on the 12th – it hit $80.16 and headed lower. This Wednesday, the crude ticked $71.46 intraday, followed by Thursday’s $71.58, which was bought, closing the session up 1.5 percent to $73.01. Come Friday, it rallied another 2.5 percent to $74.83/barrel.
Incidentally, a rising trendline from May last year when WTI bottomed at $63.57 was tested this week and remains intact. Above, trendline resistance from last September lies around $82, which approximates the top of the range discussed earlier.
The path of least resistance is up.
In the meantime, US crude production in the week to August 16th increased 100,000 barrels per day week-over-week to match record output of 14.4 million b/d set two weeks ago. Crude imports increased 367,000 b/d to 6.7 mb/d. Stocks of crude, gasoline, and distillates all declined – down respectively 4.6 million barrels, 1.6 million barrels and 3.3 million barrels to 426 million barrels, 220.6 million barrels and 122.8 million barrels. Refinery utilization rose eight-tenths of a percentage point to 92.3 percent.
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4 weeks ago
NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | August 24, 2024
The NY Crude Oil Futures has been in an uptrend for the past 2 days closing above the previous session's high quite significantly by 1.78%. Currently, the market is trading in a neutral position on our indicators but it is trading strongly higher up some 4.87% from the previous session low. Our projected target for closing resistance for the next session stands at 7687, we need to close above that target to imply a further advance. Failure to even exceed this intraday warns that the upward momentum is starting to decline. Nevertheless, this session closed below our ideal projection for closing resistance warning that the market which stood at 7558 may have reached a high. However, keep in mind that any decline from here must be more than just 2 to 3 sessions We see strategic overhead resistance standing at 7486 which means we have not broken out in a runaway market to the upside. A lower opening below 7483 will warn that we may have aa temporary high for this moment.
Up to now, we still have only a 1 month reaction rally from the low established during June. We must exceed the 3 month mark in order to imply that a trend is developing.
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 bearish position at this time with the overhead resistance beginning at 7570 and support forming below at 7438. 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. Afterwards, the market bounced for 10 weeks reaching a high during the week of August 12th at 7452. Since that high, we have been generally trading down for the past week, which has been a very dramatic move of 10.85% in a stark panic type decline.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a weak posture.
Looking at this from a broader perspective, this last rally into the week of August 12th reaching 8016 failed to exceed the previous high of 8452 made back during the week of July 1st. That rally amounted to only six weeks. Right now, the market is neutral on our weekly Momentum Models warning we have overhead resistance forming and support in the general vacinity of 7297. Resistance is to be found starting at 8081. Looking at this from a wider perspective, this market has been trading up for the past 2 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 August, this market has held above last month's low of 7459 reaching 7459.
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 trading beneath last month's low.
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1 month ago
Natural Gas Key Levels to Watch as Bear Trend Deepens
By: Bruce Powers | August 23, 2024
• Natural gas continues its bearish slide, dropping to 2.00, signaling potential for further declines if key resistance levels aren't recaptured.
Natural gas continued its bearish correction on Friday with a drop to a new retracement low of 2.00 before finding support. The 61.8% Fibonacci retracement at 2.04 was exceeded to the downside and the 127.2% extended target for a falling ABCD pattern completed at 2.02. Neither managed to sustain support leaving open lower price levels.
At the time of this writing natural gas is on track to close weak, in the lower third of the day’s trading range. If the close today is similar, sellers will have dominated trading into the close and may do so again heading into next week.
Finishing Week in Bearish Position
Today’s bearish behavior in the price of natural gas improves the chance that it may be heading to lower price levels before the retracement is complete. In addition, on the weekly time frame a bearish weekly reversal triggered this week, and the week is set to end with a bearish red candlestick pattern and a close near the lows for the week. This will set up a bearish signal below this week’s low. The next lower price target is at the 78.6% Fibonacci retracement at 1.97. A little lower is the 161.8% extended target for a small declining ABCD pattern at 1.95.
Rally Above Today’s High Will Show Strength
Nonetheless, natural gas found support today at 2.00 and it could continue to hold above that price level leading to a bullish reversal. A rally above today’s high of 2.07 would be a sign of strength with natural gas first heading towards the 20-Day MA, now at 2.11. If the 20-Day line can be recaptured natural gas will have a chance to proceed higher.
Resistance at Moving Averages
The next higher key resistance zone that would need to be recaptured is the recent swing high and last week’s high of 2.30. However, there are two moving averages nearby that need to be considered as well. The 200-Day MA is also at 2.30 and the 50-Day MA is at 2.305. Therefore, recapturing the 2.30 high and moving averages will put natural gas in a position to proceed higher. Until then, they may continue to identify an area of potential resistance.
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1 month ago
Jerome’s Big Adventure. The Energy Report
By: Phil Flynn | August 23, 2024
The petroleum markets that have crashed despite data showing robust demand and tight supply should be a flashing caution light for Federal Reserve Chairman Jerome Powell as he goes off on a big adventure to a beautiful valley between the Gros Venter and Teton mountain ranges in the beautiful state of Wyoming to little place known as Jackson Hole. The name of the place is appropriate because the oil market is saying the economy could be headed into a big Jackson Hole if screws his next move up. “Is there something you could share with the rest of us, Amazing Jerome?”
