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Natural Gas Targeting Higher Levels
By: Bruce Powers | May 9, 2024
• The current natural gas rally suggests a move towards 2.37-2.465, backed by various technical indications.
Natural gas triggered a bullish continuation today as it rallied above the prior trend high of 2.27. It is on track to possibly close above that price level and confirm the breakout. It will be a clearer sign of strength if it does close above 2.27. Resistance for the day was seen at a high of 2.31, an interim target defined from a prior swing low. Today’s advance followed a retest of support with a low of 2.15, before buyers took back control.
Bullish Price Action Improves Chance of Hitting 2.37 and Higher
Bullish price action seen today improves the chance that natural gas reaches the next higher target zone. It is anchored around the 200-Day MA, currently at 2.465. Given the current trajectory of the trend and the fact that the 200-Day line has not been tested as resistance since late-January, there is a good chance the 200-Day line may be reached. It is the top of a potential resistance zone that starts at 2.37, which is the completion of a rising ABCD pattern where the CD leg of the advance is 161.8% of the AB leg. Also, a minimum target from the bottom symmetrical triangle completes at 2.37 (light blue arrows).
Measured Move Completes at 2.40
A little higher, at 2.40, a measured move completes. That is where the current rally matches the advance from the December 13 low on a percentage basis. The December rise was 51.8% and the current rally matches at 2.40. It would reflect price symmetry between different swings. The December rally was the last advance that was greater than the previous three, which all followed the December rally. It is also close to a match with the rally that began from the August 24 swing low last year. And that rally was just prior to the December advance. Natural gas advanced by 50.2% from that low.
Can the price of natural gas extend beyond the 200-Day MA. Of course it can, but the resistance zone noted above is backed by multiple indications that a potentially significant resistance zone begins at 2.37. The risk of a retracement will be highest upon entering the 2.37 to 2.465 price zone.
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Natural Gas Potential Pullback Ahead as Price Approaches Key Levels
By: Bruce Powers | May 8, 2024
• Natural gas price movement suggests potential for a deeper retracement, with key levels at 2.09, 2.01, and 1.95 to 1.93 on the downside.
Additional consolidation around this week’s high of 2.26 continues in natural gas today as it tests support around 2.17. The 2.17 price level was busted last week on the rally to the 38.2% Fibonacci retracement target zone and now is showing minor support. Further signs of strength were seen briefly earlier in today’s session as the 2.26 high was exceeded to reach 2.27. However, it looks like natural gas may end in the red and short-term bearish, in the lower third of the day’s price range. Subsequently, if it falls below today’s low of 2.17 a deeper retracement may be in the works. And a decline below Tuesday’s low of 2.14 would further secure the pullback.
Failed Continuation
Price areas to watch on the way down include 2.09, 2.01, and a range from 1.95 to 1.93. The first level was previously the trend high from April 30. It is followed by the initial target from the rising ABCD pattern. And the lower range is derived from the April 2023 trend low and 50% retracement, respectively. Given today’s minor weakness following a new trend high, it looks likely that a pullback may come before new trend highs. Even if a new high is launched it may quickly encounter resistance as seen today as the launch pad is of questionable integrity.
Upside Target Begins at 2.37
Nevertheless, if the trend does continue higher, the next primary target zone is from around 2.37 to 2.47. The relatively long-range begins an approach towards the 200-Day MA at 2.40. A rising ABCD pattern with the CD leg extended by 161.8% of the AB leg is at 2.46. Moreover, a measured move completes at 2.40, followed by the 50% retracement at 2.37. The measured move is a match with the rally from the December 13 swing low on a percentage basis. That rally saw the price of natural gas rise by 51.8%. A similar percentage advance in the current rally completes at the 2.40 price level. The December 13 advance is being used as it was the largest advance of the past three rallies.
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Crude Inventories Decline By 1.4 Million Barrels
By: Vladimir Zernov | May 8, 2024
Key Points:
• Strategic Petroleum Reserve increased from 366.3 million barrels to 367.2 million barrels.
• Domestic oil production remained unchanged at 13.1 million bpd.
• Oil prices rebounded from session lows as traders reacted to the report.
On May 8, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories declined by 1.4 milion barrels from the previous week, mostly in line with the analyst consensus. At current levels, crude inventories are about 4% below the five-year average for this time of the year.
Total motor gasoline inventories grew by 0.9 million barrels, while distillate fuel inventories increased by 0.6 million barrels.
Crude oil imports increased by 198,000 bpd from the previous week, averaging 7.0 million bpd. It should be noted that crude inventories declined despite the material increase in crude oil imports.
Strategic Petroleum Reserve increased from 366.3 million barrels to 367.2 million barrels as U.S. continued to buy oil for strategic reserves.
Domestic oil production remained unchanged at 13.1 million bpd, which is not surprising as oil prices have been moving lower in recent weeks.
WTI oil rebounded from session lows as traders reacted to the EIA report. Currently, WTI oil is trying to settle above the $78.50 level. The recent pullback was driven by the material decline in geopolitical risk premium for oil. Traders do not believe that Israel – Hamas conflict will lead to any disruptions in the oil supply.
Brent oil is trying to climb above the $83.00 level as traders focus on declining crude inventories in the U.S.
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$OIL $XLE $BPENER - Recall we are under the kosh with the percentage of stocks on Point & Figure Buy signals having been up in reversal territory (Red Band)
By: Sahara | May 8, 2024
• $OIL $XLE $BPENER - Recall we are under the kosh with the percentage of stocks on Point & Figure Buy signals having been up in reversal territory (Red Band).
Where I showed the Bear 'Wedge's which have fulfilled their targets for the stocks...
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Natural Gas Testing Resistance Levels Amidst Bullish Momentum
By: Bruce Powers | May 7, 2024
• As natural gas approaches resistance levels, a breakout above 2.23 could lead to testing higher potential resistance areas, including the 200-Day MA at 2.47.
Natural gas pauses its ascent to again test resistance around the 38.2% Fibonacci retracement, which is at 2.24. Today’s high was 2.23, at the time of this writing, and natural gas is poised to end Tuesday with an inside day bullish doji hammer candlestick pattern. It reflects continuing strength in the advance. Further, Monday’s high slightly exceeded the 38.2% resistance zone to reach a trend high of 2.26 before turning down. Another rise above the 38.2% price area could see a continuation of the rising trend if signs of strength continue thereafter.
Inside Day Sets Up
An inside day provides a potential bull trend continuation setup. A decisive advance above today’s high would trigger the breakout. Then, further signs of strength should be seen to reflect increasing demand, including a daily close above today’s high. Once yesterday’s high is exceeded, the path is clear to test higher potential resistance areas. As noted in prior articles, the key higher price area to watch is around the 200-Day MA, now at 2.47. It is also marked by the 50% retracement at 2.46. In addition, a measured move completes at 2.40.
Measured Move Targets 2.40
The measured move is looking for a match with the mid-December rally on a percentage basis. That rally ended at a high of 3.39 to complete a 51.8% advance. A similar size move for the current rally completes at 2.40. It deserves attention especially since the target is close to the 200-Day line. When two or more indicators identify a similar price zone, it is the market’s way of identifying an area of interest. Since there is some distance to be traveled to approach the 200-Day line, it is anticipated to act as resistance on the first approach.
Watch Support on Deeper Pullback
Alternatively, if a deeper pullback happens before a bullish continuation, a drop below today’s low of 2.14 will provide the next sign of weakening. Yesterday’s low of 2.13 may act as near-term support, but if not the prior recent trend high at 2.09 is then a target. During uptrend, it is common for resistance around a prior trend high to act as support during pullbacks.
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Interesting read
$WTIC $OIL - Seeking out the 3rd Target from that Bear Plot...
By: Sahara | May 7, 2024
• $WTIC $OIL - Seeking out the 3rd Target from that Bear Plot...
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What Cut? The Energy Report
By: Phil Flynn | May 7, 2024
The oil market was trying to get its hands around the impact of Israel’s military operation in Gaza against a backdrop warning from a Chevron CEO about upside risk to the price of oil when Russia’s Alexander Novak seemed to pull cold water on one of the bullish oil market narratives.
