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16 hours ago
Natural Gas Rebound Faces Resistance at Moving Average Zone
By: Bruce Powers | April 18, 2024
• Trading in natural gas expected to be choppy, as volatility declines in the narrowing pennant.
Natural gas bounces to test a moving average resistance zone with the day’s high of 1.78. Today’s advance (Thursday) broke out above the high of Wednesday, which was an inside day. Natural gas is on track to end the day above yesterday’s high of 1.72. However, it remains inside the wide trading range from Monday, and it is also within a developing bearish pennant consolidation pattern.
Signs of strength seen today may take the price of natural gas up to the top boundary line to test resistance. However, it is not clear whether Tuesday’s swing low will be the low of the swing until there is an advance above Monday’s high of 1.80.
Choppy Moves While in Consolidation
Until natural gas breaks out of the pennant consolidation pattern trading will likely be choppy and difficult to predict, as with any consolidation period. Volatility can be expected to decline as the pennant narrows the trading range as the apex of the triangle is approached.
Further, the three moving averages representing different time frames of 8-Day, 20-Day, and 50-Day have converged. This is another indication of low volatility. How natural gas behaves when testing the upper or lower boundary lines will provide clues as you whether a breakout to the upside or downside may occur.
Consolidation Could Continue for Weeks
The pattern is bearish since natural gas remains in a downtrend and there was a sharp decline prior to the formation of the pennant. Nevertheless, it is not determined until a breakout occurs. A breakout either up or down should occur before the apex is reached. This means that trading within the pennant could go on for as long as more seven weeks. Regardless, a breakout could occur at any time as the pennant is already well defined.
8-Week Moving Average Recaptured
It is interesting to note that there was a breakdown from last week’s bearish shooting star candlestick pattern (not shown) before this week’s low of 1.65 was reached, leading to a bounce. Also, the 8-Week MA, which had marked support for the last two weeks was broken to the downside. Today’s advance has recaptured the 8-Week MA, a sign of strength. Confirmation of strength will be provided on a daily close above the current price for the 8-Week MA at 1.75. Natural gas exceeded that level today.
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20 hours ago
EIA Natural Gas Storage Build Of +50 Bcf Misses Estimates
By: Vladimir Zernov | April 18, 2024
Key Points:
• EIA reports a build of +50 Bcf vs +54 Bcf estimate.
• Stocks remain well above the five-year average for this time of the year due to warm winter.
• Natural gas prices are trying to settle above the $1.75 level.
On April 18, 2024, EIA released its Weekly Natural Gas Storage Report. The report indicated that working gas in storage increased by 50 Bcf from the previous week.
Analysts expected that working gas in storage would increase by 54 Bcf, so the report was somewhat bullish.
At current levels, stocks are 424 Bcf higher than last year at this time and 622 Bcf above the five-year average of 1,711 Bcf.
The current demand for natural gas is moderate. Production has declined by about 10% in 2024, but production trends did not provide sufficient support to natural gas prices due to warm winter.
Natural gas continued its attempts to settle above the $1.75 level as traders reacted to the EIA report. From the technical point of view, natural gas received strong support near the key $1.60 – $1.65 level and is trying to gain upside momentum, supported by the better-than-expected data from the EIA.
It remains to be seen whether natural gas will be able to gain sustainable momentum as traders are worried about weak demand. At this point, it looks that natural gas will need strong positive catalysts to get out of the current trading range between the support at $1.60 – $1.65 and the resistance at $1.95 – $2.00.
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22 hours ago
You Can’t Hurry Cuts. The Energy Report
By: Phil Flynn | April 18, 2024
Jerome Powell hints: You can’t hurry cuts. No, you’ll just have to wait. Inflations not easing, But It’s a game of give and take. You can’t hurry cuts, no, you just got to wait, just trust in the Fed’s time, it’s a game of interest rates. How many heartaches must we stand before inflation’s so tame to let us live again. Rate cuts were the only thing that kept us hanging on. When I feel my paycheck, you know it’s almost gone. No, you can’t hurry cuts….
Well after trying to hold support for days, the market had the rug pulled out from underneath it as the market seemed to lose the Fed and the Strategic Petroleum Reserve (SPR) put in quick succession. Backing off rate cuts and the Biden administration switching to a potential seller from a buyer for the SPR took away the invisible floor that oil had. We also saw an easing of war premium in part because of an Axios report that said that Israel considered a retaliatory strike against Iran on Monday but decided to wait.
The market also was less than inspired by the weekly Energy Information Administration (EIA) status report that seemed to suggest the gasoline demand in the United States is struggling but at the same time so are the inventories of oil products. Yet the tightness of diesel supply and gasoline, especially in certain parts of the country, seem to be overshadowed as the market tries to reprice oil and gas in an environment where we might not get any rate cuts this year after all and perhaps a measured response to Iran’s unprecedented attack on Israel.
Federal Reserve Bank of Cleveland President Loretta Mester seemed to echo the sentiment from Fed Chair Jerome Powell by saying monetary policy is in a good place, adding that the central bank shouldn’t be in a hurry to cut interest rates. Yet by backing off the suggestion that rate cuts would be coming, it took away what some might say was the Fed oil put that would keep a floor under oil just a day after the Biden administration took away the Strategic Petroleum Reserve put by saying that instead of buying back for the reserve they might be selling.
Add to that its seems that the market believes that the Biden administration will not impose sanctions on Iranian oil because they fear a shortage. Even so called reimposition of oil sanctions on Venezuela will not impact their exports to the US ahead of the election. Bloomberg News reports they intend to reimpose oil sanctions on Venezuela, ending a six-month reprieve, if Nicolas Maduro’s regime does not take steps in the next two days to honor an agreement to allow a fairer vote in elections scheduled for July.
The US plans to allow a Treasury Department license permitting oil and gas production to expire without renewal on Thursday, according to people familiar with the plan, who asked not to be identified without permission to speak publicly if Venezuela fails to act. Sounds ominous but as oil analyst Anas Alhajji points out, the reimposition of sanctions will not cover Venezuela’s oil exports nor U.S. oil imports from Venezuela. So, while the Biden administration is trying to act tough protecting free and fair elections, they are more worried about the price of oil and diesel hurting their reelection chances.
In fact, John Kemp at Reuters pointed out that Brent crude oil calendar spreads have continued to soften as traders downgrade the probability the conflict between Iran and Israel will escalate to the point where it disrupts oil production and exports. The spread from June to December 2024 has fallen to its lowest for more than five weeks. Most of the softening has come in the nearest-to-deliver June-July and July-August spreads where most of the speculative money is concentrated and where the supply-demand balance would be impacted most immediately by any escalation that threatened oil production and exports from the Persian Gulf. Traders have concluded Iran will not risk any disruption of its exports; the United States will not risk higher oil prices in an election year; and the United States will restrain the next round of responses by Israel. Then again, if it does happen, well, stay tuned.
How about gasoline futures which in recent days has been surging also saw the bottom drop out after the Energy Information Agency {EIA) report. The market became concerned about the strength of the consumer after another week of subpar 8.862 million barrels a day demand. Even though it was stronger than the week before, the market is concerned that this summer driving season might not be getting off to a bang up start.
We did see a big rebound in U.S. oil exports that surged to a whooping 4.726 million barrels a day, that probably included some post Easter Holiday work. Then I would have to say that the report really wasn’t bearish. In fact, I would suggest you could even see green shoots in this report that would suggest more bullishness in the weeks to come. Yet when we lost the Fed put and with the market taking off some more premium, we started the see people’s online positions after they took out support.
According to the EIA, demand in the four-week moving average, which is really what you must keep an eye on, showed that based on total products supplied over the last four-week period averaged 19.8 million barrels a day, down by 0.2% from the same period last year. Over the past four weeks, motor gasoline products supplied averaged 8.8 million barrels a day, down by 1.9% from the same period last year. Distillate fuel product supplied averaged 3.5 million barrels a day over the past four weeks, down by 8.4% from the same period last year. Jet fuel product supplied was up 0.8% compared with the same four-week period last year.
EIA said supplies of U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.7 million barrels from the previous week. At 460.0 million barrels, putting U.S. crude oil inventories are about 1% below the five year average for this time of year. Total motor gasoline inventories decreased by 1.2 million barrels from last week and are about 4% below the five-year average for this time of year. Finished gasoline inventories increased, while blending components inventories decreased last week. Distillate fuel inventories decreased by 2.8 million barrels last week and are about 7% below the five-year average for this time of year.
After taking off support both oil and products are vulnerable from a price standpoint. There is still geopolitical risk in the marketplace even though it’s been downplayed in the short term. If the demand side of the equation bounces back just a little bit, we can see by the inventories that supplies will tighten significantly. And while right now we are vulnerable to see oil retest near $80.00 a barrel, we believe it would be prudent to put on some call positions on breaks.
Gas producers are praying that today’s natural gas inventory report will throw them a lifeline so they can survive another week. The U.S. likely saw a below-average build in natural gas inventories last week, lowering slightly the storage surplus as the injection season gets under way, according to a survey by The Wall Street Journal. Natural gas in underground storage is expected to have increased by 45 billion cubic feet to 2,328 Bcf as of April 12, according to the average estimate of nine traders, brokers and analysts. Estimates range from a storage increase of 39 Bcf to one of 51 Bcf.t Journal writes that “the EIA is scheduled to report last week’s storage levels on Thursday at 10:30 a.m. EDT. The projected rise is smaller than the five-year average injection for the week of 61 Bcf and would reduce the surplus from 633 Bcf the week before. The large surplus over the five-year average follows an unusually mild winter that limited inventory drawdowns. The U.S. Energy Information Administration estimates that natural gas in storage will end the injection season at a record 4,120 Bcf, or 10% above the five-year average.
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2 days ago
Natural Gas Volatility Decline Setting Stage for Pennant Breakout
By: Bruce Powers | April 17, 2024
• Natural gas is consolidating within a bear pennant pattern, with volatility declining as it trades inside a narrowing price range.
Natural gas further consolidates on Wednesday within a bear pennant pattern. It is on track to end the day as a relatively narrow inside day. Yesterday’s low of 1.65 approached a test of support at the lower trendline of a developing bear pennant consolidation pattern. This week’s decline has clarified that pattern as an attempt to hold support above the 50-Day MA and long-term trendline failed earlier this week.
Declining Volatility Likely to Continue
Volatility has been declining and it will likely continue to fall as natural gas further trades inside the small triangle pattern with a narrowing price range. The decline in volatility is also indicated by the three moving averages that have converged. The 8-Day, 20-Day, and 50-Day have come together.
What follows a period of low volatility is a clear increase in volatility. That will likely happen upon a breakout of the pennant. Natural gas remains in a clear downtrend and there was a relatively sharp decline prior to the pennant consolidation pattern. However, the downside may be limited.
29-Year Low is 1.44
In June 2020 a low of 1.44 was reached and price was quickly rejected to the upside. Natural gas traded below the prior support level of 1.52 for only one day before buyers took back control and the early stages of an advance began. That is the lowest price that natural gas has traded at in approximately 29 years. This means that 1.52 is a key low price to watch if a breakdown from the pennant occurs. Given the quick rebound off the 1.44 price level it seems unlikely that that price area will be tested again as support. Nevertheless, it is always a possibility.
Breakdown Signal
Until it is clear that Tuesday’s low of 1.65 is going to be a swing low, a breakdown is triggered on a drop below the earlier swing low at 1.59. It is confirmed on a daily close below that price level. Otherwise, support is likely to continue to be seen near the lower boundary line with trading contained within the pattern. Such a low volatility environment is likely to keep some traders on the sidelines until price breaks out.
Upside Trigger
Although the bear pennant is considered a trend continuation pattern, it is not valid until a breakout is triggered. Therefore, an eventual upside breakout remains a possibility. An upside breakout is triggered on a move above the recent swing high of 1.94. The next time that a bullish breakout could occur would be on the next rally towards the top of the pattern if it does occur.
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2 days ago
Crude Oil Continues to Bounce Around
By: Christopher Lewis | April 17, 2024
• Crude oil markets continue to bounce around in a consolidation area, as the market has a lot of external factors pressuring it.
WTI Crude Oil Technical Analysis
The West Texas Intermediate market fell significantly during the early hours on Wednesday, as it looks like we are going to give up quite a bit of momentum. The question, of course is this, has anything changed? Well, no, it hasn’t.
Ultimately, we are in the midst of consolidation and even if we do get some type of pullback, there are plenty of buyers underneath. The geopolitical situation alone dictates that we should probably have higher oil pricing. And at this point, I think each dip offers a short term buying opportunity.
That doesn’t necessarily mean that you get a huge position going, but I do think that we continue to go higher, not only due to geopolitics, but also the fact that the driving season is among us. There are threats of the Americans digging into the Strategic Petroleum Reserve, but quite frankly, President Biden emptied that last year, so it can only do so much.
Brent Crude Oil Technical Analysis
Brent markets also have fallen toward support but at this point I suspect that there’s probably some buying pressure just waiting to happen. $90 above continues to be an area of contention, and overall, this again is a buy on the dip market.
If you are cautious about your position size, you can get away with doing that because in the longer term the trend is more likely than not higher. That being said, keep in mind that crude oil is moving with the latest headlines coming out of Israel, Gaza, Iran, etc. So, with that being the case, you have to be cognizant of what’s going on in the news, and as things have calmed down a little bit, some of the risk premium might be taken out of the market. Nonetheless, this is still a very strong market and supply is going to be an issue.