We can go over the current state of US demand where we see some warning signs that while the consumers are holding up the manufacturing and trucking sectors are slowing.
Distillate demand numbers averaged 3.6 million barrels a day over the past four weeks, down by 5.0% from a year ago and that is raising some red flags.
Yet based on total demand we are still averaging an impressive 20.4 million barrels of oil per day and gasoline demand came in at a near record 9.913 million barrels last week which is amazing considering the Biden Administration speding billions on electric car subsides does not seem to be making a dent in gasoline demand.
Maybe because they never asked the consumer whether they wanted them. Sort of like the Democratic nominee Kamala Harris, the voters never said they wanted her they just shoved her down your throat like they did electric cars.
Is it any surprise that Ford announced that it was canceling its electric three-row SUV and delaying the launch of a new electric pickup truck until 2027. Now Ford says it won’t release any new electric vehicles until it can ensure profitability on the models within the first year of launch.
They may release hybrid, but I am not sure that is going to be enough to appease the Biden bunch that believes in energy platitudes but have no real plan for implementation other than to throw your money up in the air and hope that something sticks.
Yet the oil trade and OPEC know that the crash in oil prices has little to do with supply or demand but the financialization of that barrel of oil.
Oil sold off because the Bureau of Labor Statistics lied to us.
Oil sold off because they know they cannot trust the government.
Yet oil also was caught up in the unwinding of the Yen carry trade because oil, like gold, is like real money.’
Jeff Currie, the famed former Goldman Sachs energy analyst said that oil was the unwinding of the ‘oil carry trade.”‘
He explained that traders would borrow paper/physical barrels, and convert into USD, and invest in US treasuries.
He said that that move “squares a record weak financial oil market against a tight fundamental oil market, as the market is liquidating both physical and financial barrels for US dollars.”
He said that a “strong USD and attractive risk-free rate of 5.5% = overall weak financial demand for commodities. He warns that a “Potential for sharp unwind like what happened with Japanese Yen a few weeks ago with Fed cut in September/turn in rate cycle.
Jeff Curries also told Barrons that it might be time to go green again.
He said that ” .lean energy is one of the most rate-sensitive sectors in the global economy.
The peak in clean energy occurred when rates were at 0%. Since rates have moved up, the pendulum has swung back toward traditional energy.
If you think the Fed is going to start cutting rates, it will swing back toward clean energy again, so you’d want to be a buyer of clean energy here. The clean energy sector looks attractive today.
So that brings us back full circle back to Jerome Powel “That’s my name. Don’t wear it out.” big adventure and his speech at 10 am eastern time.
We know that Jerome Powell will signal that we will cut rates in September, but the key is whether they’re going to do a quarter or 50 basis points.
The other key is if he’s going to signal how aggressive he will be in cutting rates in the future.
We may see some more shakedown as the Bank of Japan continues to suggest that their rates are going up as they unwind from their policies of negative interest rates that hobbled their economies for a generation.
In the meantime, the selloff in products is bringing down gasoline prices even in the Midwest. Wavering EPA regulations seem to suggest that lower gas price becomes a political party so you can ignore the eventual threat of climate change for awhile
The EIA said that A series of refinery outages in Chicago and Ohio have generally increased Midwest prices for petroleum products relative to the U.S. average, particularly gasoline. The outages reflect an unusual decline in refining activity near the end of the high-demand summer season and have drawn down regional inventories.
On July 15, ExxonMobil’s Joliet refinery outside of Chicago, with 251,800 barrels per day (b/d) of capacity, was shut down on an emergency basis in response to a power outage brought on by severe weather conditions. The shutdown took the refinery offline for several weeks before it could safely resume operations.
Operators reported they had begun bringing the facility back online as of August 8, and later reports have since indicated that the Joliet facility has resumed normal operations.
In Ohio, operators also reported temporary unit shutdowns at Cenovus’s 183,000-b/d Lima and 150,800-b/d Toledo refineries. Since the week ending July 12, just before the Joliet outage, to August 9, Midwest refinery utilization decreased 11 percentage points to 86% because of the outages, reducing refinery production of gasoline, diesel, and other refined petroleum products. As these refineries reentered service, Midwest refinery utilization increased more than 10 percentage points the following week, to 97% as of August 16.
So, after it’s all said and done if the Fed decides are gonna cut rates more than likely oil is hit the lower end of its trading range.
The expectations are being built into the market of a slowdown in the economy are probably overstated somewhat because the diesel demand numbers were somewhat of influx.
There is no doubt the concerns about the global manufacturing sector slowdown are the number one negative factor on oil prices. Yet these worries come even as global oil demand is at an all-time high and daily oil production can’t keep up.
Geo-political risk factors are still high. The Houthi Rebels are still hitting tankers in the Red Sea and US bases are in high alert. A report overnight that Nato Airbase Geilenkirchen Germany was on high alert due ‘potential threat”. Is it just me our have we seen an uptick in terror threats around the word since Joe Biden was President?