Oil rose as Israeli forces took control of the Palestinian side of Rafah crossing in Gaza but was subdued as the operation looked very targeted and professional. That was after a desperate attempt by Hamas to try to convince the world that they have accepted the ceasefire proposal from Israel the only problem is that was not the ceasefire proposal that Israel offered.
While all the signs were pointing towards the fact that OPEC plus Russia was going to not only to follow through with their production 2.2 million barrel a day production cut into the end of the year possibly talk about extending those cuts into the New Year It was supposed to be augmented with makeup cuts from the producers like Kazakhstan and Iraq that had over produced.
And instead of that tidy little narrative overnight Russians Novak talked about the possibility of increasing oil production.
Novak suggested that under the OPEC deal, it may still be possible to increase oil production. He suggested that no deal has been agreed to and it’s still being analyzed by Russia.
Russia’s Novak of course has always played” bad cop” going into these OPEC plus meetings. Disagreement on production cuts years ago between OPEC and Russia was one of the reasons why they had a production war which eventually caused oil prices to crash to below zero. Novak said that “There is no need to predict further OPEC+ steps, we must look at the market.
And right now, based on the way the markets have been acting, OPEC needs to act as it seems like the market is less concerned about tight supply than it was just a few weeks ago.
Surprise increases in U.S. oil supplies and a drop in US exports suggest that perhaps global demand isn’t as strong as it should be.
John Kemp at Reuters points out that went through the wells calendar spreads have narrowed sharply over the last month in other words flipping from concerns about undersupply to supply so it will be more comfortable in the second half of the year.
If that is the case, then OPEC needs to show solidarity and continue along with their production cuts in Russia’s gentle threat that they could increase oil production is one of the reasons why oil prices have given up some of its gains overnight.
My take on this story from Russia is that it’s just typical pre-OPEC meeting positioning. I think OPEC plus Russia is gonna speak loud and strong because they don’t want to give up the dominance that they have achieved in securing its market share, While there are definitely some issues as far as producers that want to produce more that they will have to deal with I think that will be a problem for next year. I think the entire group realizes that they need to stick together, and they will probably achieve their objective of reducing global supplies in the next couple of months. That means that you should be prepared for upside price risks going forward,
As far as the geopolitical risk factors Biden administration as saying that, if need be, they will be able to tap the Strategic Petroleum Reserve even though they have taken steps to drain it down to its lowest levels in decades. President Joe Biden’s energy adviser Amos Hochstein said on Monday that the U.S. has sufficient supply of oil in the Strategic Petroleum Reserve to address any supply concerns and is monitoring markets on how to use it.
From a technical area of the market still looks extremely oversold at this point and more than likely as close to a bottom seasonal demand should pick up and it’s very clear that the Energy Information Administration has consistently underestimated demand for both gasoline and diesel.
This comes as the CEO of Chevron Mike Wirth is reiterating his warning that there are significant upside price risks to oil.
He also said that natural gas demand will rise on electricity consumption from data centers. He says that Wind and solar still face challenges meeting peak demand due their reliance on variable weather.
He says that reliable baseload power is needed to support renewables and natural gas is the most likely source, he said.
Remember how Transportation Secretary Pete Buttigieg was telling us what a great deal electric car were? Remember how he seemed to blame everybody for not buying that electric car when gasoline prices went up.
I assume he was talking about getting away so away from some of those gasoline taxes that the federal government collects or perhaps the state government collects, where the local government collects. Well now it appears that governments across the globe now want the drivers of electric cars to pay their fair share.
The Financial Times reports that ‘Global policymakers are imposing new taxes on electric vehicles as the shift away from combustion engines threatens to leave a $110bn hole in government revenues owing to a drop in receipts from fuel duties.” So the old adage remains, If you build it! They will tax it!
The UK, New Zealand, Israel and the majority of US states are among jurisdictions introducing tax changes and charges on EVs and hybrid vehicles designed to raise funds and compensate for declines in petrol and diesel excise taxes. The measures are varied, running from registration fees to road usage charges based on mileage and taxes on public charging points. EV owners and green campaigners say they will slow society’s switch from gas-guzzling vehicles to lower-emissions alternatives.”
Reuters is reporting that oil output at Kazakhstan’s giant oilfield Tengiz, operated by Chevron-led CVX.N Tengizchevroil, declined by 25% over May 1-5 from April’s average level to 474,000 barrels per day (bpd), a source familiar with the data told Reuters on Monday.
Natural Gas is risng as US production is falling and demand is rising. Nat gas production in the US fell to 96.9 in May down from 98.1 in April. Increased flows to Freeport and Delays in Cheniere maintenance is helping reduce the Nat gas glut. The long term outlook for gas is getting stronger as green energy realities are sinking in.
Oil Price reports that Back in January, Cheniere predicted that China’s demand for LNG exports could double over the next decade, as reported by the South China Morning Post (SCMP). In the U.S., electricity demand is expected to soar by up to 20% by 2030, based on April data from Wells Fargo, with natural gas demand potentially increasing by 10 billion cubic feet per day as a result. Additionally, Goldman Sachs predicts that natural gas will account for 60% of new electricity demand from data centers, compared to estimated 40% market share for renewables, with gas pipeline operators to benefit significantly.
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If we can stay in the $75-$85 a barrel range for the short to mid-term I will be happy.
Natural Gas Bullish Continuation Stalls at Resistance Zone
By: Bruce Powers | May 6, 2024
• With natural gas reaching highs and strong upward momentum, a pullback may occur before a continuation higher, providing better risk-reward opportunities.
Natural gas advanced on Monday, reaching a high of 2.26, at the time of this writing. It was the third day in a row that it rallied. Each of the prior two days ended strong, in the top quarter of the day’s range. Earlier, it looked like today’s session may also end strong, but the situation has weakened somewhat intraday.
Upward momentum has been strong as the two previously identified resistance targets at 2.20 (rising ABCD pattern, 127.2% extended target (D)) and 2.24 (38.2% Fibonacci retracement and swing low support from December 13) were exceeded to the upside. An intraday pullback followed the 2.62 high, with lower price levels being tested as support.
Next Bullish Signal, Above Monday Highs
Following today’s close, a bull trend continuation signal will be generated on a rally above today’s high and confirmed on a daily close above it. However, given that the ascent has stalled within a target zone, the potential for a pullback prior to a continuation higher has increased. This would be healthy for the advance and provide better risk reward opportunities for the next rally.
Pullback May be Short Lived
Last week’s pullback was shallow, indicating underlying strength in demand. A somewhat similar short-term pullback may occur off today’s high. Significant potential support is noted at last week’s low of 1.91 and it marks the maximum decline anticipated for the near-term bullish outlook to be maintained. But support should be seen higher. Watch the 2.17 price zone (resistance and now potential support from February 1 high) and today’s low of 2.13.
Measured Move Points to 2.40 Possibly
The current upswing in natural gas has exceeded the three previous rallies of 22.3%, 32%, and 24.8%, reflecting improving demand. As of today’s high, it was up by 42.9% from the most recent swing low at 1.58 (C). The relative performance confirms that the buyers are back in charge. Analysis of time provides additional supporting evidence for the bull move as the current advance was faster than the prior three.
This is another way to confirm strength as the current advance is only on its seventh day and the three prior rallies completed in three to 11 days. So, based on time there could be further upside. Also, taking a measured move of the fourth most recent rally, that began from the December 13 swing low, further supports a bullish scenario. That rally was 51.8% in 20 trading days. Similar performance in the current move would occur around a 2.40 target zone.
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Price Matters. The Energy Report
By: Phil Flynn | May 6, 2024
While some in the marketplace are concerned about weak demand, a move by Saudi Arabia to raise their price for oil seems to suggest that they’re not that concerned. Consider the fact that the well prices according to technical analysis, West TX intermediate crude prices are close to the 100-day moving average and now are the most oversold on a 14-day relative strength index basis since they bottomed out last December.
Now with the Gaza ceasefire talks falling apart, as was expected, the market is starting to realize that the geopolitical risk factors have not gone away. Reports say that Israel is warning Palestinians to evacuate parts of Rafah as they prepare to move to remove Hamas from the area. Reports say Israel struck an area overnight from which Kerem Shalom was attacked. Israel Prime Minister Benjamin Netanyahu made it very clear that just ending the war in Gaza would keep Hamas in power and that would pose a threat that Israel cannot accept. They would be willing to pause fighting in Gaza in order to secure the release of hostages but obviously it doesn’t look like that’s going to happen.