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2 days ago
Crude Inventories Rise By 2.7 Million Barrels, Exceeding Analyst Expectations
By: Vladimir Zernov | April 17, 2024
Key Points:
• Strategic Petroleum Reserve increased from 364.2 million barrels to 364.9 million barrels.
• Domestic oil production remained unchanged at 13.1 million bpd.
• Oil prices are moving lower despite rising tensions in the Middle East.
On April 17, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories increased by 2.7 million barrels from the previous week, compared to analyst consensus of +1.6 million barrels. At current levels, crude inventories are about 1% below the five-year average for this time of the year.
Total motor gasoline inventories declined by 1.2 million barrels, while distillate fuel inventories decreased by 2.8 million barrels.
Crude oil imports averaged 6.5 million bpd, mostly unchanged from the previous week. Over the past four weeks, crude oil imports averaged 6.6 million bpd.
Strategic Petroleum Reserve increased from 364.2 million barrels to 364.9 million barrels as U.S. continued to buy oil for reserves despite rising oil prices.
Domestic oil production remained unchaged at 13.1 million bpd. Interestingly, U.S. oil producers are unable to raise production despite favorable market environment.
WTI oil pulled back towards the $84.00 level as traders focused on rising crude inventories. Today, traders will also stay focused on the situation in the Middle East. Israeli Prime Minister Benjamin Netanyahu has recently said that the country would make its own decisions on how to defend itself, raising worries about additional escalation. However, oil markets are moving lower, and traders bet that oil supplies would not be disrupted despite rising tensions between Israel and Iran.
Brent oil settled below the $89.50 level amid a broad pullback in the oil markets.
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2 days ago
Biden’s Oil World. The Energy Report
By: Phil Flynn | April 17, 2024
Wars, rumors of war, record deficits, raging inflation and threating more taxes and regulations on US energy as Iran’s Oil production is allowed to hit a 5 and a half year high and they secretly meet with the Maduro regime while having to decide this week as to whther or not to impose sanctions. And now with the supplies of aluminum platinum tightening ask the CME Group and the London metals exchange decides to not deal with the Russian supply the Biden administration is now suggesting tariffs on Chinese metals.
Oil prices are pulling back as Israel has yet to respond to Iran’s unprecedented attack and stubborn inflation has Jerome Powell said that “If price pressures persist, the Fed can keep rates steady for “as long as needed” and the Biden administration and White House senior adviser John Podesta hinted at another release from the Strategic Petroleum Reserve to try to ease rising gas prices and try to improve his boss’s political fortunes.
The Biden Administration has made no bones about it that the mission of the SPR not just to be used in an emergency but as a political piggy bank where he can use taxpayer paid for oil to improve his political fortunes. Kind of like defying the Constitution and the Supreme court to use your money to pay off some college loans. Yes, President Biden has done this before releasing oil from the SPR before he welcomed a ‘minor incursion” by Russia into Ukraine and before his failed policy of deterrence with sanctions on Russia.
This comes as the American Petroleum Institute released a report that shows that gasoline inventories are tightening as well as diesel but did see an increase in crude oil supply. API reported that gasoline supplies fell by 2.51 million barrels in the current week. AAA pots gas prices at $3.660 A gallon up from $3.644 yesterday and up from $3.461 a month ago, Year over year they are about a penny lower, and that was when the market was getting regular released from the SPR that could be exported to China and India and Europe. Yes, oil exports in the US did hit record highs as we drained our SPR.
So, it’s probably good news that the API reported that we saw crude inventories rise by 4.09 million barrels, but it is more than likely that that’s going to change as refiners have to ramp up production. Gasoline supplies are below normal and so we’re distilling inventories and they fell to 427,000 barrels. The smaller than expected 169,000 drawdown and Cushing OK may be a sign that the crude oil supply increases could be coming to an end and that may pressure the Biden team to use SPR oil once again in an attempt to keep down gasoline prices.
First behind the backdrop is the market waiting to see how Israel is going to respond to that unprecedented attack by Iran on its own soil it seems like Iran is taking steps because I think they are starting to realize that after their failed assault maybe they bit off a little bit more than they can chew. Today Iran is talking about letting in nuclear weapons inspectors from the International Atomic Energy agency which would be the first time this year.
Bloomberg reported that Rafael Mariano Grossi, director-general of the UN’s nuclear watchdog, will visit Iran “soon,” the head of the Atomic Energy Organization of Iran said on Wednesday, according to the state-run Hamshahri newspaper. Mohammad Eslami said the date of Grossi’s visit had not yet been decided, Hamshahri reported. He also said that International Atomic Energy Agency cameras were installed and “constantly monitoring” Iran’s nuclear facilities. Remember the AP reported that the head of the International Atomic Energy Agency said Wednesday that Iran’s decision in September to bar several experienced U.N. inspectors from monitoring the country’s nuclear program constituted “a very serious blow” to the agency’s ability to do its job “to the best possible level” last November.
And while traders may be selling futures at the same time, we’re seeing a record amount of call buying for just in case scenarios some of the calls amazingly enough our way out of the money $250 Brent crude calls. If you buy enough of those options and you’ll get a spike in the price of crude oil you don’t have to get anywhere near $200 a barrel to do very well on a very cheap investment still it’s a long shot but it’s interesting that some serious money is making that bet.
of course geopolitical events sometimes really put a different perspective on good old fashioned supply and demand fundamentals. Once we see a significant change in the economic outlook the global oil market is going to continue to be undersupplied for the rest of the year. Misuse of strategic petroleum reserves around the world have discourage investment along with ESG responsible for taking away much needed funds from fossil fuel investment and putting them into other types of things that will not be able to help the global economy in the short run so it’s no wonder that these losing ESG investments s that were based more in false virtue instead of common sense Have some investors fleeing the sector and droves.
The American Petroleum Institute also is warning that Bidens lessee ban on Federal land is going to be bad for US economy and taxpayers. The API says “As energy demand continues to grow, oil and natural gas development on federal lands will be foundational for maintaining energy security, powering our economy and supporting state and local conservation efforts. Overly burdensome land management regulations will put this critical energy supply at risk. We are reviewing the rule to ensure the Biden administration is upholding its responsibilities to the American taxpayers and promoting fair and consistent access to federal resources.”
They point out some of the benefits that we will forgo such as the fact that “In FY 2022, onshore federal oil and natural gas development supported nearly 250,000 jobs, generated $19.4 billion in labor income, and contributed $36.7 billion to GDP.
In FY 2022, oil production on federal lands averaged 1.2 million barrels per day and marketed natural gas production averaged over 9 billion cubic feet per day. Between FY 2013 and FY 2022, oil and natural gas production on federal lands generated a total of $35 billion in disbursement revenue from bonuses, rents, and royalties, averaging approximately $3.6 billion per year. 53% of this disbursement revenue, totaling more than $19 billion, went to the federal government or programs, while state and local governments received the remaining 47%, totaling $16 billion.
In FY 2022, federal oil and gas development in the five highest producing states supported more than 170,000 jobs and more than 75,500 jobs in other U.S. states mainly through the supply chain and other purchasing. New Mexico: 105,300 jobs/ Wyoming: 24,400 jobs/Colorado: 21,000 jobs/Utah: 11,200 jobs/North Dakota: 10,000 jobs.
I guess we all wonder why that the Biden Administration is not as tough in enforcing Iranian sanctions and sanctions on Venezuela.
Who winters over winter is not over until we say it is. OK maybe that’s a little bit strong but we did get a little bit of a rebound in the beleaguered natural gas market after a report that we could get a may freeze. This is why here in Wisconsin you better not plant those flowers until Mother’s Day. Yet the overall outlook for natural gas continues to be bleak. EBW Analytics says that The mini rally in the May contract crashed lower last week as daily heating demand collapsed and acute weakness in LNG exports emerged alongside a bearish EIA storage surprise. Henry Hub prices in the $1.30s/MMBtu remain an alarming bearish warning sign of downside risks ahead of May expiration.
Acute weakness in LNG feedgas demand collapsing sub-10 Bcf/d represents near-term risks, although a probable rebound higher could help stabilize prices.
Natural gas production scrapes continue to descend more rapidly than projected, offering bullish upside into summer. Still, weak EIA storage figures pose a risk that imprecise pipeline scrapes may overstate supply losses. Near-term difficulties in sustainably lowering the storage surplus indicate likely continued weakness for near-term NYMEX futures. As weather headwinds ebb and storage surpluses decline into summer, however, natural gas may rise.
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3 days ago
Buying Rumors. The Energy Report
By: Phil Flynn | April 16, 2024
Global oil prices went through the ‘buy the rumor sell the fact’ on the Iranian attack on Israel and now are still waiting to see what Israel’s response will be. Reports by the Israeli Defense Minister Yoav Gallant said that Israel would have no choice but to retaliate and reports that the ground invasion in Rafah southern Gaza will be put off until the Iranian response happens. This raises more questions than answers. Iran’s attack on Israel seems to have given Israel surges in international support even by Arab nations that are tired of Iran’s goal to disrupt peace in the region.
Iran is the driving the force between Hezbollah, Hamas and the Houthi rebels that have basically destabilized the region and caused war and turmoil for almost every country in the world. It also clear that the failure to enforce sanctions on Iran has allowed Iran to raise oil output to a 5 and a half year high and the billions of dollars they are reaping for this has gone to fund terror and bloodshed. Now after the attack, many countries are urging Israeli restraint on its response to Iran but secretly behind the scenes, they would love nothing better than to see the Iranian regime fall because of all the havoc that they’ve been causing. Oil prices have sold off because of the expectation that Israel will be measured in the response and is putting pressure on prices, but it may not be long before we start buying the rumor of an attack once again.
Zero Hedge reports that new statements from the Pentagon issued Monday have said the Houthis fired over 90 ballistic missiles and drones – most of which were intercepted by US and allied forces over the past 48 hours, once the Iranian attack kicked off in the overnight hours of Saturday. US Central Command described that at one point during the attack the Houthis fired an anti-ship ballistic missile directly against US Navy and commercial ships in the Gulf of Aden. “There were no injuries or damage reported by US, coalition, or commercial ships,” CENTCOM said.
Oil prices seem to be getting mixed emotions from Chinese economic data. The gross domestic product seems to be better than expected but the report on consumer demand seemed to be disappointing especially because of past reports that over the Chinese holiday domestic demand was at pre COVID levels.
Domestic oil production also increased but make no mistake about it, they’re still going to need a lot of oil from other places. The Wall Street Journal wrote, “With familiar signs of weakness in consumption and real estate in the first three months of the year, many economists say Beijing still isn’t doing enough to support Chinese households and nurture a more balanced recovery. And the loss of some momentum in March compared with the preceding two months reinforced expectations that further stimulus will be needed to ensure that the government meets its growth target of around 5% for the year. China said its economy grew 5.3% in the first quarter compared with the same three months a year earlier, a faster pace than the 5.2% year-over-year growth rate that the country notched in the final quarter of 2023, China’s National Bureau of Statistics said Tuesday. The pickup was propelled by a rise in industrial production and swelling investment in factories. After a challenging few year, Chinese officials are steering activity and investment toward manufacturing and exports to compensate for domestic consumers’ reluctance to spend and a continuing crunch in the property market.”
It is very powerful that yesterday sell off oil price low set the low for the week. We expect modest drawdowns in crude oil and products and today’s American Petroleum Institute report and we expect to see an uptick in demand after the drop in demand that we saw over the Easter holiday weekend. I expect that the exports for oil and gasoline will rebound, and we should see an uptick in gasoline demand as well and with the ongoing risk to supplies, it’s unlikely that the market is at a point where it will collapse.
Reuter reports that – Russia has been able to swiftly repair some of key oil refineries hit by Ukrainian drones, reducing capacity idled by the attacks to about 10% from almost 14% at the end of March, Reuters calculations showed. Ukraine stepped up drone attacks on Russian energy infrastructure since the start of the year, hitting some major oil refineries across the world’s second largest oil exporter in attacks that sent up oil prices.
Natural gas cash prices are falling once again and even with the drop in US natural gas, rigs production may not be falling quite fast enough. Yahoo finance writes, “the bearish sentiment surrounding the commodity even prompted shale producers Chesapeake Energy CHK and EQT Corporation EQT to hit the brakes on new drilling. Chesapeake announced a reduction in its drilling rigs so as to lower volume. The company has decided to cut this year’s gas production expectations by around 20%. Chesapeake’s plans rippled through the market, with Appalachian Basin-focused EQT following on. The explorer and producer of natural gas said that it will lower its daily output by 1 Bcf to combat the supply glut in the U.S. market. According to EQT, the revised plan will likely reduce net production by 30-40 Bcf. While these production cut announcements temporarily drove natural gas prices higher, they have failed to galvanize the market.”
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4 days ago
Natural Gas Price Forecast: Breaks Support, Eyes Lower Price Levels
By: Bruce Powers | April 15, 2024
• Recent attempts to strengthen natural gas prices have failed, confirming the presence of downward pressure.
The bearish correction in natural gas continued Monday with a drop below support of both the downtrend line and 20-Day MA. Selling accelerated following the breakdown, with natural gas still trading near the lows of the day and creeping lower at the time of this writing.
Today’s price action sets the stage for a test of the bottom boundary line (purple) of a small symmetrical triangle consolidation pattern or bear pennant. The line would be around 1.63 if reached today. Given the rising slope, the line will represent a higher price level going forward.