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1 month ago
Natural Gas Falls to Support but Will it Hold?
By: Bruce Powers | August 22, 2024
• Natural gas pulls back sharply from 2.30, testing key support at 2.03. A bullish reversal could spark a new rally if support holds.
Natural gas took the alternate route on Thursday and continued to pullback from the 2.30 high. The 20-Day MA failed to hold as support and it fell to a low of 2.03 before there were signs of support. That low hit the next lower support zone identified over the past couple of weeks that combines the 61.8% Fibonacci retracement with a previous daily support and resistance price zone hit on multiple days previously (blue horizontal). Further testing of support around today’s low may remain on the horizon as a falling ABCD pattern extended by the 127.2% ratio completes a little lower at 2.02.
Bearish Reversal on Weekly Chart Playing Out
There was a bearish reversal triggered on the weekly chart earlier this week and it looks like that is now playing out. Moreover, natural gas remains below both its 50-Day MA and 200-Day MAs, in addition to falling back below its 20-Day MA today. If the 2.02 price area fails to hold as support, then a dip lower may be in the plans. It looks like the next lower price zone is from around 1.95 to 1.92. The lower level is the 78.6% Fibonacci retracement level and the 1.95 level is the target from a falling ABCD pattern extended by the 161.8% ratio.
Bigger Picture Remains Bullish
Despite short-term weakness, natural gas remains on track to progress higher once the retracement is complete. It broke up and out of a falling bull wedge two weeks ago and then rallied to a high of 2.30, which was above a prior swing high at 2.27. That rally also recaptured the 20-Day MA. The bottom at 1.88 on August 5 completed a 40.2% decline from the prior swig high at 3.16. On a percentage basis, that drop exceeded all the prior corrections starting from the February 2023 bottom starting from the February 2023 bottom, except one. The decline from the January peak to the February low was 55.1%.
The current retracement is the first pullback since the bottom reversal since the bottom earlier this month. Once support is found followed by a bullish reversal on some time frame (daily or intraday) It has the potential to lead to a resumption of the developing bull trend. Given the significance of the prior decline a reversal up also has the potential to surprise to the upside.
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1 month ago
Crude Oil Maintains Critical Support; Awaiting Breakdown or Bull Reversal
By: Bruce Powers | August 22, 2024
• Crude oil tests key support at 72.82 within a large symmetrical triangle. A breakout or breakdown could trigger significant volatility in the coming days.
Crude oil pulled back to a low of 72.82 on Thursday, providing a second test of support around Wednesday’s low of 72.71. A 78.6% Fibonacci retracement was completed during the decline at 72.82. Notice that this was the second decline to the 78.6% price zone with the early-August drop being the first. Today, will likely end as an inside day. Therefore, a rally above the high at 74.76 is a sign of strength, and a decline below today’s low of 72.82 a sign of weakening.
Sitting at Support of Large Symmetrical Triangle Formation
Lows this week in the price of crude oil are testing support at the bottom boundary line of a large symmetrical triangle consolidation pattern. It has been forming for approximately eight months. Given the size of the pattern a breakout, either up or down, may be followed by a spike in volatility as the market seems to recognize the pattern. Take the 50-Month MA on the monthly chart (not shown).
That moving average has done a good job since May 2023 of defining support. It was tested as support and held, leading to a bullish reversal, during seven months since then. However, since Monday it has been trading below the 50-Month line. Moreover, if crude stays weak into the end of the month it could potentially close below the 50-Month MA for the first time since November 2020. This would be a bearish indication but will require additional confirmation.
Breakdown Triggered Below 72.71
A breakdown from the triangle will be triggered by a decisive decline below Wednesday’s low of 72.71. The next lower trigger level would then be at the August 5 swing low of 72.24. Nevertheless, to guard against false breakdowns the bearish move would be confirmed by a daily close below 72.71. As with any breakout, follow-through is key.
Strength Indicated Above 74.76, then 75.46
On the upside, if this week’s support leads to a bullish reversal crude could be heading back towards the top line of the triangle. A rally above today’s high of 74.76 will show strength that will be further confirmed on an advance above Wednesday’s high of 75.46. Notice that a new rising ABCD pattern has been added to the chart considering this week’s swing low. If it remains a swing low and leads to a bullish reversal the initial target from the pattern is at 81.96.
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1 month ago
Lying Eyes. The Energy Report
By: Phil Flynn | August 22, 2024
You can’t hide your lying eyes, but the Bureau of Labor Statistics sure tried. The U.S. Bureau of Labor Statistics had to fess up and revise down its estimate of total employment in March 2024 by a record 818,000, the largest such downgrade in 15 years. Oil prices plummeted after being lied too even as oil and product inventories plummeted, and weekly gasoline demand came in just shy of a record high and what some say that based on supply and demand was the most bullish fundamental reports in 7 years.
There are still worries about Chinese oil demand on fears that this record crude imports might be in the rearview mirror and India feasts on cheap Russian crude. Yet despite demand fears the oil market is still in backwardation so the recent market action reeks of a market that has been lied do removing confidence that the people in charge can acually mange the economy away from a nasty economic hard landing. An economy is based in part on trust and the market is losing its trust.