This comes as Saudi Arabia and OPEC plus used their market might and sent a message signaling that they’re not only going to continue their voluntary production cuts into the end of the year but potentially in the New Year. On top of that, the market pricing and the potential for even deeper cuts as Iraq has vowed to make compensation cuts this year of 602,000 barrels a day, we also have a commitment from Kazakstan vowing to reduce production by an additional 389,000 barrels a day.
Bloomberg reported that Saudi Arabia raised the price of its flagship crude to Asia for a third consecutive month, as the kingdom tries to tighten the oil market to prevent a global surplus. Saudi Aramco raised the June official selling price of Arab Light crude for customers in Asia by 90 cents to $2.90 a barrel above the regional Oman-Dubai benchmark, according to a price list seen by Bloomberg. It compares with an increase of 60 cent forecast in a Bloomberg survey of six refiners. Prices for other lighter and heavier varieties were also increased from May.
Gasoline demand in recent weeks has been poor and even though there are reports that it’s improving. In the big picture, Woods MacKenzie is predicting that gasoline demand will be weak because of the greater adoption of electronic vehicles. There are reports that quote penetration of electronic vehicles has been increasing in the US and China this year. Chinese gasoline demand will only grow by 10,000 barrels a day due to a higher electronic vehicle uptake.
Yet despite spite recent mixed signals about U.S. oil demand, the reality is that we’re seeing the science of supplies are going to tighten. We did see a big drop in rig counts for both oil and natural gas last week.
The weekly count for oil dropped to 499 from 506, while gas lost three rigs week to week at 102, Baker Hughes said Friday. The miscellaneous tally grew by two to four. A year earlier, the US had 588 oils, 157 gas and three miscellaneous rigs in operation, the company’s data showed.
We see signs that demand should pick up this weather starts to kick in to more summer like temperatures. I think that last week was a great buying opportunity.
Reports that the Freeport LNG export terminal was taking more inflows last week and they hope that power generation for artificial intelligence and Bitcoin mining and data centers will create an explosion in demand for natural gas next year. It is giving the markets some hope in the face of pretty overwhelming supplies. The market is trying to bottom, and it still might be a good time to buy some long-term calls.
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Crude Oil Investors Turn Cautiously Bullish Amid Global Tensions
By: James Hyerczyk | May 6, 2024
Key Points:
• Oil futures rise with geopolitical tensions, Saudi pricing.
• Saudi Arabia hikes prices for Asian, European markets.
• OPEC+ likely to extend production cuts into June.
Crude Oil Futures Gain
Oil futures saw a slight increase on Monday as market conditions were influenced by geopolitical tensions and strategic pricing adjustments by Saudi Arabia. This shift comes in response to heightened tensions in the Middle East and adjustments in Saudi crude pricing.
At 09:27 GMT, Light Crude Oil Futures are trading $78.92, up $0.81 or +1.04%.
Saudi Pricing and Market Impact
In a significant move, Saudi Arabia has raised the official selling prices (OSPs) for its crude destined for Asia, Northwest Europe, and the Mediterranean for June. This adjustment reflects the kingdom’s anticipation of robust demand during the summer months. Despite a sharp decline in prices last week, with ICE Brent falling over 7%, the new week opened with a stronger price footing due to tightened supply expectations.
Geopolitical Tensions and Oil Supply Risks
The ongoing conflict between Israel and Hamas introduces an element of uncertainty, heightening the geopolitical risk premium initially. However, this risk premium has subsided as immediate threats to oil supply routes have not materialized, and diplomatic efforts towards a ceasefire continue, albeit with challenging negotiations ahead.
U.S. Production and Rig Count Trends
Domestically, the U.S. oil landscape is witnessing a reduction in operational rigs, indicating a potential tightening of oil supply. The latest report from Baker Hughes highlights a significant drop in oil rigs, marking the most substantial weekly decline since November 2023. This could hint at a cautious production stance amidst fluctuating market conditions.
OPEC+ Production Strategy
Looking ahead, OPEC+ is likely to maintain its current production cuts into the upcoming review in June. The decision aims to stabilize the market, particularly as global inventories have not decreased as expected earlier this year. Despite pressures to increase production due to growing outputs from non-OPEC+ members like the U.S., Canada, Brazil, and Guyana, any potential increase by OPEC+ might be minimal and largely symbolic given the current market equilibrium.
Market Forecast: Cautiously Bullish Outlook
Given the ongoing geopolitical risks, strategic price adjustments by major producers, and the current balance of supply and demand, the market outlook remains cautiously bullish. Investors and traders should keep a close watch on further developments in geopolitical events and OPEC+ decisions, as these will be pivotal in determining market directions in the near term. The market’s reaction to these elements will set the path for oil prices in the upcoming weeks.
Technical Analysis
Daily Light Crude Oil Futures
Light crude oil futures are edging higher on Monday, but inside Friday’s range. This chart pattern suggests transition as well as investor indecision and impending volatilty. All this is taking place while the market is straddling the 200-day moving average at $78.58.
The 200-day MA is not only controlling the long-term direction of the market, but today it is likely to act like a short-term pivot.
Since sentiment seems to have shifted to cautiously bullish, a sustained move over $78.58 could lead to increased momentum with the primary upside target the 50-day moving average at $81.24. This indicator is controlling the intermediate-term trend.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | May 4, 2024
• Following futures positions of non-commercials are as of April 30, 2024.
WTI Crude Oil: Currently net long 259.7k, down 18.8k.
West Texas Intermediate crude dropped in all sessions this week, down 6.9 percent for the week to $78.11/barrel. This was the third down week in four. The crude rallied from $67.71 last December to $87.67 on April 12th before coming under pressure.
This week, both the 50- and 200-day were breached. WTI concurrently fell back into a well-established range between $71-$72 and $81-$82 that persisted for 19 months before the upper end gave way five weeks ago. Even more important, it ended the week right on a rising trendline from last December’s low. A likely breach can eventually open the door toward the lower end of the range in question.
In the meantime, US crude production in the week to April 26th was unchanged for eight consecutive weeks at 13.1 million barrels per day; 10 weeks ago, output was at a record 13.3 mb/d. Crude imports increased 275,000 b/d to 6.8 mb/d. As did crude and gasoline inventory, which respectively rose 7.3 million barrels and 344,000 barrels to 460.9 million barrels and 227.1 million barrels. Distillate stocks, however, dropped 732,000 barrels to 115.9 million barrels. Refinery utilization declined one percentage point to 87.5 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | May 4, 2024
NY Crude Oil Futures closed today at 7811 and is trading up about 9.01% for the year from last year's settlement of 7165. Caution is required for this market is starting to suggest it could now decline on the MONTHLY level. As of now, this market has been rising for 4 months going into May suggesting that this has been a bull market trend on the monthly time level. As we stand right now, this market has made a new low breaking beneath the previous month's low reaching thus far 7796 while it's even trading beneath last month's low of 8070.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Looking at the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains in a bearish position at this time with the overhead resistance beginning at 8095.
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. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed beneath that low which was 8070. This was a very bearish technical indicator warning that we have a shift in the immediate trend. We are trading below the Weekly Momentum Indicators warning that the decline is very significant and we need to pay attention to the timing and reversals. When we look deeply into the underlying tone of this immediate market, we see it is cautiously starting to weaken since the previous high at 3070 made 1197 weeks. Immediately, this decline from the last high established the week of April 8th has been important closing sharply lower as well. Before, this recent rally exceeded the previous high of 7960 made back during the week of November 27th. Nonetheless, that high was actually lower than the previous high made the week of October 16th suggesting this market has really been running out of sustainable buying for right now. This immediate decline has thus far held the previous low formed at 6771 made the week of December 11th. Only a break of that low would signal a technical reversal of fortune and of course we must watch the Bearish Reversals. Right now, the market is below momentum on our weekly models casting a bearish cloud over the price action. Looking at this from a wider perspective, this market has been trading up for the past 20 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 May, this market has held above last month's low of 8070 reaching 8070.
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 trading beneath last month's low.
Natural Gas Eyes on Further Gains
By: Bruce Powers | May 3, 2024
• Natural gas breaks to a new trend high of 2.16, triggering a monthly breakout. It is likely to close strong, hinting at a continuation higher into next week.