Recent Signs of Strength Hit with Resistance
Recent attempts to strengthen the price of natural gas have been met with failures. Last week’s swing high of 1.94 completed a lower swing high, relative to the higher March 1 swing high. Further, recent strength was met resistance below lower blue dashed parallel channel line. In other words, the dashed line represents potential resistance, and evidence for resistance was seen. Such behavior reflects continued downward pressure on the price of natural gas, which was confirmed with today’s breakdown.
Moving Average Support Zone Fails
Notice that the downtrend line, orange 50-Day MA, and purple 20-Day MA had all converged around the same potential support zone. There was a clear chance for the zone to reject price to the upside and it has failed to materialize. Instead, a bearish breakdown has been triggered, putting short-term price action in alignment with the larger bearish trend. A breakdown from consolidation is first indicated on a drop below the lower boundary line, but more so on a decline below the most recent swing low at 1.59.
Range Bound Until Pennant Breakout
Regardless of the bearish nature of the pennant pattern, it won’t matter much until there is a breakout of the pattern. Choppy range bound trading is likely for the time being if the pennant continues to evolve. Certainly, the pattern could evolve for a while longer with trading contained within its boundaries. Therefore, a bounce off the lower boundary line could eventually lead to a test of resistance at the top line of the pattern. At that point, a bullish reversal may also be a possibility. Given recent history, an upside breakout would be triggered on a rally above the most recent seeing high at 1.94.
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4 days ago
Natural Gas Traders Seek Support Base Amidst High Storage Levels
By: James Hyerczyk | April 15, 2024
U.S. Natural Gas Market Analysis
U.S. natural gas futures are slightly down as traders seek to establish a support base. Despite an attempted breakout above the 50-day moving average last week, factors such as favorable weather, low LNG demand, and significant storage builds have stalled upward trends.
At 12:27 GMT, Natural Gas Futures are trading $1.735, down $0.035 or -1.98%.
Market Trends and Influences
The market reacted sharply to last Thursday’s EIA report, which recorded a storage build exceeding expectations by more than 10 Bcf, causing a drop in prices. The weather forecast predicts mild conditions with temperatures ranging from 50s to 80s Fahrenheit across the U.S., suggesting continued light demand for the next week.
Storage and Production Trends
End-of-season reports show U.S. natural gas inventories 39% above the five-year average, with a surplus driven by a mild winter and reduced residential and commercial consumption. This surplus has pressured prices, with Henry Hub averaging less than $2.00 per MMBtu recently. Projected natural gas production for the upcoming months shows a slight decline from the previous year.
Global LNG Exports
Globally, U.S. LNG exports are expected to rise modestly in 2024, with significant project completions poised to boost supply by year-end. Meanwhile, Asian LNG prices have climbed, supported by steady demand and supply disruptions, potentially redirecting U.S. LNG from Europe to Asia due to favorable price arbitrage.
Short-Term Market Forecast
The market’s short-term outlook remains cautiously bearish due to high storage levels and anticipated mild demand. However, potential reductions in production or increased demand for electricity generation during a hotter summer could tighten the market and support a price rebound. Traders should closely monitor updates on production and consumption trends, which will be key in shaping the market’s near-term direction.
Technical Analysis
Daily Natural Gas
U.S. natural gas futures are under pressure on Monday, while hovering just above a multi-year low. Meanwhile, the 50-day moving average continues to trend lower.
This intermediate trend indicator at $1.936 is controlling the near-term direction of the market. A sustained move under this indicator is expected to keep the pressure on prices. However, some also view it as a potential trigger point for an upside breakout.
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6 days ago
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 13, 2024
• Following futures positions of non-commercials are as of April 9, 2024.
After 4 consecutive up weeks, West Texas Intermediate crude dropped 1.4 percent this week, forming a weekly spinning top. Friday was a huge reversal session, with the intraday high of $87.67 drawing sellers near prior Friday’s spinning top high of $87.63 and reversing to end the session at $85.66/ barrel.
There is horizontal resistance at $88. The crude has come a long way from last December’s bottom at $67.71.
On its way to the recent highs, WTI went back and forth between $71-$72 and $81-$82 for a year and a half before pushing through the upper end two weeks ago. At this stage, a successful breakout retest will be a welcome development for the bulls.
In the meantime, as per the EIA, US crude production in the week to April 5th was unchanged for five consecutive weeks at 13.1 million barrels per day; seven weeks ago, output was at a record 13.3 mb/d. Crude imports decreased 184,000 b/d to 6.4 mb/d. Stocks of crude, gasoline, and distillates all rose – respectively up 5.8 million barrels, 715,000 barrels and 1.7 million barrels to 457.3 million barrels, 228.5 million barrels and 117.7 million barrels. Refinery utilization dropped three-tenths of a percentage point to 88.3 percent.
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6 days ago
NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | April 13, 2024
NY Crude Oil Futures closed today at 8566 and is trading up about 19% for the year from last year's settlement of 7165. Caution is required for this market is starting to suggest it may now decline on the MONTHLY level. Up to this moment in time, this market has been rising for 3 months going into April reflecting that this has been only still, a bullish reactionary trend. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 8767 while it has not broken last month's low so far of 7679. Nevertheless, this market is still trading above last month's high of 8321.
Up to now, we still have only a 3 month reaction rally from the low established during December 2023. 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.
From a perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 8509 and overhead resistance forming above at 8698. 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 April 8th at 8767, which was up 17 weeks from the low made back during the week of December 11th. So far, this week is trading within last week's range of 8767 to 8455. Nevertheless, the market is still trading downward more toward support than resistance. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8767 made 0 week ago. Still, this market is within our trading envelope which spans between 6533 and 9317. The broader perspective, this current rally into the week of April 8th reaching 8767 has exceeded the previous high of 7960 made back during the week of November 27th.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend. Looking at this from a wider perspective, this market has been trading up for the past 17 weeks which from a timing perspective warrants concern.
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 September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in April, this market has held above last month's low of 7679 reaching 7679.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 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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6 days ago
Natural Gas Testing Support Amidst Low Volatility
By: Bruce Powers | April 12, 2024
• Natural gas is testing support around the downtrend line and 20-Day MA. Signs of strength are crucial if the rally off trend lows has a chance to continue.
Natural gas dipped briefly below the minor 1.75 swing low from Monday before finding support at 1.73 and stalling the descent. Volatility diminished as it is on track to complete a narrow range day while further testing support around the long-term downtrend line and 20-Day MA, now at 1.76. If natural gas can advance above today’s high of 1.785 heading into next it has a chance to progress the near-term uptrend that starts from the higher swing low and potential second bottom (C).
Drop Below Today’s Low Points to Lower Triangle Line
However, a drop below today’s low without a quick recovery increases the chance that natural gas will further trace out a developing symmetrical triangle (purple). A drop below today’s low increases the chance of a test of support at the lower boundary line of the triangle. Recent minor signs of strength seen recently as natural gas recaptured both the 20-Day and 50-Day MAs would then be negated.
Rally Above 1.785 Would Be First Sign of Strengthening
Nevertheless, if natural gas can continue to find support around the downtrend line and 20-Day MA, followed by signs of strength, it will likely have completed a minor pullback. The chance for an eventual bull trend continuation will then become more likely. A rally above today’s high of 1.785 will provide an initial signal, but upside follow through will be key as to whether it can keep rising from there.
Weekly Chart Analysis
On a weekly basis, natural gas is on track to close weak, in the lower third of the week’s range and possibly with a doji. The weekly candle will be bearish unless natural gas can rise before today’s close. Last week also ended relatively weak. This week will be the second in a row where natural gas is closing in the lower area of the week’s range. In both cases support for the week was seen in the 8-Week MA.
Natural gas has been mostly below the 8-Week line since early-January. So, a successful test of support at the 8-Week line is one sign of strength. Regardless, the weekly performance did not confirm strength since this week and last week ended (likely) in the lower part of the range. Therefore, a drop below today’s low would also give a weekly bearish signal relative to this week’s low and the 8-Week MA.
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1 week ago
Natural Gas Testing Support Amidst Consolidation
By: Bruce Powers | April 11, 2024
• Natural gas prices test support at 20-day MA, poised for bullish reversal or failure to lower prices.
Natural gas retreats further from Wednesday’s 1.94 high on Thursday as it tests support around the 20-day MA with the day’s low of 1.77. The 20-Day line is at 1.76 and it is strengthened by the long-term downtrend line, which marks the same price area. Notice that the 20-Day line and trendline have joined together. This should lead to a rejection of price to the upside, but there are no signs of it yet.
Moving Averages Show Improving Strength
Natural gas rallied back above the 20-Day line on April 1, and there was one subsequent successful test of support at the 20-Day MA. Today provides the second such test. A bounce and bullish reversal off the 1.76 price zone should complete the test and clear the way for natural gas to continue to advance. Over the past week the 8-Day MA has risen back above both the 20-Day and 50-Day MAs. And there was recently a higher swing low (C), reflecting improving demand.
Further Consolidation Possible Until Clear Breakout
Nevertheless, there is also a possibility that natural gas traces out a consolidation pattern. A bearish pennant or symmetrical triangle is the form now taking shape. It remains valid until there is an upside breakout above Wednesday’s high of 1.87. A drop below Monday’s low of 1.75 will increase the likelihood that consolidation may continue.
Rise Above 1.89 Shows Strength
Near-term resistance is now at today’s high of 1.89. A breakout above that high will provide the next sign of strength that could lead to a breakout above Wednesday’s high of 1.94. Once there is a daily close above that level natural gas should be ready to progress higher. The neckline for a potential double bottom bullish pattern is at 2.01 (B), with the first higher target zone around 2.06 to 2.08. Other target areas of interest are marked on the chart.
Weekly Chart, Bullish Signs
The weekly chart (not shown) is not a screaming buy, but it does show bullish progression. Last week’s close was relatively weak as it was in the lower half of the week’s trading range. Further, this week’s performance is also at risk of closing in the lower half of the week’s range. At the same time, this week’s low and last week’s both found support around the 8-Week MA, now at 1.73.
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1 week ago
Weighty Decisions. The Energy Report
By: Phil Flynn | April 11, 2024
Global oil markets must decide whether they are more worried about inflation or global conflict. Oil prices fluctuated on the prospect of a widening war with new potential battlefronts in the Middle East, the ongoing war between Russia and Ukraine and surging inflation that could delay or indefinitely postpone interest rate cuts. monitoring amid ongoing uncertainties to ensure a sound and sustainable oil market balance they also are keeping their demand growth forecast for 2024 at a very impressive 2.25 million barrels a day, The stakes are getting higher every day with lives, and sacred fortunes on the line.
The Consumer Price Index was a blow to those sacred fortunes and those trying to live paycheck to paycheck or those migrant debit cards. The consumer-price index, a measure of goods and services prices across the economy, rose 3.5% in March from a year earlier, the Labor Department said Wednesday. That was a touch higher than economists had forecasted and a pickup from February’s 3.2%. The so-called core prices, which exclude volatile food and energy categories, also rose more than expected on a monthly and annual basis according to the Wall Street Journal.
That hot inflation report took the odds of a June rate cut from better than 50% down to the low 20s. The reason for this hot inflation number is very simply corporate greed. How do I know that? Very Simply, Joe Biden said so. Biden urged, “corporations including grocery retailers to use record profits to reduce prices.” As corporations should know that they should be beholden to the Biden administration and not their shareholders. That is why he wants to tax them more so he can use that money to win favor with a student who can’t or refuse to pay back their loans or others that he thinks might vote democrat. So, don’t you listen to all the economists who try to tell you that inflation is caused by the government printing too much money or running up massive historic debt levels because Biden knows better? It seems that based on when Biden got elected it brought in a new era of greed! When President Trump was in office, corporations were not greedy because inflation was at historically low levels.
Of course, you can whine about not having enough money to buy groceries or fill your gas tank or weighty decisions about what you have to put back on the shelf that was in your grocery cart but that is because you don’t understand how good you have it under Biden. Remember he called out those companies that makes your potato chip bag smaller. Maybe that’ll make your waistline shrink a little too! So, to think you’re not better off just because your monthly bills are well above your wage increases, it is just because you have been psychologically damaged. Most likely due to climate change fears. And we all know that was President Donald Trump’s fault.
Even after the hot inflation number, oil tried to hold its ground even with an Energy Information Administration (EIA) report that was bearish on the surface. Yet thoughts about inflation or the volatility of the Weekly EIA were put aside on reports that an attack on Israel by Iranian proxies was imminent according to the United States. Reuters wrote that, “Oil prices settled up $1 on Wednesday after three sons of a Hamas leader were killed in an Israeli airstrike in the Gaza Strip, feeding worries that ceasefire talks might stall.”
The market had other concerns as to whether or not the United States would back Israel in a confrontation with Iran. Some people are suggesting that the Biden administration is emboldening Iran because there is this perception that the United States will not stand with Israel if Iran attacks. The flip side of that is the Biden administration seems to be walking a fine line between saying that they will defend Israel but at the same time trying to appease their base suggesting that they might not if they don’t approve a ceasefire in the Gaza Strip.
Israeli Prime Minister Netanyahu is saying that, “we are preparing for scenarios and challenges from other fields in other words getting ready to fight a war on many fronts. This comes as the Iranian Revolutionary Guard is bragging that they could shut down the Strait of Hormuz, the world’s most important oil chokepoint. This comes as Iranian-backed Houthi rebels are already causing havoc in the Red Sea transit routes. The attempt to shut these oil flows down could lead to an incredible price spike.