The Energy Information Administration (EIA) reported a massive 4.6-million-barrel counter seasonal draw. Gasoline inventories fell by 1.6 million barrels as demand surged to 9.19 million barrels a day, just missing the record for this time of year. Distillates also has whopping draw of 3.3 million barrels a day.
And even as the market is fretting about global demand the US exported a massive 11.35 million barrels a day.
Yet the numbers don’t seem to matter as the market subtracts geopolitical risk factors and the element in trust not only in US data but trust in the people that are running the country.
China concern have been a bearish talking point all year. Reuters wondered ” Is it time to ask whether China’s crude oil imports have peaked?
The world’s biggest oil importer brought in record volumes last year, a feat that seems unlikely to be repeated in 2024 given the decline in arrivals in the first seven months.
The market consensus so far, though, is that the weakness in 2024 is temporary and China’s import of crude oil will resume an upward trend as soon as the world’s second-largest economy regains momentum.
Reuters also reported that ” India overtook China as the world’s biggest importer of Russian oil in July as Chinese refiners bought less because of lower profit margins from producing fuels, a comparison of import data showed.
Russian crude made up a record 44% of India’s overall imports last month, rising to a record 2.07 million barrels per day (bpd), 4.2% higher than in June and 12% more than a year ago, data on Indian shipments from trade and industry sources showed.
Gasoline demand goes up and prices go down hitting the lowest seasonal level in 2 years, In part the EPA has helped lifting a RVP waiver to blend higher RVP gas in Illinois because of refining issues to allow winter blends early help price to crash. The EPA is worried about the environment unless it impacts the party in power.
Price charts look very difficult right now and you must go with the mood of the market. You should protect puts for further downside price but be aware we are into a supply squeeze.
WE are still vulnerable to price spikes So even though the horrible technically with the key thing you want to do is make sure you’re protected from an upside spike because at some point supply and demand that might matter.
Democrats that try to justify Bidens energy policy point to record oil production. People in the energy industry know better. So does the EIA. They say oil production has increased not because of Biden buy despite them. The EIA said that: In our latest Short-Term Energy Outlook (STEO), we forecast that crude oil production in the United States will grow to an average of 13.7 million barrels per day (b/d) and marketed natural gas production will grow to an average of 114.3 billion cubic feet per day (Bcf/d) in 2025. Most of the forecast growth in oil and natural gas production comes from the Permian region of western Texas and eastern New Mexico, where we expect productivity gains, new and expanded infrastructure, and high crude oil prices will support rising production.”
Nat gas is coming back on the heat, John Kemp wrote that EU GAS STORAGE reached 90% full on August 19, just three days later than in 2023, and otherwise similar to 2020 and 2019, when the market was heavily over-supplied.
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1 month ago
Crude Inventories Declined By 4.6 Million Barrels
By: Vladimir Zernov | August 21, 2024
Key Points:
• Strategic Petroleum Reserve increased from 376.5 million barrels to 377.2 million barrels.
• Domestic oil production grew from 13.3 million bpd to 13.4 million bpd.
• WTI oil made an attempt to settle above the $74.00 level as traders reacted to the EIA report.
On August 21, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories declined by 4.6 million barrels from the previous week, compared to analyst consensus of -2.72 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 1.6 million barrels, compared to analyst consensus of -1 million barrels. Distillate fuel inventories declined by 3.3 million barrels from the previous week.
Crude oil imports increased by 366,000 bpd, averaging 6.7 million bpd. Over the past four weeks, crude oil imports averaged 6.5 million bpd.
Strategic Petroleum Reserve increased from 376.5 million barrels to 377.2 million barrels as U.S. continued to buy oil for reserves. Domestic oil production moved back from 13.3 million bpd to 13.4 million bpd.
WTI oil gained ground as traders reacted to the EIA report. Falling crude inventories provided additional support to oil markets. Currently, WTI oil is trying to settle above the $74.00 level. It should be noted that oil markets have been under pressure in recent trading sessions as traders focused on Gaza ceasefire talks and China’s economic problems, and it remains to be seen whether EIA report will provide sustainable support to oil prices.
Brent oil made an attempt to settle back above the $78.00 level after the release of the EIA data.
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1 month ago
Demand Unease. The Energy Report
By: Phil Flynn | August 21, 2024
Iran revolutionary guard spokesman said that a retaliation attack on Israel may take a long time so without a threat of a major OPEC oil producer getting into war the market’s focusing on demand worries.
Even as the American Petroleum Institute (API) reported only a sling 347,000-barrel increase in crude supply the drop of 1.043 million barrels in gasoline supply and a drop of 2.247 million barrel in distillate should be supportive for crude.
Continued weakness in the crack spreads for both products suggests that the economy in the US may be slowing and the market is raising questions about a major downward revision in US jobs numbers may suggest that maybe the Fed was behind the curve in rate cuts.
Experts at Goldman Sachs and Wells Fargo are predicting that the preliminary benchmark revisions on Wednesday will show that the economy created between 600,000 and 1 million fewer jobs than what was reported, according to Bloomberg News. Economists at JPMorgan Chase foresee a downward revision of around 360,000.