Natural gas breaks out to a new trend high of 2.16 on Friday and it is on track to close strong, in the upper quarter of the day’s range. If it does, a continuation higher heading into next week looks to be on the table. The weekly chart is also set to end strong for the second week in a row.
Further, a monthly breakout triggered today on a move above April’s high of 2.09. Today’s high approached a resistance zone from late-January and early-February with a high for the range at 2.17. If that high gets busted, higher price levels become targets.
Improvement in Momentum
Given the improvement in momentum and the likely strong closing price for the week, the initial targets could eventually be exceeded. That is, if demand remains strong. The next target zone begins with the completion of an extended rising ABCD pattern at 2.20. That is where the CD leg of the advance is 127.2% of the AB leg.
Nonetheless, an initial Fibonacci retracement of 38.2% is at 2.24, with that price level confirmed by previous support from the December 11 swing low. If natural gas can get through that price level and keep rising it may have a chance to eventually test resistance around the 200-Day MA, which is currently at 2.47.
Signs of Strength in Monthly Chart
Confirmation of strength on both the monthly and weekly charts provides further evidence for a bullish reversal of the bottom from February. This means that that rally should have more to go, and it may just be getting started. Today’s price action extends an advance off support around the lower blue dash trend channel line.
In general, once prices rise above from support at the bottom of a channel, an eventual target is the top channel line. This doesn’t mean it will be reached, just that it could be. Of course, the price represented by the upper line will depend on when it is reached, given that it is downward sloping. However, given that it is now a potential target, it may make the lower price targets more likely to be reached.
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Crude Weekly Price Forecast – Crude Falls Hard to Test Support
By: Christopher Lewis | May 3, 2024
• The oil markets have fallen a bit during the trading week, as we are now looking for some kind of reason to get long again. Remember, there are a multitude of noisy reasons to be in this market at the moment.
WTI Crude Oil Weekly Technical Analysis
The West Texas Intermediate crude oil market has plunged for the week, but quite frankly, at this point in time, I think it continues to see a lot of support underneath, as a lot of questions are now being asked about whether or not there is going to be a geopolitical risk premium attached to this market.
I think it’s a huge mistake to take that out and all it would take is one errant headline to send this market straight back up in the air. Typically, this time of year, we do see a bit of a demand increase for crude oil due to driving and flying. And now the questions around jobs have come into the fray.
As of Friday, we saw the US print much less than anticipated. So, the question will be whether or not demand will pick up or fall if the Federal Reserve cuts rates. Typically, that means oil goes higher over the longer term. And although I don’t call for that, I recognize that if we could reach the $80 level and recover that to the upside, we could see buyers come back in.
Brent Crude Oil Weekly Technical Analysis
Brent markets look very much the same, with the $84.50 level being a significant barrier that if we can overcome, I think a lot of traders will get involved and try to run Brent to the $90 level. I have no interest in shorting the oil markets, although it doesn’t look as bullish as it once did. I think this is a situation where if oil starts to fall apart, you’re probably going to have better short trades against other things because if oil falls apart, that means the economic conditions are probably falling apart as well. That being said, I expect a little bit of a recovery, but whether or not we break out to the upside remains to be seen.
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Play It! The Energy Report
By: Phil Flynn | May 3, 2024
I was shocked to hear there was gambling going on at Ricks Café and equally shocked to hear that Biden’s price caps on Russian oil have failed. In 2022 the administration of Joe Biden tried to impose a price cap to cut oil revenues for Russia, a major source of funding for its war against Ukraine. Now as my buddy Anas Alhajji points out, the Russian Urals crude price is about $15 above the price cap and is very concerned about who is going to tell Treasury Secretary Yellen or Biden.
Of course if Ms. Yellen or Biden read my report back then, I could have saved them the trouble of putting on the ill-fated price cap in the beginning. I predicted that the price caps would fail and if they asked me, who knows, it could have been the start of a beautiful friendship.
I’m no good at being noble, but it doesn’t take much to see that the problems with price caps are that they never work, and never have worked. People will either find a way around them or if they are truly enforced, it will lead to shortages. You show me a price cap, then I will show you a shortage. Yet the shortage did not happen because the price caps were never enforced.
This week Reuters reported that a group of Western insurers said a Russian oil price cap has become unenforceable and only pushed more ships into joining a shadow fleet, delivering one of the harshest rebukes to the measure that had been meant to cut revenue to the Kremlin. Now there are more calls in congress to lift the Russian oil price caps and try – maybe – some sanctions that might work.
First the Biden administration has been trying to convince people over the last couple of years that the price caps were working. Now it’s clear that they never really did work and I told them that.
Biden’s spendthrift ways of throwing money at the electric car industry, as we said, was doomed to fail and it is failing. Biden’s attacks on the US oil and gas industry and the reversal of many of Trump’s policies on energy was the start of his problems. Killing pipelines, drilling moratoriums and extreme regulations are some of the factors that is causing inflation. His tapping of the Strategic Petroleum Reserve for purely political purposes was part of his ill fated energy policy. Biden’s foreign policy in the Middle East by going hard on Saudi Arabia and soft on Iran has had devastating consequences for the globe. Biden’s energy policies may very well be the reason why he could lose his reelection. Maybe he’ll always have Paris. Paris, as in the Paris Climate accord, at least until the next president pulls out of it. Here’s looking at you, kid.
Yet this week it was the Fed that did more to bring down oil prices than anything Biden or Janet Yellen did. This week the story was bigger than expected increase in crude oil supplies, disappointing gasoline demand and real concerns that the Federal Reserve was going to have to induce a recession to get inflation under control. The problems are being complicated by a slowdown in US manufacturing and talk of the possibility of stagflation is permeating the marketplace. This puts emphasis on today’s jobs report. The other thing that we’ve seen in oil this week is the unwinding of geopolitical risk factors. It’s almost amazing to me that oil prices took seriously the possibility that ceasefire talks were going anywhere, but they obviously did.
It’s going to be interesting to see how oil traders will prepare for what may be coming this weekend as many sources believe that Israel will start to move into Rafah this weekend. This comes as the Wall Street Journal reports that, “The Pentagon is shifting jet fighters, armed drones and other aircraft to Qatar, repositioning its forces to get around restrictions on conducting airstrikes from an air base long used by the U.S. in the United Arab Emirates. The U.A.E. informed the U.S. in February that it would no longer permit American warplanes and drones based at Al Dhafra air base in Abu Dhabi to carry out strikes in Yemen and Iraq. That has prompted U.S. commanders to send the additional aircraft to Al Udeid air base in Qatar, the small Persian Gulf monarchy that hasn’t imposed similar restrictions, U.S. officials said.”
Oil should be close to the low and the correction should be over. If the jobs market is not too hot, then the bottom should be in as the risk premium goes back in.
Natural gas is putting up a good fight in the face of an overwhelming supply. Codes for the US domestic natural gas market is in fact that natural gas prices are historically cheap and data centers unquenchable demand for power continues to grow to incredible heights. With the emergence of cryptocurrencies, artificial intelligence, electricity demand is going to be going through the roof and is it possible that the US natural gas market will be saved by this incredible surge and demand. More on that next week.
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Natural Gas Potential for Bullish Trend Continuation
By: Bruce Powers | May 2, 2024
• Weekly chart shows bullish continuation, with last week's high of 2.00 a key level to watch.
Natural gas triggered a bullish reversal on a rise above Wednesday’s narrow range day high on Thursday before encountering resistance at 2.05 and stalling the ascent. This increases the chance that the low of 1.91 from the past week will maintain support. However, further bullish follow-through is necessary to further confirm the indication. Once today’s session is complete, that will start to happen on a rally above today’s high. But there will not be a bullish trend continuation signal until the recent high of 2.09 is exceeded to the upside.
Bullish Weekly Signal
A bullish continuation on the weekly chart was triggered this week further supporting a continuation higher for natural gas. Last week’s high of 2.00 is the price level to watch relative to this week’s closing price. It is currently trading above that price level and a daily close above it will confirm the bullish move on a weekly time frame. Keep in mind that the larger time frames influence the shorter time frames.