While the global oil price spreads are pricing in a very undersupplied market, the EIA is giving us a little reprieve in a weekly report that may be exaggerated due to the Easter Holiday. The EIA reported that oil supplies increased by a surprising 6.4 million barrels as U.S. oil exports plummeted to 2,708 million barrels a day from 4,022 million barrels a day in the holiday-shortened week. Week-over-week drops and demand was likely impacted by the holiday. Total Petroleum demand fell from 9,236 million barrels a day to 21,292 million barrels a day a drop of 2,056 Million barrels a day
Now overnight oil prices are pulling back as well as products as the imminent talk of a threat of an attack haven’t happened just yet. Traders may also be booking profits ahead of the producer price index which if it comes in hotter like the CPI did, it could cause the dollar to rally and put downward pressure on prices. I guess we have to wait to see how greedy corporate America is gonna be this week.
Today we get the natural gas inventories we’re looking for a small injection in the supply of about 11 to 14 BCF. The market does look like it’s trying to bottom here and it still is facing some incredible headwinds but production is starting to taper off.
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1 week ago
Natural Gas Hits New Trend High and Pulls Back
By: Bruce Powers | April 10, 2024
• Natural gas triggered a new trend high today but could got turned around after encountering resistance at 1.94.
Natural gas continued its advance on Wednesday with a new minor trend high of 1.94. Although Tuesday’s closing price relative to the day’s range was not particularly strong, it did manage to close at its highest daily closing price in 23 trading days. Today’s advance was hit with selling pressure once the 1.94 high was reached. At the time of this writing natural gas is trading near the lows of the day and set to close relatively weak, in the lower quarter of the day’s range.
New Bullish Indications
Nonetheless, there are recent bullish indications showing underlying strength in the price of natural gas. The blue 8-Day MA has crossed up above the orange 50-Day and prior peak of the current short-term uptrend was exceeded yesterday. In addition, natural gas is holding above the 50-Day MA and above the long-term downtrend line. Support around the 50-Day line, currently at 1.80, should maintain support during weakness for recent bullish indications to remain valid.
Support Levels
The downtrend line can be priced currently because it has converged with the purple 20-Day moving average, now at 1.76. That is a more critical price area where support should be seen for the near-term bullish outlook to be retained. Given the potential for a weak close today, there is a possibility a pullback towards support may have already begone. However, it seems likely that it should be short lived if the growing bullish sentiment is to remain in charge.
Buyers Back in Charge Above 1.94
Further strength is signaled on a breakout above today’s high of 1.94. There is an initial target zone highlighted on the chart from 2.06 to 2.08. That price zone marks the completion of two rising ABCD patterns. The larger pattern is shown in green and labeled, while the smaller pattern is not labeled and starts from the most recent swing low at (C). Having such a fractal relationship between the two pieces of the developing uptrend should increase the chance for the targets to be reached. Also, a breakout above that price zone should also be met with enthusiasm from buyers.
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1 week ago
Crude Inventories Increased By 5.8 Million Barrels, Exceeding Analyst Expectations
By: Vladimir Zernov | April 10, 2024
Key Points:
• Gasoline inventories increased by 0.7 million barrels.
• Distillate fuel inventories grew by 1.7 million barrels.
• Strategic Petroleum Reserve increased from 363.6 million to 364.2 million.
On April 10, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories increased by 5.8 million barrels from the previous week, compared to analyst consensus of +2.37 million barrels. At current levels, crude inventories are about 2% below the five-year average for this time of the year.
Total motor gasoline inventories grew by 0.7 million barrels from the previous week, while analysts expected that they would decline by 1.32 million barrels. Distillate fuel inventories increased by 1.7 million barrels.
Crude oil imports averaged 6.4 million bpd, declining by 183,000 bpd from the previous week. Crude oil imports were slighly lower than the four-week average of 6.5 million bpd.
Strategic Petroleum Reserve increased from 363.8 million to 364.2 million as U.S. continued to buy oil for strategic reserves.
Domestic oil production remained unchanged at 13.1 million bpd despite high oil prices. At this point, it looks that WTI oil must settle above the $90.00 level to boost domestic oil production.
WTI oil settled in the $85.00 – $85.50 range as traders reacted to the EIA report. Crude inventories exceeded analyst expectations, which is bearish for oil markets. However, domestic oil production does not grow despite rising oil prices, which is a bullish factor for oil.
Brent oil moved closer to the $90.00 level as traders focused on rising crude inventories. It should be noted that oil is trading with a geopolitical premium, but serious risks for oil supply routes have not materialized yet.
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1 week ago
War Torn Super Cycle. The Energy Report
By: Phil Flynn | April 10, 2024
The Commodity Supercycle that seemed dormant late last year has awakened, incredibly. While many thought that the cycle had passed, it is clear now that price respite was just the eye of the commodity prices super cycle hurricane. The historic record-breaking price surge that we have seen in cocoa may be a preview of what we may see in other commodities where it appears demand will outstrip supply. Commodities like copper, silver, platinum, palladium, and of course the world’s black gold, oil that Texas tea, are headed for supply squeezes unlike anything we have seen since the 1970s and it did not happen overnight. It happened while the world was sleeping.
Underinvestment in fossil fuels as well as a hostile regulatory environment, means global oil supplies are going to be short. Even the Energy Information Administration in their recent short-term energy outlook not only had to raise the oil prices but also had to adjust their downward projections of future demand in an attempt to perhaps justify their previous massive adjustments to their numbers. In other words, the EIA had to raise their demand forecasts before they could lower it. The EIA raised their forecast of WTI crude prices to average $83.78/ barrel(bbl) in 2024, versus an earlier forecast of $82.15/bbl. The EIA also raised its Brent Crude prices to an average of $86.98/bbl in 2025, versus an earlier forecast of $84.80/bbl. Yet it was demand where they had to raise the river instead of lowering the bridge to make their forecast jive.
Or as the EIA put it, “This month we revised the 2022 global liquid fuels consumption data available in our International Energy Statistics, increasing our assessment of global oil consumption that year by nearly 0.8 million barrels per day (b/d) compared to last month’s STEO. The historical data serves as a baseline for our short-term forecasts, affecting our view of energy markets this year and next. This month’s revision to historic data, as well as current market dynamics, led us to increase our forecasts for global oil consumption.” Yet if you want to be confused, then they go on to say that after the adjustment the EIA cuts forecast for 2024 world oil demand growth by 480,000 bpd, now sees 0.95 mln bpd year-on-year increase. And cuts forecast for 2025 world oil demand growth by 30,000 bpd, now sees 1.35 mln bpd year on year increase.” Are they trying to hide their meaning here?
What they won’t be able to hide is rising gasoline prices. The EIA raised its forecast for retail gasoline prices in 2024 to $3.59 a gallon, versus an earlier forecast of $3.48 a gallon.
Yesterday the market was reluctant to move higher as it tried to digest headlines surrounding geopolitical risk that could have major implications for the price of oil and the potential movement for oil. Last week oil put in a lot of risk premium on the expectations that Iran would respond directly against Israel after the attack on its compound in Lebanon. Yesterday there was an unconfirmed report that an Iranian envoy was en route to the United States for some talks to avoid a conflict and made the rounds even though the story wasn’t confirmed.
Another headline that took out some more premium was the report that the US Defense Secretary heard from Israel that there is no set date for its invasion of Rafah, raising hopes that there could be some hope for a ceasefire even if a ceasefire talks broke down. That was after Prime Minister Benjamin Netanyahu said Monday that he has set a date for the IDF to launch its much-anticipated offensive in the southern Gaza city of Rafah. All of this is happening and swaying the market.
Now the American Petroleum Institute (API)report seemed to suggest that supplies from the seasonal viewpoint are very tight but based on weekly numbers are less than inspiring to the bullish side of the market.
The API reported the crude supplies increased by 3.034 million barrels which was more than the market had anticipated but from a seasonal viewpoint smaller than most builds at this time of year. Gasoline inventories fell by 609,000 barrels and distillates rose by 120,000 barrels which wasn’t that inspiring to either the bulls or the bear. The products have been under pressure. This week’s report, if confirmed today by the Energy Information Administration report, could give us the bottom for the products.
Yet what may be important to the oil and product traders today will be the consumer price index. The market fixation on whether or not the Federal Reserve is going to have the ability to cut interest rates as inflation continues to be strong is the question on most traders minds. The key thing here is that even if the Federal Reserve has to backtrack on a rate cutting, the reality is it won’t impact oil demand quickly enough to save the market from a supply squeeze.
What we expect is that oil will react to a hot or cold report in the long run. It’ll be the supply deficit that will keep support under this market. Remember all that talk about peak oil supply and then the switch over to peak oil demand? Well apparently in the big picture neither one of those predictions is correct. There is a new report by Enverus Intelligence Research that expects global oil demand will grow by 108 million barrels a day by 2030 and will not see peak demand at the end of the decade. The quiet little secret known by many people in the oil industry is simply this: the predictions of peak oil demand were greatly exaggerated.
Speaking about being greatly exaggerated, did you know that Treasury Secretary Janet Yellen is trying to tell people that she believes that the Russian price caps worked? I’m not kidding you. My good friend and noted oil analyst Anas Alhajji said, “Yellen’s price caps on Russian oil are a joke and have no impact. Attacks on Russian refineries meant more crude to export. Here is what Argus wrote today: “Russian crude production rose by 30,000 b/d to 9.44mn b/d, just 10,000 b/d shy of its target. Drone attacks have damaged over 800,000 b/d of Russian refining capacity in recent months, freeing up more crude for export — shipments hit an 11-month high in March.” Take that, Vladimir. Now let’s talk about those so-called sanctions on Iran that have given them billions of dollars. Never mind…I am running out of time.
Let’s move on to natural gas quickly. Reports that Freeport is going to get back online a month earlier than expected and more capacity coming online for LNG exports is giving us a ray of hope that maybe the bottom is in for natural gas. What’s interesting to note is the Energy Information Administration pointed out that for the first time in history, the cost of natural gas is lower than coal. This should be incredible news for people who are concerned about greenhouse gas emissions. The United States is the biggest producer of natural gas and we can change the world by providing cheap natural gas to replace coal plants thereby reducing greenhouse gas emissions. Incredibly this comes even as the Biden administration plays politics with projects surrounding LNG exports.
In yesterday’s Short-Term Energy Outlook, the EIA reported that, “The U.S. winter natural gas withdrawal season ended with 39% more natural gas in storage compared with the five-year average. From April through October this year, EIA forecast less natural gas will be injected into storage than is typical, largely because we expect the United States will produce less natural gas on average in 2Q24 and 3Q24 compared with 1Q24. Despite lower production, EIA still expects the United States will have the most natural gas in storage on record when the winter withdrawal season begins in November. As a result of high inventories, we expect the Henry Hub spot price to average less than $2.00 per million British thermal units (MMBtu) in 2Q24 before increasing slightly in 3Q24. EIA forecast for all of 2024 averages about $2.20/MMBtu.
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1 week ago
Natural Gas Moving Average Breakout Improves Bullish Outlook
By: Bruce Powers | April 9, 2024
• Natural gas showed strength by closing above its 50-Day MA, signaling potential demand increase.
Natural gas closed above its 50-Day MA for the first time since mid-January on Monday. That is a sign of strength that should see demand increase in the coming days. A teaser occurred today as natural gas rallied above the recent 1.91 minor swing high before encountering resistance at the day’s high of 1.92. An intraday selloff followed back to the lows of the day. Where it closes relative to the day’s range should provide a clue as to current sentiment.
Advance Continues Following 50-Day MA Breakout
There was minor confirmation of strength since the breakout above the 50-Day MA, as the 8-Day MA crossed above the 50-Day today for the first time since mid-January, today. Also, yesterday the 20-Day MA was successfully tested as support for the first time since the price of natural gas rallied back above the 20-Day line on April 1.
That cleared the way for further strengthening, which we saw yesterday and then again today. What happens next will be key though as a failed breakout is always possible. A second daily close above the 50-Day line today would dampen that possibility. Then, we need to see signs of further strengthening if natural gas is going to have a chance at reaching higher targets.
Potential Double Bottom Setup
A rally above the 2.01 (B) swing high will trigger a breakout of a double bottom bullish reversal pattern and a continuation of the current developing uptrend. At that point there would be a higher swing high that would follow the recent higher swing low (C). The first identified target from current levels is the completion of a small rising ABCD pattern at 2.08.
At that price the CD leg of the advance will match the price appreciation seen in the first leg up, marked A to B. Once there is price symmetry a potential resistance zone has been reached. There are also interim price targets on the way up to the double bottom target of 2.50.
Higher Targets
The consolidation high following the large gap down in late-January is at 2.17. However, the more notable 38.2% Fibonacci retracement level is at 2.24. That price level takes on a somewhat greater significance since it is also match with prior support at the December swing low.
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1 week ago
Control Freak Out. The Energy Report
By: Phil Flynn | April 9, 2024
Oil is on the rise as the headlines blast that the oil market is going to get extremely tight in the second half of the year and that OPEC has regained control of the oil market. These headlines are correct, and it is something we predicted would happen oh so long ago. These are predictions by Citadel and are being echoed by other people in the market who must face up to the fact that global demand is exceeding daily production and could by a wide margin by the end of the year. Vitol is predicting oil averages between $80 and $100 a barrel because of what they call a restrained market. The CEO of Vital, Russell Hardy, says that oil demand growth is expected to be at 1.9 mbpd this year. Also, Reuters is reporting that Mexico is cutting oil exports by at least 330,000 barrels per day in May.