As predicted, peak oil demand predictions are looking less likely Bloomberg news reports Enbridge Inc. Chief Executive Officer Greg Ebel said oil demand may continue to grow in the decades ahead, putting his company’s internal assumptions among the more bullish forecasters of long-term crude usage.
Oil demand by 2050 will be “well north” of 100 million barrels a day and possibly exceed 110 million daily barrels, Ebel said Tuesday in an interview at Bloomberg’s New York headquarters. That contrasts with an International Energy Agency projection that demand will decline to 97 million barrels a day by mid-century.
Oil demand may plummet and prices for oil will soar if Kamala Harris gets her war. Zerohedge succinctly laid out her proposals. Price Controls, 28% corporate tax, 44.6% capital gains tax, 25% tax on unrealized gains. St least she stole Trump’s idea of no taxes on tips. So, we got that going for us.
Summer is still hot. Natural gas futures are rebounding om hot forecasts and basking in last week’s supply withdrawal. This week we should get a 21 bcf increase but the heat may keep natural gas rising.
John Kemp at Reuters reported that US Colling demand has been higher than the long-term average so far this summer but slightly lower than recent “hot” summers since 2014. The Lower 48 states are three quarters of the way through the typical air-conditioning season. So far the total number of population-weighted cooling degree days is +9% above the long-term average for 1981-2010. But cooling degree days have been only +3% above the average for the last ten years and lower than other “hot” summers in 2022, 2020, 2018 and 2016.
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1 month ago
Crude Oil Tests Support at $73.87 Amid Bearish Retracement
By: Bruce Powers | August 20, 2024
• Crude oil's bearish retracement found support at $73.87. A reversal is possible, targeting $81.96, if lower resistance levels are overcome.
Crude oil continued its bearish retracement on Tuesday to find support at 73.87. The decline completed a 78.6% Fibonacci retracement and then bounced intraday. That low price may lead to a bullish reversal but so far there is no confirmation of it. There has been a bounce to the 74.62 area at the time of this writing.
Drop Below 73.87 Heads Lower
What we know is that support was seen from the day’s low. Therefore, a decisive drop below today’s low signals a continuation of the bearish retracement. That will put crude in a position to test support round the bottom rising trendline that provides the lower boundary for a large symmetrical triangle pattern. Also, the recent swing low of 72.24 is nearby and can be watched along with the line for signs of support.
Rise Above Today’s High is Bullish
On the upside, a breakout above today’s high of 75.72 provides a sign of strength and it may signal a bullish reversal and completion of the retracement. Follow-through will be key and provide additional clues to help answer that question. Given bullish signs on the monthly chart for crude the expectation is that support is seen somewhere above the 72.24 swing low, and that it is followed by a bullish reversal. However, the symmetrical triangle formation does not indicate direction and can breakout either way, up or down. The monthly time frame shows crude hugging support of the 50-Month MA for over a year and a successful test of the 200-Month MA as support more recently.
First Upside Target is 76.98
A bullish reversal off from today’s low has crude heading back up into potential resistance levels. Also, it has the potential to eventually test resistance at the top downtrend line, followed by a bullish breakout of the triangle. Nevertheless, on the way there the 20-Day line at 76.98 presents the first potential resistance barrier. A daily close above that price level is needed to indicate that demand in crude is strong enough to take it the distance to the top of the triangle.
New ABCD Pattern Points to 81.96
Added to the chart is a rising ABCD pattern with an upside target of 81.96. It assumes that today’s low (C) is a swing low. Notice that the target is joined by the 78.6% Fibonacci retracement at 82.07 and the long-term downtrend line, which is also the top boundary of a symmetrical triangle formation.
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1 month ago
Natural Gas Poised for Upside Despite Intraday Pullback
By: Bruce Powers | August 20, 2024
• Despite an intraday pullback after testing resistance, natural gas remains poised for further gains, with the 200-Day MA as a crucial breakout level.
Natural gas attempted a continuation higher on Tuesday as it triggered a breakout above Monday’s high of 2.25. However, resistance was quickly seen off that high leading to an intraday pullback. Trading continues at the lows of the day at the time of this writing. Natural gas is on track to end the day with a failed one-day breakout and a red candle. Plus, the day’s close will likely be near the lows of the day, currently 2.17. Nonetheless, a successful test of support at the 20-Day MA occurred yesterday and price was clearly rejected to the upside.
Higher Swing Low is Bullish
Following today’s pullback natural gas should be ready to proceed higher. Monday’s low of 2.10 created a higher swing low relative to the early-August low of 1.88. It was the first pullback following a bullish reversal off the 2.10 bottom. In other words, it looks like an uptrend is still in its beginning stages to provide plenty of potential upside. The 20-Day line at 2.10 remains critical near-term support for the uptrend and provides the C point for a rising ABCD pattern.
Today’s weakness should be resolved to the upside given recent signs of strength in the price of natural gas including, breakout of falling wedge three weeks ago, rally above 20-Day MA followed by successful test of the line as support, and the advance above the interim swing high of 2.39 last week. Together, these indications show a strengthening trend.