Low Volatility Leads to Higher Volatility
Further, volatility in the price of natural gas dropped during the formation of the bottom symmetrical triangle consolidation pattern. What usually follows low volatility? Higher volatility. In other words, the stage is set for a potential rally into higher price zones. That doesn’t mean it goes straight up. There is still the possibility of a dip below this week’s low of 1.91. But it becomes less likely if this week ends above 2.00.
Signs of Strengthening
This week’s high of 2.09 completed an initial rising ABCD target at 2.07 and the high reached the underside of the 20-Week MA, an obvious location for possible resistance, which is what happened. Further supporting a continuation higher is the relationship with the declining blue dashed parallel trend channel. The area around the lower channel line has acted as support for five days and now strength is returning. That is a sign of progress as the top channel line becomes a potential target once this week’s high is exceeded. This doesn’t mean it will be reached but the possibility exists. Therefore, the chance of eventually reaching lower targets increases.
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Lack Of Further Progress. The Energy Report
By: Phil Flynn | May 2, 2024
Commodity volatility went crazy as the Federal Reserve signaled, “the lack of further progress on there are inflation target in recent months” shook up a whole host of commodities. We started with dramatic moves in grains, meats, industrial metals, and precious metals and of course in oil that not only had to deal with the Federal Reserve seemingly putting off interest rate cuts, but also a very disappointing weekly inventory report that suggests that U.S. oil demand is sputtering. Yet the further lack of interest rate cuts and the drop in oil prices means that OPEC plus could extend its voluntary production cuts beyond the second quarter and into the New Year. The plunge in oil might reverse if OPEC sources are correct and OPEC signals an extension of the cuts then more than likely this is going to be a trial balloon, but our expectations are very clear. If prices don’t hold this area, then OPEC will extend cuts and possibly even work towards a larger cut in production.
While the weekly demand numbers for total petroleum products came in at an impressive 20.417 million barrels of oil a day, we saw an uptick in gasoline demand which was up 195,000 barrels a day from the week before and is still coming in at a weak 8.618 million barrels a day. Distillate demand was also up week over week, coming in at 3.678 million barrels a day. But where you see the demand discrepancy is when you look at the four-week moving average, for example gasoline averaged 8.6 million barrels a day which is down by 3.6% from the same period last year. The weakness in gasoline demand probably reflects the big drop that we saw in consumer confidence last week.
This is a warning sign that high inflation is really starting to cut into the consumer’s ability to spend the money. Now if you put this in the context of the Federal Reserve coming out saying that they are going to have to potentially pause an interest rate cut, it means that there’s going to be more pain for consumers because the only way you’re going to bring down gasoline demand is to make the economy tougher for most people.
We were expecting a bigger uptick in gasoline demand this week and while the weekly numbers have not been so accurate, the trend is not encouraging. The data shows a drop in distillate inventory that if you look at the four-week moving average, is down 8.2% from the same period a year ago. The other main reason why the report came out as bearish as it did was the fact that we saw commercial crude inventories surge by 7.3 million barrels from the previous week. Not all of that was demand related but due to a surprising increase in U.S. oil imports and a big decrease in U.S. oil exports from the record-breaking numbers that we’ve been seeing. US crude exports fell from 5.179 million barrels a day to 3.918 million barrels a day, down 1.261 million barrels a day. US crude oil imports on the other hand rose to 2.854 million barrels a day and that was up from 1.318 million barrels a day the week before.
The market also seemed to be removing some of the geopolitical risk and worst-case scenarios. Even with the hopes of a ceasefire deal between Hamas and Israel falling apart, the market seems unfazed that it’s going to have any negative consequences for the flow of oil.
Get geopolitical risks remain. Overnight it was reported that Ukraine drones hit a Rosneft refinery. Bloomberg reported that Ukrainian drones hit a major oil refinery owned by state-controlled Rosneft PJSC in Ryazan, southeast of Moscow, just as the facility’s crude-processing had recovered from a previous strike. The overnight attack caused a fire at the plant, a person in the Ukraine military who is familiar with the matter told Bloomberg News.
Apparently the Wall Street Journal reported that they found evidence of collusion! They reported that Ex-Pioneer CEO Scott Sheffield was barred from the Exxon Board in the merger between the two companies. The Journal says that antitrust enforcers are set to allege Scott Sheffield discussed coordinating oil-production levels with other producers and OPEC. Exxon agreed in October to buy Pioneer for $60 billion in stock, marking its biggest deal since it merged with Mobil in the late 1990s and the largest oil-and-gas deal in two decades. The WSJ says that they will all edge that Sheffield engaged in collusive activity that could have raised the price of oil, these people said. The allegations will include that Sheffield sent hundreds of messages to representatives of the Organization of the Petroleum Exporting Countries about market dynamics, including pricing and production levels.
The Journal, in a must read, said that, “For years, investors urged frackers to stop overspending on drilling new wells and pumping ever-increasing amounts of crude, and instead to keep production largely flat, which would increase cash flows and enable higher returns to shareholders. It took years—and a crippling pandemic—for shale producers to agree.” U.S. frackers fiercely competed for years with OPEC for market share. At a 2017 dinner in Houston, shale executives sat down for a first-of-its-kind dinner with Mohammad Barkindo, then the secretary-general of OPEC. Sheffield attended the dinner, during which Barkindo discussed OPEC negotiations on cutting oil output, among other topics.”
This is going to be interesting. Many investors and people in the oil industry believe that when the US frackers started to over produce and flood the market with oil that it was not a good business decision.
The column of oil depressed prices and many of the producers racked up huge debt. OPEC on the other hand is a well oiled machine these days and they can really have an impact on global inventories. The question becomes at what point does collusion crossover with common sense.
Many people in the industry think that shell producers were derelict in their duty by not cutting back production earlier. One of the things I used to write during those days is that the frackers used to try to lose money on every barrel then try to make up for that in volume. Of course the commodity markets are probably the best way to hedge the risk of the boom and bust industry. But perhaps there has to be a better way for the US oil and gas industry to judge the market so that they can stay competitive with the likes of OPEC and Russia.
After the huge sell off the last couple of days as we ended the big plunge on the last trading day of April and we continued to sell off on the first day of May, we do believe that we’re getting pretty close to a value range for oil. While there still could be some downside today this will probably be a good opportunity to put on your spring hedges.
Natural gas is attempting to bottom but failed when the rest of the global markets seemed to fall apart. Today is going to be a big day as far as the natural gas injection number. We’re looking for an increase of 54 BCF.
The Biden administration’s attitude towards the energy policy is to throw as much of it on the wall and see what will stick. New rules by Bidens Environmental Protection Agency is going to compel coal and natural gas power plants to cut or capture 90% of their carbon pollution by 2032 according to the very optimistic but not very scientific EPA. They say this is going to reduce carbon dioxide emissions by 75% compared to its peak in 2005. The EPA wants to use 2005 as a benchmark because it makes them look good. The Biden administration wants to push through as many environmental rules as they can we regardless of the economic fallout because they need to start pleasing their environmental base that is turning against them. Biden’s approval ratings are in the sewer and in desperation they’re going to throw out as much as they can in the next few months.
West Virginia attorney general Patrick Morrisey he said he’s going to challenge the new EP rules in court he said that the US Supreme Court has placed significant limits on what the Environmental Protection Agency can do and we plan on ensuring that those limits are repelled and we expect that once again we will prevail on this out of control EPA.
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Fed Freak Out. The Energy Report
By: Phil Flynn | May 1, 2024
Oil prices tried to stay strong in the face of the market doing a Federal Reserve freak out. Rumors that the Fed today is going to be extremely hawkish, even reports of potentially talking about raising rates before the end of the year, caused a major sell off in a lot of the markets. That wave of pessimism eventually dragged oil down and took the products with it.
Obviously, the fear of a more hawkish Fed and even a delay of interest rates could slow the economy and could slow the demand for oil at the same time. The rate differentials between the US dollar and other commodities could keep oil prices under pressure. It’s a story and they’re sticking to it.
Economic data yesterday though may suggest that the Fed is getting too hawkish and might be premature as consumer confidence is plummeting, falling to a reading of 97 yesterday when the expectations were for it to come in at 104.7. This came as manufacturing data in Chicago took a dive.