Oil prices are surging after Hamas predictably rejected the terms of the ceasefire and Israeli Prime Minister Benjamin Netanyahu on Monday said Israel will be moving forward with a planned attack on the city of Rafah in the Gaza Strip. This comes as the Iranian foreign minister continues to blame the United States for approving Israel’s attack on its consulate in Syria. The attack that killed 2 Iranian generals may be a reason why Iran may still respond. Yet Iran has failed to do so, so far. Perhaps they are worried about sparking a direct conflict with Iran or the United States.
Global demand is exceeding supply as China’s manufacturing sector surges. Their domestic demand hit the highest level since pre-COVID. S&P Global reported overnight that China’s independent refineries ramped up feedstock imports by 13.3% on the month to a seven-month high of 17.4 million mt (127.54 million barrels) in March, the highest since August when it was at 18.23 million mt, S&P Global Commodity Insights data showed April 9.
The supply squeeze is on and the bearish arguments that we would not consume as much oil because we were heading into a recession or that Chinese demand was near record high would peak were incorrect.
They also said that US energy producers would continue to find ways to increase output to meet global demand would continue to happen even with the most hostile fossil fuel administration in the nation’s history. Sadly, Americans pulling up to the pump are finding out that this was not the case.
JP Morgan is reporting that U.S. oil production is starting to fall to 12.32 million barrels a day over the past week that’s down from 12.71 million barrels the prior week. Industry insiders are now saying that because of increased regulatory burdens and the lack of capital, the US energy production is going to plateau. Sufficient reasons suggested that the cancellation of the Keystone XL pipeline and drilling moratoriums, and threats of more regulations would stymie US output and cede control of the global oil market back to OPEC over the US was bound to happen.
Now there is a Washington Post article, you know that paper where their mission is to let Democracy Die In Darkness that says, “The EPA Mulls Tougher Limits On New Gas Plants As 2024 Election Nears. “The Post says, “The reconsideration comes after the Biden administration has backpedaled on other proposed climate regulations.” Yes, the ridiculous proposals were based on data that showed it cost a lot of money but did absolutely nothing to help the environment. He had to back pedal because the truth made them look ridiculous. So now to try to save face with the environmental left they have to make a splash.
The Post reports that, “The Environmental Protection Agency is considering significantly strengthening proposed limits on planet-warming pollution from power plants — a crucial part of President Biden’s climate agenda — according to three people briefed on the matter, who spoke on the condition of anonymity because no final decisions have been made.
The discussions about toughening the standards, which are set to be released this month, have major implications for America’s fleet of power plants, which rank as the country’s second-largest contributor to climate change. They come as the administration weighs the political calculus of weakening or strengthening environmental regulations before the 2024 election. The Post says, “The change could affect most new gas plants built in the United States, and it could have a significant climate impact. According to the EPA’s modeling, it could prevent up to 10.6 million metric tons of carbon emissions per year — equivalent to taking 2.5 million cars off the nation’s roads for a year.” Of course, you better check their math on that.
One of the things that we want to keep an eye on is this weakness in the crack spreads. The weakness in the crack spreads and the moves higher suggests that maybe demand could be challenged by these prices. On the flip side of that though, the other reason why we’re seeing some reluctance to move higher is concerns that the economy is too strong, and the Fed will have to cool things down. Don’t you love it when the market is confused as to whether it should be happy, the economy is strong, or it should be bearish because the economy is strong?
Oil prices are overbought but bounced back after key support test. The risk to oil is still around the upside but we have to be on guard for some corrections and some volatility.
Natural gas is starting to rebound even as we expect to see an injection this week into supply. With more talk of falling production, it is giving the natural gas market a boost.
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2 weeks ago
Natural Gas Continues to Build Its Base
By: Christopher Lewis | April 8, 2024
• The natural gas markets continue to bounce around near the overall bottom, and therefore I think this market could be an investment, not necessarily a short-term trade.
Natural Gas Technical Analysis
Natural gas markets have rallied a bit during the early hours on Monday, but at this point in time, I think you’ve got a situation where the $1.50 level underneath continues to be a major floor, while the $2 level above continues to be a major ceiling. Now, I think longer term this is a situation where investors are stepping in and buying natural gas, which is what I’ve been doing, but I’ve been doing it through an ETF. I don’t use leverage because I don’t know when we recover. This is something that you have to be very patient with and you have to use low leverage. You can’t get spooked every time the market moves a little bit. So, with that being the case, I like the idea of buying short-term dips, I’ll do something like buy another 20 shares of the UNG ETF.
That’s how I play it, but maybe you can do it with a small CFD position. Just make sure you’re paying attention to any swap you’re paying. If we can break above the $2 level, it opens up a very serious potential for a move to the $2.50 level. I have no interest in selling in this market. We are at a major bottom going back multiple years, and at this point, you have to wonder who’s left to sell to other than people building up a big, longer term position.
Remember, the most important thing is that you can be patient, as the move higher could literally be months down the road, but the potential is there for a rather big move. You need to be able to put a little bit into this market and ignore it for a while from what I can see.
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2 weeks ago
Crude Continues to See Upward Pressures
By: Christopher Lewis | April 8, 2024
• The crude oil market continues to see a lot of upward pressure, as we have multiple reasons to think that this market is going to rise in value over the longer term.
WTI Crude Oil Technical Analysis
West Texas Intermediate Crude Oil Market broke down below the $85 level. And as you can see, we have seen a lot of buyers and now it looks like we will continue to see a lot of upward pressure. That being said, I think this is a market that continues to ride on momentum. And of course, technical analysis suggests that we have recently cleared up a major barrier. I think at this point in time we are looking at a potential move to the $87.50 level and then after that, the $90 level. Short-term pullbacks continue to get bought into. I don’t see that changing anytime soon and I think the absolute floor in the market is at the $80 level.
Brent Crude Oil Technical Analysis
Brent is a market that has fallen pretty significantly early in the day only to turn around and retake the $90 level. This is a market that may have to consolidate a bit and that might be true with oil in general as we had gotten stretched but ultimately there are plenty of reasons to think that every dip will get bought into. Supply is starting to get stretched around the world.
We have a lot of geopolitical concerns in the Middle East and of course if central banks in fact are going to start cutting interest rates, that could put upward pressure on crude oil anyway due to the fact that demand, at least in theory, should pick up from industrial usage.
There’s also the cyclical trade which states that in the spring we start to see more travel, and that tends to put a lot more pressure on the price of oil as well as people continuing to demand more. With all that being said, I’m not selling in this market at all and I’m looking at every pullback as a potential buying opportunity.
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2 weeks ago
The Pullback. The Energy Report
By: Phil Flynn | April 8, 2024
Oil is back after Israel pulled back some troops in Gaza and because Iran failed to follow through on threats to respond to Israel’s attack on its consulate in Lebanon. Yet to say the market is on edge is an understatement as supply tightness is clear as we continue to see ongoing threats to supply. Move Israel in oil prices are seeking to regroup it’s the market waits to see if there are any other shoes to drop.
There is also a lot of speculation in the market that the Energy Information Administration has been overestimating US oil production by almost 1 million barrels per day. As we know the Energy Information Administration has consistently had to adjust their production estimates from their weekly reports and now it’s very clear to many in the industry that the numbers that they have been reporting fall short. HFI Research points out that the EIA admitted that they didn’t survey oil production but used a model to come up with their equation the model has had run of overestimating production.
This overestimating production means that the supply situation based on current demand is much tighter than we had originally thought. If you look at the demand numbers from last week in the United States, they say hit an incredibly high 21,292 million barrels a day. So if the pattern of overestimating production continues and underestimating demand we could be in a very interesting situation.
So with the reduction of geopolitical risk, we’re back to focus on supply and demand which still looks exceedingly tight this week we expect to see crude oil supplies fall by 3,000,000 barrels. We also expect to see the same in products with a 3 million barrel drop in both gasoline and distillates refinery run should see an uptick of 0.5.
B technical pullback is happening because crude is overbought and because of the reduction of geopolitical risk in this type of situation is going to be important to see whether or not the market consolidates where we see some further downside are expectation is that we will consolidate at some point because the supply versus demand situation is too tight to ignore and it’s too dangerous to allow prices to fall because we’re going to need to squeeze out as much production as we can to meet demand.
Based on what we’re seeing in industrial metals and gold the markets as expected to see some industrial demand big strength in both aluminum and copper is giving the market some support in this one of the reasons why oil isn’t falling out of bed despite being very overbought.
Javier Blass at Bloomberg pointed out that Vitol, the world’s largest independent oil trading company, has made more money in the last 3 years than during the past 30 years combined.
Gasoline prices are still above year-ago levels. AAA reports that The National Average was $3.598 slightly above yesterday and a year ago and about 5.7 cents a gallon a week ago.
You don’t have to go to Nova Scotia to see the total eclipse of the Sun but it might be a day that is not good for solar panels, sort of like when it hails or snows. The EIA reports that On April 8, 2024, a full solar eclipse will briefly but fully obscure sunlight to utility-scale solar generation facilities from Texas through Maine with a combined 6.5 gigawatts (GW) of capacity. In addition, the eclipse will partially block sunlight to facilities with a combined 84.8 GW of capacity in an even larger swath of the United States around peak solar generating time.
Solar-powered generators centered in the path of totality—where the moon will completely obscure the sun—will be affected the most because the moon will block all direct sunlight for more than four minutes. The partial eclipse could limit the sunlight in the path of totality for more than two hours. Areas around the path of totality will have varying levels of diminished solar generation during the eclipse. Because we know about the eclipse ahead of time, utilities have prepared and planned for the lost solar energy. Several grid authorities have released plans for how they plan to deal with the change in solar generation during the eclipse according to EIA. So, we have that going for us.
Natural gas rigs have fallen to the lowest level since January. Production of natural gas is starting to fall. Power burns for natural gas have been exceedingly high as low prices have encouraged demand we’re expecting to see an increase in supplies of about 15 BCF this week in the weekly report and it feels like the market is trying to put in the bottom. Still, the fundamentals in the glut is real so it’s probably best to be hedged with options.
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2 weeks ago
Energy sector price trend + seasonality is in perfect bullish alignment. BUT, has price gotten ahead of itself? IMO if you are long in this sector, expect some choppiness. If not, look for a potential buying opportunity if sector pulls back.
By: Jay Kaeppel | April 8, 2024
• Energy sector price trend + seasonality is in perfect bullish alignment. BUT, has price gotten ahead of itself? IMO if you are long in this sector, expect some choppiness. If not, look for a potential buying opportunity if sector pulls back.
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2 weeks ago
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 6, 2024
• Following futures positions of non-commercials are as of April 2, 2024.
WTI crude oil: Currently net long 327.9k, up 5.4k.
After jumping 3.2 percent last week, West Texas Intermediate crude added another 4.5 percent this week to $86.91/barrel. This week’s gains followed last week’s decisive range breakout. The crude went back and forth between $71-$72 and $81-$82 for a year and a half before pushing through the upper end last week.
WTI has come a long way since bottoming at $67.71 last December. Conditions are overbought, but oil bulls have wrested control of momentum for now. As things stand, in the best of circumstances, they have a shot at low-$90s.
In the meantime, as per the EIA, US crude production in the week to March 29th was unchanged for four consecutive weeks at 13.1 million barrels per day; six weeks ago, output was at a record 13.3 mb/d. Crude imports decreased 84,000 b/d to 6.6 mb/d. As did stocks of gasoline and distillates, which respectively declined 4.3 million barrels and 1.3 million barrels to 227.8 million barrels and 116.1 million barrels. Crude inventory, however, grew 3.2 million barrels to 451.4 million barrels. Refinery utilization dropped one-tenth of a percentage point to 88.6 percent.
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2 weeks ago
NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | April 6, 2024
NY Crude Oil Futures closed today at 8691 and is trading up about 21% for the year from last year's settlement of 7165. Caution is required for this market is starting to suggest it may now decline on the MONTHLY level. Currently, this market has been rising for 3 months going into April reflecting that this has been only still, a bullish reactionary trend. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 8763 while it has not broken last month's low so far of 7679. Nevertheless, this market is still trading above last month's high of 8321.
Up to now, we still have only a 3 month reaction rally from the low established during December 2023. 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.
From a perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains in a bullish position at this time with the underlying support beginning at 8550.
On the weekly level, the last important high was established the week of April 1st at 8763, which was up 16 weeks from the low made back during the week of December 11th. So far, this week is trading within last week's range of 8763 to 8260. Nevertheless, the market is still trading upward more toward resistance than support. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8763 made 0 week ago. Still, this market is within our trading envelope which spans between 6451 and 9199. The broader perspective, this current rally into the week of April 1st reaching 8763 has exceeded the previous high of 7960 made back during the week of November 27th.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend. Looking at this from a wider perspective, this market has been trading up for the past 16 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 September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in April, this market has held above last month's low of 7679 reaching 7679.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 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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2 weeks ago
Natural Gas Price Forecast: Bullish Reversal on Rally Above Today’s High
By: Bruce Powers | April 5, 2024
• Natural gas sees further weakness before finding support at 1.755. An intraday bounce suggests potential for a completion to the current pullback, but further confirmation is needed.
Further weakness in natural gas leads to support at 1.755 and an intraday bounce. The decline earlier in Friday’s session completed a 61.8% Fibonacci retracement before buyers took control. Natural gas is on track to close in the green if the close is above the open, as it is at the time of this writing.
The prior pullback triggered a bullish reversal after two days and the same may happen in this current pullback. If today’s low continues to hold as support, it will mark a successful test of support at the purple 20-Day MA and is a sign of improving short-term strength.