Bullish Signal Above 2.25, Then 2.30
A rally above today’s high of 2.25 will be a sign of strengthening that should be followed by a breakout above last week’s high of 2.30. Once that triggers the 200-Day MA at 2.32 becomes a target. However, notice that the 200-Day line has been slowly declining recently towards the 2.30 peak, putting it very close to last week’s high. Therefore, using the 200-Day line as a breakout level may provide greater confidence that a breakout would be followed by rising prices.
Above the 200-Day MA is the 50-Day MA at 2.36. It is confirmed by the 38.2% Fibonacci retracement at 2.36. If natural gas can rise above there it will likely look to complete an initial target for a rising ABCD pattern with the C leg beginning from the most recent swing low at support of the 20-Day MA.
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1 month ago
Phil Flynn: The Energy Report
By: Phil Flynn | August 20, 2024
While oil prices fluctuate on concerns about Chinese demand and handicapping geopolitical risk factors there is at least one campaign that is preparing for the coming energy crunch. It’s the Green New Deal virus energy realities that are on the ballot.
One campaign has realistic solutions that put the energy power back into the private sector with limited taxpayer dollars spent adding strategic nuclear and lifting impedance to oil and gas production. They also want to encourage clean LNG exports to the world .
That is a stark contrast to an agenda that promises massive government spending on a green energy dream that is an inefficient boondoggle failure and a waste of billions of dollars of taxpayer money on electric cars that no one wants, costing auto makers billions in losses and charging station that are never built, just to name a few.
But before we get to that, Oil prices that have been sidetracked with the Israeli Hamas conflict should not be surprised that has rejected the US hostage-ceasefire proposal that Antony Blinken said was the last best hope for peace. The Israeli military did say that they recovered the bodies of six hostages taken in Hamas’ Oct. 7 attack that started the war.
Sadly, the Hamas attack was paid for with Iranian dollars that they amazed of the last four years
And while oil prices have been hit hard on concerns of weak oil demand in China and not concerned that US crude supplies have fallen 6 out of the last 7 weeks or that we are in a global oil supply deficit at this moment, the lack of global oil spare capacity and the amount of underinvestment is a simmering risk against US and global economy.
We should also see crude supply resume its crude draw this week. We are looking for crude down 2 million barrels or gasoline supply is down 2 million barrel and distillate down 2 million barrels and runs unchanged.
While the Biden Harris campaign has rallied against natural gas and fossil fuels, it gave OPEC more power as global spare production capacity is tightening. Now with the possibility that US oil production may be nearing a peak it puts all the world’s oil spare capacity mainly In Saudi Arabia/
S@P Global reported that “Support for crude markets is hinging on OPEC’s spare capacity as global demand continues to grow, APA Corp. executives said , while US production is expected to slow down in the near term.
Ben Rodgers, APA Corp warns that “If the Permian starts to flatten, US production growth will moderate in coming years, putting a lot of power in OPECs hands.”
The failure of the green new deal to add electric capacity or have a real plan to meet growing demand for power and the realty that a BIDEN/ Harris EPA rule would lead to sharply higher electricity bills as well as electricity shortages.
The EPA rule, which a federal appeals court ruled last month could be enforced, requires coal-fired power plants to shut down if they cannot capture 90% of their carbon emissions starting in 2032 according to the New York Post.
Trump said Monday that “I am announcing today that when I return to the White House, I will end this anti-American-energy crusade and terminate Kamala’s so-called Power Plant Rule,’ “Instead of shutting down power plants, we will open dozens and dozens more.” He said that in regards to Vice President Harris, the co-sponsor for the Green New Deal that “Kamala stands for energy disappearance and factory obliteration. I stand for manufacturing dominance. Kamala is on a regulatory jihad to shut down power plants all across America,” Trump said.
Trump also called for renewed investment in nuclear power, calling for advanced, small modular nuclear reactors online” to meet America’s energy demands. “Small nuclear, we call it,” Trump said, describing nuclear energy as “ultra safe” and “ultra clean.”
The Green New Deal folks keep telling us that we need to keep up with China on the fight against climat change. Then we had better go with trumps plan to expand nuclear.
Bloomberg is reporting that “China approved 11 nuclear reactors across five sites on Monday, a record amount of permits as the government leans even more heavily on atomic energy to support its push to
China has more nuclear reactors under construction than any other nation in the world, and approved 10 new reactors in each of the last two years. The country is expected to surpass France and the US to be the world’s leading atomic power generator by 2030, according to Bloomberg.
So, oil is up on the peace hopes dashed and ahead of inventories that look tight.
Reuters is reporting that “Russia hit energy infrastructure in northern Ukraine in an overnight missile and drone attack and caused a big fire in the west of the country, Ukrainian officials said on Tuesday.
Ukrainian forces shot down three ballistic missiles and 25 of the 26 drones launched in the attack on nine regions across the country, Ukraine’s air force commander said.
Regional officials in the northeastern Sumy region bordering Russia said an energy facility was hit, causing blackouts for 72 settlements and more than 18,500 consumers.