After the close it didn’t help that the American Petroleum Institute (API) reported a whopping 4.906-million-barrel increase in crude supplies. While oil products saw a supportive 1.48 million barrel drop in gasoline supplies and an equally supportive 2.187 million barrel drop in distillate supplies. The market was overwhelmed with the size of the crude oil supply increase.
It’s going to be interesting to see if today’s Energy Information Administration (EIA) report confirms the crude oil increase and if they do, what makes up that increase. We’ll look at production and see if it’s a case of reduced refinery runs or more just an aberration.
The concerns about slowing demand or the potential slowing of demand come as OPEC has shown further commitment to reducing global oil supplies. In the latest Reuters survey, they show that oil output from OPEC fell by 100,000 barrels a day in March as exports from Iran, Iraq and Nigeria seem to be signaling better compliance from the countries that have been over producing.
Geopolitical risk factors continue to be at play but the fact that Israel has not invaded Rafah just yet seems to be taking some of that risk premium off the table. The latest news is Hamas is saying that they’re still studying the recent ceasefire offer. Yet Israel has ceasefire or no ceasefire, they’re going to eliminate Hamas. This comes as reports say that the Biden administration is going to welcome in refugees from the Gaza Strip into the United States.
The Biden administration offers new rules that will add to the cost of energy and inflation. My friend Mike “Mish” Shedlock reports that, “New Biden Energy Rules Will Raise the Cost of a New Home by $31,000.” He says that new HUD energy rules will raise the cost of home construction by imposing stricter building codes. Payback time is 90 years. Maybe time to bring back the 100 year mortgage?
Now The United States Department of Energy (DOE) has decided to mandate federal agencies to construct only fossil fuel-free buildings starting 2030. “DOE estimates that over the next 30 years, the new rule will reduce carbon emissions from federal buildings by 2 million metric tons and methane emissions by 16 thousand tons—an amount roughly equivalent to the emissions generated by nearly 310,000 homes in one year, while also reducing infrastructure costs”. The rule, which enforces the 2007 Energy Independence and Security Act, applies to construction projects with start dates that fall in 2025 or later. The rule requires projects breaking ground in 2025–29 to be designed in such a way that fossil fuel energy in each building is 90 percent lower relative to 2003 levels. Projects that begin construction 2030 or later must cut consumption by 100 percent relative to 2003 levels. The sense is that the Biden administration is trying to push through as much crazy stuff regulation as they can because they think they’re going to lose the election.
Bloomberg writes that, “Nations from the Group of Seven have agreed to work to reduce their reliance on “civil nuclear-related goods” from Russia, as major industrialized nations work to reset their energy plans while isolating Moscow. G-7 energy ministers said their countries will engage in a multilateral effort to promote a diversified fuel supply chain free from Russian influence, according to the closing statement from a meeting in the Italian city of Turin. The ministers also committed to promoting fusion as a future energy source alongside regulatory efforts. Germany had previously objected to any reference to nuclear power as part of the group’s initiatives for so-called green transition.
Gold prices also pulled back on the Fed concerns but MarketWatch cited healthy investment from the over the counter market as well as central bank purchases according to a report from the world council that was released on Tuesday. Total first-quarter gold demand, which includes the investment and industrial sectors and central-bank purchases, climbed 3% from the same period a year ago to 1,283.3 metric tons — the strongest first quarter since 2016, according to the World Gold Council report. The total demand figure included 136.4 metric tons in over-the-counter (OTC) purchases, characterized by market participants trading directly with each other, it said. That’s more than triple the year-ago amount of 42.7 metric tons.
Saudi Arabia and Iran met to try to develop a road map for economic cooperation in the public and private sector. Both sides said the talks were constructive in these two adversaries are trying to find a way to work together.
The New York Times reported that, “the Biden administration on Tuesday released rules designed to speed up permits for clean energy while requiring federal agencies to more heavily weigh damaging effects on the climate and on low-income communities before approving projects like highways and oil wells. As part of a deal to raise the country’s debt limit last year, Congress required changes to the National Environmental Policy Act, a 54-year-old bedrock law that requires the government to consider environmental effects and to seek public input before approving any project that necessitates federal permits. That bipartisan debt ceiling legislation included reforms to the environmental law designed to streamline the approval process for major construction projects, such as oil pipelines, highways and power lines for wind- and solar-generated electricity. The rules released Tuesday, by the White House Council on Environmental Quality, are intended to guide federal agencies in putting the reforms in place.
The morning after a big sell off in the oil makes it harder to recover. Margin selling and position adjustment is adding to early morning weakness. Still oil is at a value range and after we get through the EIA and Fed, we should start the trek higher.
Natural gas is trying to find a bottom against incredible odds. Look to buy long dated calls.
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$WTIC $Oil - Slipped its Daily 150/MA (Dotted-Grey) and testing the edges of the 'Bowl'
By: Sahara | May 1, 2024
• $WTIC $Oil - Latest
Slipped its Daily 150/MA (Dotted-Grey) and testing the edges of the 'Bowl'.
Be aware of the bearish plot tho...
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Natural Gas Price Forecast: Current Patterns and Potential Price Targets
By: Bruce Powers | May 1, 2024
• Natural gas has exceeded its first target in a rising ABCD pattern, with trading now eyeing a test of support in a declining channel. Recent highs suggest the potential for further price increases.
Natural gas exceeded its first target today at the completion of a rising ABCD pattern. The high for Tuesday is 2.09 and the pattern target was 2.07. Resistance was seen off the high and trading is happening at the lows of the day at the time of this writing. It looks like a test of support at the lower declining blue dashed parallel channel may be in the works.
The April 14 swing low of 1.95 can be used as a proxy for the line if reached today as it is crossing the dashed line. Otherwise, watch for support at or above the top boundary line (purple) of the symmetrical triangle bottom. The three-day low of 1.91 can be used as a proxy for the line, however, keep in mind that the line will represent a lower price in the future given its downward slope.
Highest Daily Closing Price in 59 Days
On Monday natural gas ended the session at its highest daily closing price in 59 days. Along with today’s new recent high, it looks like it is telegraphing higher prices. If it continues to rise, and there is a good chance it will, the next higher ABCD pattern target is up at 2.20. That price is within a target zone from around 2.17 to 2.24 and it includes the 38.2% Fibonacci retracement at 2.24.
Further up is the price area around the 200-Day MA at 2.48. Notice that the moving averages are showing improving demand. Recently, the purple 8-Day MA crossed up through the orange 50-Day MA after being below it for some months. Further, the relative strength index momentum oscillator (RSI) recently broke a trendline to the upside.
Below 1.91, Likely Leads to Test of Support Lower Down
Ideally for the bulls, natural gas stays above the April 26 gap day low support price of 1.91 during retracements. If so, the above bullish case becomes more likely and may occur faster than otherwise. However, if the 1.91 price level fails to act again as support and is broken to the downside, a test of lower price levels becomes likely. Lower meaning, from 1.90 to the 1.61 closing price from the day before the gap. The April 23 high of 1.85 and the 20-Day and 50-Day MAs from 1.80 to 1.78 are two price areas that stand out.
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Making Russian Oil Great Again. The Energy Report
By: Phil Flynn | April 30, 2024
Oil prices, after dipping yesterday on cease fire talks, reacted to an announcement of the start of an important Canadian oil pipeline and a report that Biden will ease sanctions on Russian banks to allow energy deals to help keep prices lower headed into his election, are now back on the rise as geopolitical risk factors realities resurface. Israeli Prime Minister Benjamin Netanyahu is warning that, “Israel will enter city of Rafah in south Gaza to eliminate Hamas, with or without a ceasefire and hostage release deal.” Mr. Netanyahu says that they have begun evacuating Palestinians from Rafha in preparation for an upcoming operation. Hamas said they will respond in writing to Israel’s ceasefire proposal but are not giving a time as to when they will do so.
The market is now starting to realize that Israel’s attack on Rafha is a match that will be played and asked to increasingly worry about the fallout. This comes as Biden’s administration is showing signs of panic surrounding the potential price spike that may be coming ahead of the Presidential election.