Rally Above Today’s High Signals Further Upside
Heading into next week, a bullish signal will be generated on a rally above today’s high of 1.82. That should mark the completion of the current pullback and set the stage for moving higher. Nevertheless, a rally above yesterday’s high of 1.85 provides greater confidence that demand is improving as it would also mark an advance back above the 50-Day MA, now at 1.84.
That should prepare natural gas for a rally above the most recent swing high of 1.91. It will trigger a continuation of the advancing CD leg of a rising ABCD pattern with an initial target at 2.08. A daily close above the 50-Day line would provide a key signal confirming an improving uptrend as the natural gas has traded below the 50-Day line since mid-January.
Weekly Bullish Reversal Intact
A bullish reversal triggered this week on the weekly chart and the week will end with a higher weekly high and higher weekly low, a sign of a developing uptrend. Support on the weekly chart was seen this week at the 8-Week MA. It is a sign of improving strength in the weekly time frame. However, the week is on track to close relatively weak, in the lower half of the week’s range and below last week’s high of 1.83. What it tells us is that the longer-time frame pattern has become more bullish. And the larger time frames impact price behavior in the shorter time frames. A variety of possible upside targets are marked on the chart. The first is at the completion of the ABCD pattern.
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2 weeks ago
Called Out. The Energy Report
By: Phil Flynn | April 5, 2024
Crude oil prices tried to retreat but rebounded after Peter Doocy at Fox News called out the Biden administration for reversing its “unwavering support for Israel” and asking about reports of a possible warning to Israel of a planned Iranian attack on Israeli soil. This was in response to a statement by US Secretary of State Anthony Blinken that said that U.S. policy will change if Israel doesn’t change course and its war against Hamas. Mr. Doocy asked, “Did the CIA warn Israel or did President Biden warn Netanyahu today about an Iranian plan to attack inside Israel within 48 hours?” John Kirby: said “I’m not going to talk about intelligence matters, Peter. I think you can understand. Um, but, um, they didn’t talk.
Reports swirling about a possible attack by Iran on Israeli soil would be a definite escalation of the proxy war between Iran and Israel. That put the market in risk aversion mode causing stocks to sell off, oil to rally as people prepared for what could be a major price spike if this confrontation happens. The risk to oil flows, especially coming out of Iran, would be put at risk. Also reports that the UAE would announce a suspension of all diplomatic ties with Israel. It’s another blow to the Mideast peace process that showed so much hope under Donald Trump when they signed the Abraham Accords.
The US Congress is continuing to call out the International Energy Agency (IEA) and sent them another letter demanding more information as to why the IEA has abandoned its historical commitment to nonpartisan and objective analysis for climate policy advocacy. And while they were at it, they may want to call out our own Department of Energy for being blasted about the misleading way that they try to justify Biden’s electric car push when data is, at the very least, downright misleading, if not intentionally written in a way to hide the truth.
The Hill reports that Biden’s EPA can justify his new EV rules only by cooking the books. They write that, “Before federal regulations are implemented, they must be justified with an extensive analysis of costs and effects. The new Environmental Protection Agency rule forcing a massive shift toward electric vehicles is no exception. Weighing in at 1,181 pages, it is accompanied by an additional 884 pages of “regulatory impact analysis.” The EPA analysis justifying this rule is not unique in its length, but it is unique in its dishonesty. In a must read they wrote, “EPA claims that the rule will reduce total greenhouse gas emissions over 2027-2055 by 7.2 billion metric tons. But despite a long and disingenuous discussion of the purported adverse effects of greenhouse gas emissions, EPA admits that it “did not…specifically quantify changes in climate impacts resulting from this rule in terms of avoided temperature change or sea-level rise.” The reason for that failure is obvious: The answer would be embarrassing. If we apply EPA’s own climate model, with assumptions that exaggerate the climate effects of reductions in GHG emissions, the rule would reduce global temperatures in 2100 by 0.0068 degrees Celsius — an effect far too small to be detectable.
Yet somehow, the EPA claims that the rule will yield “climate benefits” of $1.6 trillion. How is that possible for a near-zero effect on temperatures? As with the entire Biden climate regulatory regime across all agencies, EPA multiplies asserted reductions in greenhouse gas emissions by the “social cost of carbon,” a fictitious number that supposedly measures damage caused by the emissions.
The Daily Caller reported that, “A government watchdog group has filed a complaint with the Biden administration over its use of a dataset frequently used to push its climate agenda. They wrote, “Protect the Public’s Trust (PPT) filed the complaint with the Commerce Department over the National Oceanic and Atmospheric Administration’s (NOAA) “Billions Project” dataset, which purports to keep track of natural [and climate] disasters that have caused at least $1 billion in damages going back to 1980. The billion-dollar disasters (BDD) data — cited frequently by the Biden administration to insinuate that climate change is intensifying and justify sweeping green policies — is based on opaque data derived from questionable accounting practices, PPT alleges in the complaint.
This is just some misinformation and geopolitical risk factors creating the potential for a major oil price spike that the Biden administration may be hard-pressed to stop. So far it looks like their plans are to try to cool prices or to try to look like they’re going to be tough on Russia, Venezuela and Iran while at the same time allowing those countries to export their oil or at the very least, their oil products.
The cancellation of the buyback for the Strategic Petroleum Reserve this week shows that the Biden administration must be very concerned about the global oil supply deficit. Supply deficit that was in part created by the government manipulating the market with releases from the strategic petroleum reserve before they were needed. Biden’s misuse of the strategic petroleum reserve angered OPEC and other oil producers and that is a reason that OPEC and Russia have continued to be very cohesive in reducing global oil output. By artificially lowering prices, it did not help with a demand response or a production response to the real market conditions. And while the Biden administration may have benefited from the short-term price drop, it’s becoming more apparent with the looming global supply deficit that the misinformation provided by the reporting agencies and the SPR left the market short of supply.
Javia Blass says that all this turmoil will lead the Biden administration into a predictable pattern of damage control. First, they stopped further purchases for the SPR, then they announced there would be no reimposition of Venezuelan oil sanctions. Blass expects what will follow is to put pressure on OPEC to raise production. When that fails and it most likely will, they will start putting pressure on U.S. oil companies again probably calling them price gougers or war profiteers.” Lastly, they’ll go back to the bullpen and start releasing oil from the SPR even though it’s been depleted to the lowest level in over 40 years. Now there are also reports that the Biden administration is talking about lifting its terror designation on the rebels if they just promise to stop attacking ships in the Red Sea. I am assuming that the Biden administration is saying please on that one.
Russia is also talking about limiting gasoline exports. This could be in response to the attacks on the refineries by Ukrainian drones. Russian refineries will not be back to full operation until June according to Russia and it’s possible that the attacks on Russian refineries have not stopped.
In other words, it seems like the oil markets are getting shot out of their complacency. The reason why I continued to keep a bullish outlook, even when the prices looked over bought, was because I could see that beneath all the noise and the rhetoric, the supply versus demand fundamentals were much tighter than the market was giving it credit for. The reason why we suggested to keep hedged was exactly the situation that has been developing over the past few months. Despite all the doom and gloom about the economy and the potential for peak oil demand, we could see pretty clearly based on global daily demand versus daily global production as well as global inventories, that supplies are tighter than they’ve ever been or at least in a generation. And while the market seems to think this happened overnight, it’s been a long time since it’s been developing. The sad part about this is that a lot of this could have been avoided.
Natural gas got a bearish report. But the market is holding on to hopes of more production cuts. Working gas in storage was 2,259 Bcf as of Friday, March 29, 2024, according to EIA estimates. This represents a net decrease of 37 Bcf from the previous week. Stocks were 422 Bcf higher than last year at this time and 633 Bcf above the five-year average of 1,626 Bcf. At 2,259 Bcf, total working gas is above the five-year historical range.
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2 weeks ago
Natural Gas Pulls Back After Failed Breakout Attempt
By: Bruce Powers | April 4, 2024
• Natural gas retreats, testing key support near 8-Day MA at 1.77, following bearish candlestick pattern.
Following Wednesday’s bearish shooting star candlestick pattern, natural gas pulls back to test support around the 8-Day MA (1.77). It has fallen back below the long-term downtrend line and continues to trade near the lows of the day, at the time of this writing. The current low for the day is 1.77. If the retracement continues next watch for possible support around the 20-Day MA, currently at 1.74. This is just the first day of a pullback, so another one or two days of weakness would not be surprising.
Failed Breakout Above 50-Day Moving Average
Natural gas turned lower yesterday following a failed attempt to break out above the 50-Day MA. That was the first time it was approached since late last year. It is not unusual for price to be rejected the first time a common moving average is approached after being away from it for a while. Currently, it is at 1.86 and was tested as resistance earlier in today’s session and rejected to the downside.
Weekly Chart Shows Demand Increasing
When looking at the 8-Week MA on the weekly chart the situation with natural gas gains some clarity. Notice that this week’s low successfully tested support at the 8-Week line with a low of 1.71. Last week, the 1.75 closing price was above the 8-Week MA for the first time since the week of January 22. This shows momentum beginning to switch from bearish to bullish as a potential bottom further develops. There is only one more day to the week with the current weekly pattern reflecting some uncertainty about a bottom.
Weekly Bullish Reversal Triggered
Nonetheless, this week’s advance triggered a bullish reversal on the weekly chart. A close this week above last week’s high of 1.83 would be a stronger close than one below that price level. Currently, natural gas is trading below it. The weekly chart also shows a higher weekly low and higher high, to go along with the recent higher swing low. Each is a bullish sign.
So far upward momentum has been muted, but that can change quickly once the 50-Day MA is exceeded for a second time. A double bottom pattern remains a possibility, while the first higher target is at 2.08, which completes a rising ABCD pattern.
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2 weeks ago
Natural Gas Breakout Potential Above 50-Day MA
By: Bruce Powers | April 2, 2024
• Recent price action indicates optimism for natural gas, with potential for a breakout above the 50-Day MA and targets at previous swing highs.
Natural gas rallies to test resistance around the 50-Day MA with the day’s high of 1.88. So far, resistance has been seen off the high leading to a minor intraday pullback. Nonetheless, at the time of this writing, natural gas is on track to close strong, in the upper quarter of the day’s trading range, indicating it probably wants to go higher.
On Monday, sentiment improved as the daily close was above the long-term downtrend line for the first time since falling below the line on January 29. A daily close above the 50-Day line will provide the next confirmation of strength.
Improving Bullish Outlook
Recent price action has provided several reasons for optimism from the bulls. Natural gas has recently recaptured the 20-Day MA, exceeded the most recent swing high of 1.83, and closed above the long-term downtrend line. Further, the recent March 25 swing low is higher than the trend low from February. And natural gas is on track to close above the downtrend line for the second day today.
Watching for Close Above 50-Day Moving Average
If a daily close above the 50-Day line does occur, natural gas would next be heading towards previous swing highs. The first is at 2.01 and the second target is around 2.17. A decisive rally above the 2.01 price level will trigger a breakout of a bullish double bottom pattern that has set up since the recent higher swing low completed. When measuring the pattern, a potential target around 2.50 is identified. If reached, it would put the price of natural gas just below the 200-Day MA, currently at 2.57. If the 2.50 target is reached it wouldn’t be surprising to see prices rise to test the 200-Day line as well.
Note that a breakout above the 2.17 price target heads into a gap. Subsequent price levels to watch are then 2.31 and 2.42. However, there is an interim level within the gap at 2.235. That is a previous swing low and the 38.2% Fibonacci retracement.
Higher Swing Low Supports Continuation Higher
The definition of an uptrend is a series of higher highs and higher lows. Since the recent swing low of 1.59 is a higher low than the trend low at 1.52, part of the trend definition has been met. It is a defined trend once the higher high is in place. That will occur on an advance above the 2.17 price level. So, an advance above 2.17 will not only trigger a breakout of a double bottom pattern, but it will also confirm a rising trend.
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2 weeks ago
Oil At $85.00. The Energy Report
By: Phil Flynn | April 2, 2024
Oil is surging to another yearly high as demand expectations rise, supply falls, geopolitical risks rise and OPEC March Oil output falls by 50,000 bpd from February to 26.42 million bpd according to the latest survey. Export cuts by Mexico to the tune of 600,000 barrels a day come on a day when manufacturing data and prices paid data in the US came in much stronger than expected. Then heightened geopolitical risks rose higher after a missile attack hit an Iranian diplomatic building in Damascus that killed a senior Iranian general. Iran said it was an Israeli attack that would demand an Iranian response. Iran is blaming Israel and the United States.
Iran’s Ali Khamenei is vowing to punish Israel after the deadly attacks while Iran reportedly is in backdoor conversations with the United States to try to ease tensions that could boil over into a confrontation that both Iran and the United States are trying to avoid. Iranian state media said the attack on Monday killed a senior leader in the elite Quds Force of Iran’s Islamic Revolutionary Guard Corps, which oversees Tehran’s network of militia allies throughout the region. The commander, Gen. Mohammad Reza Zahedi, managed Iranian paramilitary operations in Syria and Lebanon, according to Iranian state media and U.S. officials.
This came after a report that the Chinese manufacturing sector expanded stronger than anticipated. We also got a report from the ISM manufacturing here in the United States that showed that the US manufacturing sector is rebounding.