Crack spreads that got crushed are trying to bottom again with the diesel crack trying once again to get off the matt after a terrible beating.
Nat gas is trying to bottom but thee Wall Street Journal explains the natural gas markets challenges.
The Journal writes that “A glut of natural gas is depressing prices and prompting fresh cutbacks in America’s drilling fields, despite one of the hottest summers on record.
Big producers such as EQT and Coterra Energy are choking back output, waiting to connect new wells to pipelines and delaying drilling projects.
They aim to buoy prices that have rarely been lower during the heat of the summer, when air conditioning creates a lot of power demand. Benchmark natural-gas futures ended Monday at $2.235 per million British thermal units, down 15% from a year ago and 29% less than the recent peak in mid-June.
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1 month ago
Natural Gas Rebounds, Targets 200-Day MA Amid Bullish Momentum
By: Bruce Powers | August 19, 2024
• Following a successful test of the 20-Day MA, natural gas shows strong reversal, targeting key resistance and higher price levels.
Natural gas dipped lower earlier on Monday before finding support at the 20-Day MA and turning up. It has since established a reversal day as it has risen above Friday’s high following a drop below the low of Friday. The low for the day was 2.10 and the 20-Day line is at 2.10. At the time of this writing natural gas continues to trade near the highs of the day, currently 2.245, and above Friday’s high of 2.22. Strength seen today should be followed by further signs of strong upward momentum.
Bullish One-day Reversal
Given today’s bullish reaction following a successful test of support at the 20-Day MA, the pullback in natural gas is likely complete. The developing uptrend should be ready to attempt to recapture the 200-Day MA on a move above 2.33. That level can be combined to show a potential price resistance range from 2.33 up to the 50-Day MA at 2.38. In between is the 38.2% Fibonacci retracement at 2.37. Together, a range from 2.33 to 2.38 is identified.
Rise Above 2.30 Triggers Bull Continuation
An advance above the recent swing high of 2.30 will trigger a continuation of the rally that began from the recent 1.88 swing low. It will follow a pullback to the 50% retracement zone. Active investors may use the first pullback off a bottom as it can be one of the better locations to get a stronger reward to risk ratio. Downside is limited to the low of the pullback, while upside is relatively more significant. However, there are technical indications pointing to higher prices.
New ABCD Pattern Targets 2.52
A new swing low is established today, assuming it is retained as support. This allows for a new rising ABCD pattern or sequential measured moves (orange) to be established. A larger rising ABCD pattern is shown in purple with a long-term target of 3.46. The new and smaller ABCD pattern shows an initial target of 2.52 and a 127.2% extended target of 2.63. Notice that the first level is associated with the 50% retracement (green). Meanwhile, the extended target is near the 61.8% Fibonacci retracement at 2.67. Together they generate a price range from 2.63 to 2.67.
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1 month ago
Decisive Moments. The Energy Report
By: Phil Flynn | August 19, 2024
The world is reaching decisive moments as the presumptive democratic presidential nominee pushes price controls and a potential ‘decisive moment’ for peace in the Middle East. We have a big show with peace talks in Israel and the start of the Democratic Convention in Chicago where Kamala Harris has to back off of her previous statements on just about everything.
U.S. Secretary of State Antony Blinken said that we have arrived at a ‘decisive moment’ for Gaza ceasefire talks and that we have, “probably the best, maybe the last opportunity” and urged all parties to get the agreement over the finish line.
Oil futures continue to squeeze out war risk premium but may not be able to ignore the commodity resurgence much longer. Iran seems to have backed off its attack on Israel because at the end of the day they knew they may be signing the regimes own death warrant. Yet with the markets pricing in interest rate cuts causing gold to hit a record high and now even the beaten down industrial metals are bouncing, can oil be too far behind?
The US oil rig count should also be supportive as there are more predictions that US oil production will come in lower than previously projected. The Baker Hughes oil rig count fell by 2 to 483 rigs. The EIA lowered their forecast for domestic oil production growth in 2024 by 120,000 barrels per day to 170,000 barrels per day, as oil production fell in January because of shut-ins related to cold weather, particularly in oil producing North Dakota.
Economists on both side of the apolitical spectrum are horrified at the economic dribble coming out from Kamala Harris. Price controls, that always lead to shortages, show a total lack of economic literacy as well as a 5.5-billion-dollar plan to increase housing and will in fact only serve to make housing less affordable by raising housing prices.
After Kamala Harris has had to walk back her statements about banning fracking for oil which would be a disaster for the US economy and the US jobs market, she’s had to back off her comments about stealing patents from public companies such as drug companies which would only reduce the availability of drugs and increase the cost. It could also slow research and developments and new wonder drugs and put off cures for diseases and push the medical field back into a new dark age. Maybe Harris can replace wonder drugs with leeches.
Yet as unlikely as it is that Kamala Harris will get her way. If she is elected, you had better prepare for the worst. It is now clear that inflation has soared under Biden Harris. It is not debatable that they tried to downplay it by saying it was transitory. Then when people blamed their policies, they blamed companies that produced its goods. The administration put on unprecedented drilling moratoriums, cancelled the Keystone XL pipelines, and reversed Trumps energy policies that cause energy prices to rise then blamed the oil industry calling them price gougers and war profiteers.