Oil prices took a dip after the Treasury Department renewed sanction relief for at least 10 Russian banks, including the Central Bank, to allow energy-related operations amid rising energy cost. Bloomberg says that, “General License No. 8I allows Central Bank of the Russian Federation; Vnesheconombank; Otkritie; Sovcombank; Russia’s largest state-owned bank Sberbank; VTB Bank; the country’s top private bank Alfa-Bank; Rosbank; Zenit and Bank Saint-Petersburg to engage in production, refinement, transport, purchase of crude oil, natural gas and petroleum products. The License also allows for operations related to coal, agricultural products used to make biofuels, wood, uranium, development, production of power including nuclear, thermal and other sources.
This easing comes after the Biden administration discouraged Ukraine from hitting Russia where it hurts and that is their oil and gas sector. The pressure for Ukraine to quit attacking Russia’s oil and gas infrastructure comes because of that could cause prices to rise.
And of course, as I predicted, the so-called Russian price cap has become an abject failure. Bloomberg News is reporting, “A Group of Seven-imposed cap on the price of Russia oil is becoming increasingly unenforceable, an organization at the heart of the global insurance industry said, offering one of the most direct criticisms yet of measures that were meant to deprive the Kremlin of petrodollars. About 800 oil tankers that were previously covered by member organizations of the International Group of P&I Clubs have migrated into what’s known as a shadow-fleet, the club said in a written submission to a UK government inquiry on the effectiveness of sanctions on Russia. In addition, there’s no way for insurers to check whether traders are genuinely sticking to the price cap. The policy “appears increasingly unenforceable as more ships and associated services move into this parallel trade,” the International Group’s submission said. It “is concerned that increasing responsibility and obligations on companies in the G-7 coalition will result in a further migration of trade activities and ancillary services outside of the G-7.”
The other report that put a little downward pressure on prices was the long-awaited announcement of the start of the Canada’s Trans Mountain pipeline expansion. Reuters reported that Canada’s Trans Mountain pipeline expansion (TMX) is set to enter partial operation on May 1, years behind schedule and at more than four times the original cost – but with the potential to affect oil flows even outside North America. The expanded pipeline will ship an extra 590,000 bpd from Alberta to Canada’s Pacific Coast, giving Canada’s heavy crude producers access to U.S. West Coast and Asian markets, and boosting prices for their grades. I guess this might be a good time to mention that the old Keystone XL pipeline would have been up and running for years helping to ease prices and improve the oil flow. Of course, somebody decided to kill the approval of that at the last minute, I wonder who that might be?
Behind all the drama, we’re also seeing signs of global demand that continues to be strong for oil and suggests a very tight global oil market. Saudi Arabia reportedly feels confident enough to raise prices for most oil grades to Asia. This comes as the OPEC secretary general suggests that crude oil demand will grow by 2.2 million barrels a day in 2024 and confirmed that OPEC production cuts are going to continue through the end of the year. So, more demand and less supplies are normally very bullish.
At the same time we’re continuing to get warnings about underinvestment in future supplies of oil and natural gas. A big part of the reason is politicians that are obsessed with climate targets and not reality. A couple years ago, when I was doing the speaking circuit at different events talking about oil, I used to get a lot of blowback from my thesis that the world was not going to run out of oil. In those days the thesis of “peak oil” was all the rage. Peak oil was the contention that conventional sources of crude oil had already been reached and we were about to reach maximum production capacity worldwide that was supposed to diminish significantly.
“Twilight in the Desert” was a bestselling book about peak oil production in Saudi Arabia and many people believed that the United States oil production was already in an irreversible decline and the country’s economy might collapse if we couldn’t find ways to import more supplies of natural gas. Yet I never believed those doom and gloom predictions and was what you might call a peak oil denier. They said I ignored science, and that oil was a finite resource. On and on they went.
Even though I was in the minority and took a lot of heat for it, I had a belief in the power of the market. That when prices got high enough, we would find a way to find more oil. I believe that the free market and free market capitalism would drive innovation and even though I might not have known exactly how it was going to play out, I knew that the world would not run out of oil anytime soon and probably not ever. Price and profit incentive would drive innovation and I knew that we would find a way.
Let us fast forward to a report yesterday by the Energy Information Administration (EIA) that would have been the fantasy 20 years ago. The EIA reported that U.S. oil and natural gas reserves hit a record high this year. They said it couldn’t be done 20 years ago but the US oil and gas industry did it anyway. The EIA said that, “U.S. crude oil and lease condensate proved reserves increased 9% from 44.4 billion barrels to 48.3 billion barrels at year-end 2022. U.S. crude oil and lease condensate production increased 6% in 2022. In Texas, which has more proved reserves of crude oil and lease condensate than any other state, proved reserves increased 9% in 2022 (1.7 billion barrels), the largest net increase in any state).
In New Mexico, crude oil and lease condensate proved reserves increased 26%, the second-largest net increase (1.3 billion barrels). In North Dakota proved reserves increased 14%, the third-largest increase (0.6 billion barrels).
The 12-month, first-day-of-the-month average spot price for West Texas Intermediate (WTI) crude oil at Cushing, Oklahoma, increased by 43%, from $66.26 per barrel in 2021 to $94.54 per barrel in 2022.
Proved reserves of U.S. natural gas increased 10%, from 625.4 Tcf at year-end 2021 to 691.0 Tcf at year-end 2022, establishing a new record for natural gas proved reserves in the United States for a second consecutive year. Natural gas proved reserves in Alaska increased 25% in 2022, raising that state’s total from 99.8 Tcf to 125.2 Tcf—the largest increase of all states in 2022.
Natural gas did get a bit of a bounce and stational electric demand hit a near record high for this time of year. Early season cooling demand in the southeast is causing prices to go a bit higher. In 2022, U.S. natural gas exports were 6.9 Tcf, the highest volume on record. Cheap natural gas prices also had a part in lowering the demand for wind generated electricity which fell for the first time since 1990s. U.S. electricity generation from wind turbines decreased for the first time since the mid-1990s in 2023 despite the addition of 6.2 gigawatts (GW) of new wind capacity last year. Data from our Power Plant Operations Report show that U.S. wind generation in 2023 totaled 425,235 gigawatthours (GWh), 2.1% less than the 434,297 GWh generated in 2022.
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Natural Gas Bullish Momentum Continues
By: Bruce Powers | April 29, 2024
• With a breakout above 2.01, natural gas is eyeing targets at 2.07 and then 2.20, supported by a potential retracement to 2.22 before aiming for the 200-Day MA at 2.49.
Natural gas rose above Friday’s high on Monday before triggering a breakout above the top of a symmetrical triangle at 2.01 (B). The high of the day at the time of this writing was 2.04, which was followed by an intraday pullback. Of interest will be the daily close.
A daily close above 2.01 will be a stronger sign of strength than a close below it as it would confirm the breakout above (B). Also, keep an eye on today’s close relative to Friday’s high. Once a daily close above 2.01 confirms the bullish breakout, natural gas should be ready to proceed towards higher target areas.
Upside Targets
The first upside target is close by at 2.07. If hit, it will complete an initial target for a rising ABCD pattern that is identifying price symmetry between the AB and CD legs of the advance. However, since it is close to the top of a symmetrical triangle higher prices remain on the radar. The second target from the ABCD pattern is 2.20. That target completes an ABCD pattern where the CD leg is extended by 127.2% of the AB portion of the advance.
It begins with a target range from 2.07 to the prior December 13 swing low at 2.24. Inside that price range is the completion of a 38.2% Fibonacci retracement at 2.24. Generally, a 38.2% retracement is usually the more common minimum retracement that might be seen. This means that since natural gas is showing improving strength, the 38.2% retracement should eventually be reached, at a minimum.
Signs of Strength
Last Friday natural gas rose above the lower dashed blue channel line before ending the day below it. Today, it is on track to close above it for the first time. The lower line is parallel to the top falling dashed blue line that connects the October and January swing highs. Further, natural gas is set to end on Monday at its highest daily closing price since February 5. If the top of the first target zone at 2.235 is exceeded, the next higher zone is around the 200-Day MA, currently at 2.49. It is further anchored by the 50% retracement at 2.46.
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$WTIC $OIL - A Bearish 'Evening Star' Tri-Candle Plot is in the making on a Daily Basis at the Uppr 'Flag' Level & Key/MA's...
By: Sahara | April 29, 2024
• $WTIC $OIL - Update
A Bearish 'Evening Star' Tri-Candle Plot is in the making on a Daily Basis at the Uppr 'Flag' Level & Key/MA's...