Bloomberg News reported that US factory activity unexpectedly expanded in March for the first time since September 2022 on a sharp rebound in production and stronger demand, while input costs climbed. The Institute for Supply Management’s manufacturing gauge rose 2.5 points to 50.3 last month, according to data released Monday. While barely above the level of 50 that separates expansion and contraction, it halted 16 straight months of shrinking activity. That report added to demand expectations for oil and products. And with the global well supply deficit already developing, the increased risk to supplies will keep the market on edge. Oil products like gasoline and diesel are starting to bounce back after being skeptical about the move but the inventories for products around the globe are below average and that should keep the market well supported on breaks. Bloomberg reported, “Mexico’s Pemex will ship less oil in a push to feed domestic refineries reducing Mexico’s exports by about 600,000 barrels a day of Maya crude oil.
There are more questions as to whether the US oil and gas industry can continue to overcome the hostile regulatory environment of the Biden administration. The American Petroleum Institute (API) is warning that the US will lose its energy advantage as the Biden administration continues to push short-sighted regulations on electric vehicles and new methane taxes that will severely curtail US oil and gas production and give our advisories a huge economic and military advantage.
In a release, the API and the Energy Workforce & Technology Council joined with 18 other associations representing all segments of the U.S. oil and gas industry operating across the country in calling on the U.S. Environmental Protection Agency (EPA) to revise its “misguided” methane fee on American energy. In comments submitted to the agency on the “waste emissions charge” proposed rulemaking, the associations argued that EPA’s proposed rule creates an incoherent regulatory regime, fails to meet the statutory requirements outlined by the Inflation Reduction Act, and disincentivizes emissions reduction efforts by the industry. “This tax on American energy is a serious misstep that could jeopardize our nation’s energy advantage and weaken our energy security,” said API Senior Vice President of Policy, Economics and Regulatory Affairs Dustin Meyer. “U.S. oil and natural gas is innovating throughout its operations to reduce methane emissions while meeting growing energy demand. Yet, this proposal creates an incoherent, confusing regulatory regime that will only stifle technology advancements and hamper energy development. With partners across the industry, we will consider all options to ensure a smart regulatory framework for continued American energy development.”
One way to reduce greenhouse gas emissions of course is going nuclear just don’t tell Jane Fonda. But the reality is that nuclear may play an even bigger part in the world’s quest to reduce greenhouse gas emissions than many may have imagined. Bloomberg News is reporting that, “US oil companies including Diamondback Energy are considering small nuclear reactors to power drilling operations in Texas’s Permian Basin. And for all those young people that are worried about climate change, wait till we tell them that we’re going to be using small nuclear reactors to power oil drilling. I don’t think they’ll ever leave their safe spaces again.
Natural gas seems to have everything against it but the charts look like they’re trying to turn positive. There is a strong seasonal tendency for the September natural gas to rally over the next month but it’s still facing some incredible hurdles when it comes to the supply side and the lack of winter. This late blast of winter is too little too late to have a meaningful impact but what could have an impact is continued production cuts at some point this comes as the Energy Information Administration touts the fact that the US is the biggest LNG exporter in the world which is a great thing if you want to replace coal around the world.
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3 weeks ago
Natural Gas Bullish Weekly Reversal Points to Higher Prices
By: Bruce Powers | April 1, 2024
• Bullish momentum in natural gas confirmed, with potential for breakout to higher prices as technicals show signs of strength.
Natural gas triggered a bullish reversal on Monday in both the daily and weekly time frames, as it advanced above Friday’s high and then exceeded last week’s high of 1.83. It continues to trade near the highs of the day at the time of this writing and is well positioned to close strong, in the upper quarter of the day’s range. In addition, natural gas has a chance to end Monday’s session above last week’s high, which would further confirm strength. It is on track to close above both the 20-Day MA (purple) and long-term downtrend line. Each metric shows improving strength in demand. Natural gas has not been able to close above the downtrend line since January 26.
Second Bottom is Set for Potential Double Bottom
Today’s advance confirms the completion of a minor pullback and further confirms the higher swing low bottom from four days ago at 1.59 (C). A higher swing low is a sign of strength and is bullish. It begins the second leg up of a rising ABCD pattern. The initial target from the pattern completes where there is symmetry between the two swings, at 2.01. The secondary target, where the CD leg of the advance is extended by 127.2% of the AB leg, is at 2.21.
Eyeing Recapture of Downtrend Line
Once a daily close occurs above last week’s high, and above the downtrend line, the chance for a continuation higher improves. The next key encounter will be with the 50-Day MA (orange) at 1.90, as it represents dynamic resistance for the recent part of the downtrend. Natural gas has been trading below it since January 18. A daily close above the 50-Day line will show further signs of strengthening and again improves the possibility of the developing uptrend continuing to higher prices.
Higher Swing Low is Sign of Demand Improvement
The completion of the higher swing low at point (C) increases the chance for an eventual breakout of a double bottom pattern as the setup exists. However, as with all patterns, they need a trigger to confirm a breakout. That will happen on the double bottom pattern on a rise above the most recent swing high at 2.01. Subsequently, a daily close above that high will confirm the double bottom. It will also put natural gas in a position of having a higher swing high to follow the recent higher swing low.
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3 weeks ago
No Fooling. The Energy Report
By: Phil Flynn | April 1, 2024
Oil and commodities are on fire with gold hitting a new all-time high and copper soaring after China’s manufacturing data hit a six-month high. China’s purchasing managers index rose to 50.8 from 49.1 in February beating expectations and Fed Chair Jerome Powell said that the February personal-consumption expenditures data was “pretty much in line with expectations,” and that he didn’t see elevated inflation risks. Oil trade should stay solid as Russia plans to cut its diesel exports by sea in April to a five-month low in the daily flows of exports from Russian ports are down 21%. Bloomberg is showing the impact of the diesel flows as Ukrainian drones hit Russian refineries. Russia has responded by attacking Ukraine’s energy infrastructure as well and we saw reports of power outages in Odessa and Kharkiv over the weekend. That, along with expectations that OPEC and Russia will follow through with their production cuts, is adding to the likelihood of an oil supply deficit as we head into the summer driving season.
Yet despite the turmoil around the globe, it seems that the Biden Administration wants to give China another big win at the expense of the US taxpayer as it drives deep into its fool-hardy obsession with electric vehicles. No fooling. China is getting a big boost of economic stimulus in part courtesy of the Biden administration as it believes they try to force electric cars down the throats of US businesses that don’t want them with no discernible help to the environment or have any impact on climate change. No fooling.
Yes, we are seeing oil prices start firm and a new record high in gold and a surge in copper prices as Chinese manufacturing hits a six-month high. So, it is head scratching time to see the Biden administration foolishly double down and its foolhardy attempt to try to electrify automobiles and the US truck fleet. A task that doesn’t make sense from a scientific standpoint but if you believe some of the economic pain it will cause and the advantage it gives to China, somehow atones for what they see as environmental injustices.
The Hill writes that, “An estimated 72 million Americans, often people of color or people with lower incomes, live near freight truck routes,” EPA Administrator Michael Regan said. “These communities are disproportionately exposed to the pollution from heavy-duty vehicles, resulting in higher rates of respiratory and cardiovascular illnesses and even premature death,” he added. “Reducing emissions from our heavy-duty vehicles means cleaner air and less pollution.” The Biden administration is fooled into believing that they are saving the planet but foolishly what they are doing is costing the US jobs and adding to inflation.
For the sake of optics, they foolishly enrich China which will benefit from this foolish policy while it may add to carbon emissions. While the EPA tries to tell us that this plan will “avoid” one billion metric tons in CO2 emissions from 2027 through 2055.
The Wall Street Journal points out that emissions from China and India rose last year alone. The Wall Street Journal points out that the, “EPA says its big-rig quotas are feasible because the Inflation Reduction Act and 2021 infrastructure law include hundreds of billions of dollars in subsidies for EVs. This includes a 30% tax credit for charging stations, a $40,000 tax credit for commercial EVs, and a tax credit for battery manufacturing that can offset more than a third of the cost. IRA tax credits for electric trucks aren’t conditioned on the source of battery material, so expect most to come from China. China’s BYD was California’s top-selling electric truck maker in 2022. Biden officials say Chinese green-technology manufacturers are flooding the U.S. market, but their mandates and subsidies are the reason.” They foolishly don’t even consider the real cost and it’s the real impact on inflation. They are foolish enough to believe that somehow, it’s OK to destroy the middle class by increasing their costs in the name of what they call environmental justice, which is kind of like a religion, to them I guess. Of course, these are the same people who foolishly believe that calling Easter, the most holy day in the Christian calendar, Transgender Day of Visibility would not be deeply offensive to Christians all over the world. This administration seems to offend anybody who gets in the way of their agenda and gets offended by the truth.
The Biden administration had harsh words for the US oil and gas industry as well as mom-and-pop gas station owners whom they accused of being price gougers and war profiteers. This is an administration that then turned a blind eye to Iranian oil sanctions and allowed Iran to make billions of dollars while they spread their errors throughout the world by supporting terror groups like Hamas, Hezbollah and the Houthi rebels. The Biden administration also is now not going to enforce sanctions on Venezuela mainly because they’re concerned about rising gasoline prices and imperiling Biden’s reelection chances.
We saw an uptick in gasoline demand as spring break and Easter travel gave us a bounce. AAA says that, “Gas prices are at 3.536 a gallon slightly more than yesterday and more than a week ago an about 14 cents a gallon more than a week ago. Prices are in overbought territory but we don’t see a big correction coming anytime soon. More than likely there will be a little bit of consolidation as we start to move higher. Inventory this week is expected to be relatively flat but we could see a drop in products like gasoline and diesel. OPEC and Russia are showing unity.
Natural gas prices continue to struggle even as Chesapeake Energy plans to put 80 new natural gas wells into suspended animation by the end of this year other firms like QG are shutting in wells we’ll see if it gives the market a bit of support.
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3 weeks ago
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | March 30, 2024
• Following futures positions of non-commercials are as of March 26, 2024.
WTI crude oil: Currently net long 322.5k, down 14.6k.
Bulls were in no mood to let last week’s potentially bearish weekly gravestone doji dictate things. The candle was not confirmed this week, as West Texas Intermediate crude jumped 3.2 percent to produce a weekly bullish marubozu, ending at $83.17/barrel, with the intra-week high of $83.21 just ahead of last week’s high of $83.12.
In the meantime, this is also the first time since last November that the crude decisively closed above the upper end of an 18-month range between $71-$72 and $81-$82.
WTI has come a long way since bottoming at $67.71 last December. Conditions are overbought, but, as things stand, oil bulls are back into the saddle.
In the meantime, as per the EIA, US crude production in the week to March 22nd was unchanged week-over-week at 13.1 million barrels per day; a month ago, output was at a record 13.3 mb/d. Crude imports increased 424,000 b/d to 6.7 mb/d. As did stocks of crude and gasoline, which respectively grew 3.2 million barrels and 1.3 million barrels to 448.2 million barrels and 232.1 million barrels. Distillate inventory, however, decreased 1.2 million barrels to 117.3 million barrels. Refinery utilization increased nine-tenths of a percentage point to 88.7 percent.
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3 weeks ago
NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | March 29, 2024
NY Crude Oil Futures closed today at 8317 and is trading up about 16% for the year from last year's settlement of 7165. Up to now, this market has been declining for going into 2024 reflecting that this has been only still a bearish reactionary trend.
Up to now, we still have only a 2 month reaction rally from the low established during December 2023. We must exceed the 3 month mark in order to imply that a trend is developing.
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 in a bullish position at this time with the underlying support beginning at 8265.
On the weekly level, the last important high was established the week of March 18th at 8312, which was up 14 weeks from the low made back during the week of December 11th. So far, this week is has moved to the upside exceeding last week's high of 8312 reaching 8321. A closing above last week's high would be a technical signal that the advance is still in motion just yet. This makes the current rally 1 weeks to date. .
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8312 made 0 week ago. Still, this market is within our trading envelope which spans between 6295 and 8977. The broader perspective, this current rally into the week of March 18th reaching 8312 has exceeded the previous high of 7960 made back during the week of November 27th. Right now, the market is neutral on our weekly Momentum Models warning we have overhead resistance forming and support in the general vacinity of 7584. Additional support is to be found at 7141. Looking at this from a wider perspective, this market has been trading up for the past 14 weeks overall.
INTERMEDIATE-TERM OUTLOOK
Looking at the longer-term monthly level, we did see that the market made a high in September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in March, this market has held above last month's low of 7141 reaching 7141.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 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
Biden Panic Buying. The Energy Report
By: Phil Flynn | March 28, 2024
What does it say that the Biden administration is starting to buy oil back for the Strategic Petroleum Reserve (SPR) above their stated $70.00 to $67.00 a barrel buying price, purchasing oil at $81.32 a barrel? Is it possible that the Biden administration is fearful that we’re going to get another spike in price? Or are they trying to fill it up in anticipation of something more ominous? Are they worried about the report from energy consultancy Wood Mackenzie that warns that more than one firth, or 21%, of global refining capacity is at risk of closure due in part because of what Saudi Aramco Chief Executive Amin Nasser said this week was a failed and flawed energy transition? Are they starting to worry that major reporting agencies like the International Energy Agency are starting to predict an oil deficit something The Energy Report of course has been warning about for over a year? Perhaps they are starting to worry about more predictions like that of Morgan Stanley about calls for a return to $100.00 a barrel of oil. Are they worried that heading into an election year, we’re seeing gasoline prices start to rise and the defense of their green energy policy is not going to play well on Main Street America?