Democrats always promise you a free lunch but there is no such thing as we all pay for it with inflation and less opportunity. They also have got Planned Parenthood to give free abortions making a side show attraction of the destruction of human life. Again, there is no such thing as free anything, there is always a cost.
There are oil product demand concerns as both the gasoline crack spread and the diesel crack-spreads plummeted. The drop in the cracks is out of whack with the inventories which continue to tighten.
This week we expect to see crude oil inventories fall by two million barrels and we expect both diesel supplies, and distillate supplies to fall by two million barrels we also expect refinery runs to stay steady as there’s no crack spread price incentive to raise output.
While global oil demand expectations have been lowered the truth is that global oil demand is still exceeding global oil production. That should lead to further tightening of supplies in the future and once the market gets confirmation that the Fed is going to cut rates that should provide us with a floor even though the mood right now is negative as they take out geopolitical risk premium.
Natural gas dropped on Friday but it’s coming back because today the heat wave is about to descend upon the country. The natural gas rig count rose by one to 98, while miscellaneous rigs dropped by one to five. A year earlier, the US had 520 oils, 117 gas and five miscellaneous rigs in operation according to Baker Hughes.
The Biden Harris Administration foolishly is hurting the US natural gas industry and hurting the environment as LNG is the cleanest Burning Fossil fuel. The FT is reporting that, “The US liquefied natural gas industry faces mounting challenges as legal clashes with activists and contractors combine with a federal permitting freeze to slow the expansion of the world’s biggest exporter. That is the good old USA, thanks to the US frackers and the US oil and gas industry. Cheap US natural gas has been a boom for the US economy and the US manufaruring base that has feasted on cheap natural gas that has helped create millions of jobs. Yet Kamala Harris wanted to ban fracking putting US Manufacturing into retreat causing the cost of goods to raise adding more inflation.
The FT says that, “Two multibillion-dollar terminals under construction on the Texas Gulf Coast backed by super majors ExxonMobil and TotalEnergies suffered fresh setbacks this month, which are expected to lead to delays. This has added to uncertainty over future supply growth created by the Joe Biden administration pause on new export permits and underlined the complexity of getting LNG mega projects off the ground.” The FT says that, “Delays in bringing US projects online threaten to further squeeze an already tight market and push up prices. The Golden Pass delay will remove 2.3mn tonnes of supply from the market next year and 5.2mn in 2026, according to Wood Mackenzie.” Less supply means more inflation and dirtier air, just like Kamla Harris, they do not think these things through.
The FT says that, “Though the Biden moratorium was blocked by a federal judge last month, no new permits have been issued since and industry players do not expect any change before the November presidential election. “Developers and LNG buyers are waiting from clarification from courts and the US election to remove uncertainty,” said Mark Bononi, an analyst at Wood Mackenzie.”
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1 month ago
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | August 17, 2024
• Following futures positions of non-commercials are as of August 13, 2024.
WTI Crude Oil: Currently net long 239.6k, up 31k.
On the 5th this month, West Texas Intermediate crude bottomed at $71.67 intraday. A week later – this Monday – it hit $80.16 and headed lower, closing the week down 1.7 percent to $75.54/barrel.
For months, WTI has been rangebound between $71-$72 and $81-$82. This range is intact.
The August 5th low also successfully tested a rising trendline from May last year when the crude bottomed at $63.57. Above, trendline resistance from last September lies around $83; bears showed up at that trendline last month when the crude hit $84.52.
For now, the path of least resistance is down.
In the meantime, US crude production in the week to August 9th declined 100,000 barrels per day week-over-week from a record 14.4 million b/d. Crude imports increased 61,000 b/d to 6.3 mb/d. As did crude inventory, which grew 1.4 million barrels to 430.7 million barrels. Stocks of gasoline and distillates, however, dropped 2.9 million barrels and 1.7 million barrels respectively to 222.2 million barrels and 126.1 million barrels. Refinery utilization rose one percentage point to 91.5 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | August 17, 2024
NY Crude Oil Futures closed today at 7554 and is trading up about 5.42% for the year from last year's settlement of 7165. Caution is required for this market is starting to suggest it could now decline on the MONTHLY level. Currently, this market has been rising for this month going into August reflecting that this has been only still, a bullish reactionary trend. As we stand right now, this market has made a new low breaking beneath the previous month's low reaching thus far 7167 yet it is trading below last month's close of 7791.
Up to now, we still have only a 1 month reaction rally from the low established during June. We must exceed the 3 month mark in order to imply that a trend is developing.
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 7652 and support forming below at 7518. The market is trading closer to the support level at this time.
On the weekly level, the last important low was established the week of August 5th at 7167, which was down 5 weeks from the high made back during the week of July 1st. We have been generally trading up for the past week from the low of the week of August 5th, which has been a move of 11.84%. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a weak posture.
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. Looking at this from a wider perspective, this market has been trading up for the past 10 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 August, this market has held above last month's low of 7459 reaching 7459.
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 trading beneath last month's low.
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