Perhaps they are concerned that their political motivated use of our strategic reserves has left the country more vulnerable as the Biden foreign policy has failed to reduce risk to global energy supply and global supply chains. Biden’s presidency has seen the risk to global energy supply higher than it has been in at least a half of century. The easing up on Iran has allowed Iranian oil production to hit the highest level since 2018 and has put billions of dollars in their coffers so they can fund their friends in Hamas, Hezbollah, and the Houthi rebels. Perhaps there is worry that the country is not going to be able to respond to a major oil price disruption.
Of course it doesn’t help that the Biden administration has demonized the US oil and gas industry and created more regulations with heavy-handed tactics that are not based in real science and is discouraging investment in the US oil and gas space which is leading some people to predict that US energy production will peak and start to fall. It doesn’t help that the Biden administration killed the Keystone XL pipeline for purely political purposes. Government studies show that the Keystone Pipeline would not have added to greenhouse gas emissions so the decision to kill the Keystone XL pipeline was purely political. Now with the global supply of oil being exceedingly tight, especially that of heavy oil, the Keystone Pipeline could have moved oil much more efficiently and safely than it’s being moved today.
Regardless of the oil and oil products, the fundamental outlook must be putting major pressure on this administration that is trying to convince you that they have reduced inflation even as everyone knows that the opposite is true. Perhaps they are upping the purchases or the SPR regardless of price because of previous comments by Energy Secretary Granholm’s impossible promise to refill the reserve by the end of the year. She was quoted as saying, “By the end of this year, because of crude purchases, the reserve is expected to “be back to essentially where we would have been had we not sold during the invasion of Ukraine,” after accounting for the cancellation of 140 mn bl of congressional mandated crude sales that were scheduled through 2031. Or maybe it’s just a realization that they’re starting to panic because they used the Strategic Petroleum Reserve as a measure to lower gasoline prices before the war in Ukraine started and now the world is at risk of a major supply shortage and they might not have enough well in the bank to cover in the event of a global disruption.
The Biden administration misused the SPR by changing the definition of the reserve as a reserve to be used in the event of an emergency not in the event of a political crisis. It was never meant to be used as a price control mechanism.
What does it mean when a People’s Bank of China adviser admits that the Chinese past regulatory tightening has hurt the confidence of investment in China? No, US Treasury Secretary Janet Yellen has the nerve to call out China saying that they should never flood the world with cheap energy exports saying it would disrupt global markets and harm workers. Of course, that’s pretty funny because she supported Biden’s release from the Strategic Petroleum Reserve. Is she trying to say that Biden’s release from the Strategic Petroleum Reserve didn’t distort global markets and harm workers? Is she saying that the killing of the Keystone Pipeline didn’t harm workers? Is she saying that the drilling moratorium and regulatory environment didn’t hurt workers in the US oil and gas industry?
Well, the reality is that we’re starting to see oil prices start to react to the global situation. Crude oil prices are surging back to the high after they put into perspective yesterday’s Energy Information Administration report that wasn’t nearly as bearish as the American Petroleum Institute report. Gasoline supplies on the West Coast seem to be tightening significantly which means California is going to see another price spike in gasoline and leave the nation with higher prices.
The EIA said that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.2 million barrels from the previous week. At 448.2 million barrels, U.S. crude oil inventories are about 2% below the five year average for this time of year. Total motor gasoline inventories increased by 1.3 million barrels from last week and are about 1% below the five-year average for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 1.2 million barrels last week and are about 6% below the five-year average for this time of year. Total commercial petroleum inventories increased by 5.3 million barrels last week. Total products supplied over the last four-week period averaged 20.1 million barrels a day, up by 2.2% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.9 million barrels a day, up by 0.9% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels a day over the past four weeks, up by 2.2% from the same period last year. Jet fuel product supplied was up 0.4% compared with the same four-week period last year.
Berkeley, CA had to reverse its ban on natural gas. Hopefully the rest of the country will do the same, especially in New York where the natural gas ban and new building is going a have devastating effects on the New York economy. Of course the New York economy it’s a mess anyway. Natural gas traders are hoping for a resumption of the Freeport LNG terminal quickly so LNG exports can start to surge. Natural gas production is showing some signs of easing off.
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3 weeks ago
Natural Gas Symmetry Pattern Points to Higher Targets
By: Bruce Powers | March 27, 2024
• Natural gas is testing support at the 8-Day MA and 1.70 level, with a bullish reversal indicated on the weekly chart.
Natural gas pulls back below Tuesday’s low to test support at the 8-Day MA. Support and the low of the day for Wednesday was at 1.70, at the time of this writing, and the 8-Day line is at 1.70. As of Monday’s 1.59, swing low (C), natural gas began the second leg up of a rising ABCD pattern. It remains valid unless there is a drop below 1.59.
Higher Swing Low Points to Improving Demand
Since there is now a higher swing low at 1.59, natural gas is showing improving underlying demand. It is still early but that is the situation currently. Therefore, the expectation is for the initial target from the ABCD pattern to be reached. It completes at 2.08, which is where there is price symmetry between the CD leg and the AB leg of the pattern. That target is then watched as any pivot level may be. Either resistance is seen or a breakout through the target zone follows and natural gas heads towards higher price levels.
Resistance Seen at Long-term Downtrend Line
Nevertheless, the next potential barrier that needs to be busted for further signs of strength is yesterday’s high of 1.83. Notice that resistance was seen right at the long-term downtrend line. That line was successfully tested as resistance twice previously (red circles). Therefore, it represents the next important barrier to be broken if the bulls are going to take back control. If it is exceeded to the upside, the next target zone would be around the 50-Day MA.
50-Day Line at 1.94 Also Upside Target
The 50-Day line is currently at 1.94 and is confirmed by the important prior trend low from April 2023. It was critical support at the same price in 2023 and now it is potentially significant resistance. That also means that a bust-up through that price level should see demand increase as it will mark a key improvement in the developing uptrend. Although, keep in mind that it is a counter-trend rally within a larger downtrend price structure.
Weekly Bullish Reversal Signaled
Currently, natural gas is showing a bullish reversal on the weekly chart, which is an outside week. A weekly close above last week’s high of 1.77 will provide a stronger sign of strength than a close below that level.
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3 weeks ago
API Surprise. The Energy Report
By: Phil Flynn | March 27, 2024
As the market prepares for the upcoming Easter holiday and with the oil market closed on Good Friday, a shocking build in crude supply might be a bit hard to shake off. The American Petroleum Institute (API) reported a massive 9.337-million-barrel increase in crude supply along with a much larger-than-expected 2.392-million-barrel increase in crude oil supply. The surge in crude supplies would be welcome news for refiners but it does have people questioning how we could have seen such a large increase in just one week. We do know that refinery maintenance issues helped increase supplies at Cushing, OK. We know that ongoing refinery maintenance issues could be partly to blame. Regardless, the increase in size was stunning just to say the least.
Oil exports and oil production are going to be monitored very closely if it weren’t for the fact that we saw a very large 4.437 million barrel drop in gasoline inventories, the market might have fallen apart on light volume that gets lighter as we get closer to the end of this shortened trading week. Distillates barely moved the needle, increasing by just 531,000 barrels. Today the market is going to analyze the Energy Information Administration report to see if this build is an aberration or if there’s something in the data that suggests a significant drop in demand.
We do know that consumer confidence, according to yesterday’s data, took a big hit. The consumer confidence board reported that the consumer confidence index fell to 104.7 this month from a revised 104.8 (originally106.7) in February and below market expectations. Consumers feeling the heat from inflation not only in rising gasoline prices but also at the grocery store are raising concerns that they may pull back when it comes to driving vacations and discretionary spending. Gasoline demand is going to be watched very carefully because if it drops, it means to consumers have hit a point where they need to pull back.
Even Russia’s commitment to cut production to 9 million barrels a day by June didn’t seem to have a lasting impact on prices. Still, the reduction in Russian oil production combined with reduced refining capacity should continue to keep the squeeze on supplies in Europe and globally. This comes as increased sanctions on Russia lead to payment delays. Reuters is reporting that, “Russian oil firms face delays of up to several months to be paid for crude and fuel as banks in China, Turkey and the United Arab Emirates (UAE) become more wary of U.S. secondary sanctions, eight sources familiar with the matter said. Payment delays reduce revenue to the Kremlin and make them erratic, allowing Washington to achieve its dual policy sanction goals – to disrupt money going to the Kremlin to punish it for the war in Ukraine while not interrupting global energy flows.”
Going into the Easter holiday we are seeing gasoline prices that are higher than they were yesterday, higher than they were a week ago, higher than they were a year ago. Today gasoline prices are clocking in at $3.53 .5 per gallon. That is up two cents from a week ago, 22 1/2 cents from a month ago and about a dime higher than they were a year ago. The trend of falling gasoline supplies needs to be reversed. It’s going to be interesting to see if there are any signs that that will happen in the Energy Information Administration report.
The market is trying to assess its supply chain issues when it comes to the tragic Francis Scott Key bridge collapse in the port of Baltimore. Close Point LNG said that their operations are going to continue as normal as their facilities were south of the bridge collapse therefore their exports will not be impacted. Car manufacturers, mainly Mazda, is going to have significant supply chain issues until the port is reopened. The port of Baltimore is the major import and export point for many automakers especially some of the higher end brands. It is a major hub for Domino sugar and some of their products also could be harder to find.
Fox News is reporting that safety investigators will probe whether dirty fuel contributed to Francis Scott Key Bridge collapse. They write that, “A safety investigation into the Francis Scott Key Bridge collapse in Baltimore, Maryland, will include whether contaminated fuel was a factor in a cargo ship losing power and crashing into the bridge. Investigators had not boarded the ship, a 948-foot-long container ship called the Dali, as of late Tuesday while it remained stuck on a pillar of the collapsed bridge, and the vessel could stay there for weeks. Rescue crews spent much of Tuesday searching for potential survivors, but officials announced that the search and rescue had been turned into a recovery operation.
Fox News said that, “blackouts at sea are uncommon, but they do happen and have long been viewed as a major accident risk for ships on the water. One cause of ship blackouts is contaminated fuel that can create problems with its main power generators, said Fotis Pagoulatos, a naval architect. He said a complete blackout could result in a ship losing propulsion and that smaller generators can kick in, but they are unable to carry all the functions of the main ones and take time to start.
The Wall Street Journal reports that “The owner of the Domino Sugar refinery at Baltimore’s port says the plant has six to eight weeks of raw sugar stockpiled at the facility and that it expects no short-term disruptions to its operations from the bridge collapse blocking the mouth of the harbor. The refinery, which boasts the last working smokestack on Baltimore’s increasingly residential waterfront, began operations in 1922. A spokeswoman for Domino owner ASR Group said a ship is currently unloading raw sugar at the refinery’s dock and another ship finished unloading on Monday.”
Natural gas continues to be one of the cheapest hydrocarbons on the planet. It’s good news for the industry that the Cove Point LNG export terminal is still operational because they really can’t afford to see anymore export terminals shutdown. The truth is that natural gas continues to be a bridge fuel for any energy transition and maybe that reality is starting to dawn on people. Even people in places like Berkeley CA..
The AP reports that, “The city of Berkeley, California, has agreed to halt enforcement of a ban on natural gas piping in new homes and buildings that was successfully opposed in court by the California Restaurant Association, the organization said. The settlement follows the 9th U.S. Circuit Court of Appeals’ refusal to reconsider a 2023 ruling that the ban violates federal law that gives the U.S. government the authority to set energy-efficiency standards for appliances, the association said in a statement last week. “While the Ninth Circuit’s ruling renders this particular ordinance unenforceable, Berkeley will continue to be a leader in climate action,” Berkeley City Attorney Farimah Faiz Brown said in an email to The Associated Press.
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3 weeks ago
Natural Gas Bullish Weekly Reversal Signals Strong Potential for Higher Targets
By: Bruce Powers | March 26, 2024
• Natural gas shows bullish signs with a reversal above key levels, indicating potential for higher targets, first around 1.95 to 2.01.
A bullish reversal triggered today in natural gas as it got back above the 20-Day MA line (purple) and above the most recent interim swing high of 1.77. Further, a weekly bullish reversal was also triggered as last week’s high of 1.77 was exceeded to the upside. If natural gas can stay above the 20-Day line, currently at 1.77, it has a chance to test higher target levels.
Next Target Zone is 1.95 to 2.01
The next higher target zone looks to be around 1.95 to 2.01. That price zone includes the prior bottom of the downtrend at 1.95, please the 50-Day MA (orange), and the bottom of the descending trend channel (blue dash). In addition, the top of the range is from the most recent swing high on March 5. That high is now the neckline of a potential double bottom bullish reversal pattern. If Monday’s low of 1.59 continues to be the low of the most recent retracement, natural gas should continue to advance from that low.
Rising ABCD Pattern Symmetry at 2.08
A rising ABCD pattern hits its first target at 2.08 and identifies that price level as a key pivot. Either resistance is seen there, as it marks the point of symmetry between the two legs of the pattern, or buyers remain in control and there is a breakout through that price zone. If a breakout occurs, the next higher price zone is 2.17, the bottom boundary of a prior gap.
Of course, an advance above 2.17 puts the price of natural gas into the gap and increases the chance it might eventually fill. The second target from the ABCD pattern is at 2.21. It is derived by applying the 127.2% Fibonacci ratio to the AB leg of the pattern and then that new price distance is applied to the C point to identify a D target.
Potential Double Bottom
As noted above, a potential double bottom has now formed on the chart. A decisive rally above the mid-point at 2.01 triggers a pattern breakout. By taking the height of the pattern in price and adding it to the neckline, a target of 2.50 is calculated from the double bottom.
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