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Oil Coil. The Energy Report
By: Phil Flynn | April 29, 2024
Oil prices are coiling as the market tries to determine whether a push by US Secretary of State Anthony Blinken to convince Hamas to release hostages in return for a cease fire will bear any fruit. Mr. Blinken says that Hamas needs to decide, and it needs to decide quickly, on what he says is a proposal that is extremely generous. Mr. Blinken is also warning Israel that they need to do more to get humanitarian aid into Gaza.
While the market has seen some easing of risk premium as the threat of a direct confrontation between Israel and Iran has gone away, the ongoing drama in the continuing risk of supply against what should be record-breaking demand is going to keep the market well supported. There is a little bit of concern about Chinese demand that last month hit a 13-month low and talk that Iran is having a harder time moving their barrels of oil. Is it possible that Iran is having a harder time moving their barrels of oil because demand is slowing or is it possible that people are starting to find Iranian oil a little bit too hot to handle. This all comes against a backdrop of tightening global supply and more pressure by many in congress to actually enforce sanctions on Iran, a novel idea as far as the Biden administration is concerned. Energy Tidbits reported that global oil in floating storage fell by 32.67 million barrels in the last two weeks to just 16.64 million barrels of oil.
The other concern for Biden is rising inflation and gasoline prices that according to Triple A have eased a bit coming in at $3.659 which is a bit higher than yesterday but 2 cents lower than a week ago. That’s still 5 cents higher a gallon than a year ago. This comes as a CNN poll shows that 61% of Americans believe Biden’s presidency is a failure. The growing pressure on Biden to do something about gasoline prices could lead to another Strategic Petroleum Reserve release as the administration has already hinted, they may do just that. Yet that will be met with a lot of dissension from the Republicans who realized that the damage that the Biden administration has done by misusing the strategic reserve is going to cost taxpayers a lot of money over the long run.
In the short run supplies in the US should tighten again this week. We are looking for a 3-million-barrel drawdown in crude oil supplies and we’re looking for a 2 million barrel drop in distillate inventories and a 1 million barrel drop in gasoline inventories. We are also looking for refinery runs to uptick by 0.5%.
The risk of products going higher is still high. Tass, the Russian news agency, reported that the Slavyansk refinery in Russia’s Krasnodar Krai, which was attacked by Ukrainian drones on 27 April, has been forced to suspend some operations. “The plant’s operations have been partially suspended. Exactly 10 UAVs flew directly into the territory of the refinery, causing a severe fire. There may be some undetected damage,” said Eduard Trudnev, the security director of the company that operates the Slavyansk refinery, as quoted by Tass. It is not reported which operations have been suspended or whether the plant is operating at all.
Reuters also reported that, “The U.S. military said on Sunday it had engaged five unmanned drones over the Red Sea that, “presented an imminent threat to U.S. coalition and merchant vessels in the region. “U.S. Central Command did not say in the statement if the drones were destroyed. Marine Log reported that, “After a period with few reports of Houthi activity, the Iranian-backed group has resumed its targeting of merchant shipping, with Al Arabiya and other regional news outlets quoting the Houthi’s military spokesman as saying the group had attacked the “U.S. ship Maersk Yorktown and an American destroyer in the Gulf of Aden and Israeli ship MSC Veracruz in the Indian Ocean.” According to U.S. Central Command: “At 11:51 a.m. (Sanaa time) on April 24, a coalition vessel successfully engaged one anti-ship ballistic missile (ASBM) launched from Iranian-backed Houthi terrorist-controlled areas in Yemen over the Gulf of Aden. The ASBM was likely targeting the MV Maersk Yorktown, a U.S.-flagged, owned, and operated vessel with 18 U.S. and four Greek crew members. There were no injuries or damage reported by U.S., coalition, or commercial ships.”
When you look at the preponderance of market action, it seems like the oil market as well as the petroleum products are coiling for a potential big move. We think the risk of an upside move is more likely.
Natural gas has some glut issues to deal with. EBW analytics reported that Freeport LNG’s false start raised demand-side concerns into early May to amplify the downturn. Although weakness appears likely to linger in the near term, however, dry gas production continuing to grind lower may offer notable upside potential into mid-summer. For the natural gas market, we’re looking for a 92 BC injection this week.
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Crude Continues to Sort Itself Out
By: Christopher Lewis | April 29, 2024
• The crude oil markets continue to be noisy, but at this point I think it has more likely buying pressure than selling when it comes to anything longer-term.
WTI Crude Oil Technical Analysis
The WTI crude oil market has gone back and forth during the course of the trading session here on Monday, as we are trying to sort out where to go next. Underneath we have the 50 day EMA, which is sitting right around the $81.50 level and is rising.
That has offered significant support over the last couple of trading sessions. So, at this point in time, I think a pullback is more likely than not going to offer a buying opportunity based on value. On the other hand, if we do turn around and break above the top of the Friday session, then it’s very likely we will go looking to test the $85 level above, which had been a major barrier.
Brent Crude Oil Technical Analysis
All things being equal, I do not have any interest in selling oil in the Brent market. It looks very much the same as crude oil. Factors continue to come in and look at geopolitics, the supply chain issues and of course, demand this time of year is generally positive for petroleum. So, I am looking to buy both grades of crude oil be it Brent or WTI.
But I also recognize that we are currently essentially in the middle of consolidation here in the Brent market. So it’s more or less a 50-50 shot as to where we go next. I prefer to buy dips in this market, especially if we get near the 50 day EMA, which is right around the $86 level above. We have a major ceiling at $90, which has a lot of psychology attached to it as well, so that might be difficult to overcome.
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Almost every time 14-day highs on energy stocks hit this 3-4% level, $XLE goes risk-on
By: TrendSpider | April 26, 2024
• Almost every time 14-day highs on energy stocks hit this 3-4% level, $XLE goes risk-on.
Last week we touched it and have already seen a nice bounce.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 27, 2024
• Following futures positions of non-commercials are as of April 23, 2024.
WTI Crude Oil: Currently net long 278.4k, down 21.7k.
After dropping from $87.67 on the 12th to Monday’s low of $80.70, West Texas Intermediate crude quickly gave back nearly seven points intraday in seven sessions. Earlier, it bottomed at $67.71 last December.
Selling stopped at the 50-day, with the crude hugging the average ($81.49) for four sessions, ending the week up two percent to $83.85/barrel. With this, oil bulls also defended breakout retest at $81-$82. WTI went back and forth between $71-$72 and $81-$82 for 19 months before pushing through the upper end a month ago.
The weekly remains overbought, but the ball remains with the bulls so long as they defend $81-$82.
In the meantime, US crude production in the week to April 19th was unchanged for seven consecutive weeks at 13.1 million barrels per day; nine weeks ago, output was at a record 13.3 mb/d. Crude imports increased 36,000 b/d to 6.5 mb/d. As did distillate inventory, which rose 1.6 million barrels to 116.6 million barrels. Stocks of crude and gasoline, however, dropped 6.4 million barrels and 634,000 barrels respectively to 453.6 million barrels and 226.7 million barrels. Refinery utilization rose four-tenths of a percentage point to 88.5 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | April 27, 2024
NY Crude Oil Futures closed today at 8385 and is trading up about 17% 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. At the moment, 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.
The 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 8343 and overhead resistance forming above at 8455. 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. We have seen the market drop sharply for the past week penetrating the previous week's low and yet it recovered to close above the previous week's close of 8222. We are still trading neutral on the Weekly Momentum Indicators and this is a warning that initial support has been breached. This strongly implies we should pay close attention now to the Weekly Bearish Reversals. If we begin to elect Weekly Bearish Reversals, then we are dealing with a more sustainable near-term correction. 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 2 weeks ago. Still, this market is within our trading envelope which spans between 5669 and 10409.
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.
Oil dip buyers are hitting the tape. A variety of $XOM & $USO call orders just came in
By: Cheddar Flow | April 26, 2024
• Oil dip buyers are hitting the tape
A variety of $XOM & $USO call orders just came in
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Natural Gas Upside Breakout from Consolidation, Eyes Higher Levels
By: Bruce Powers | April 26, 2024
• Natural gas reverses higher, breaking out of a triangle pattern and testing resistance near 2.01.
Natural gas reverses higher on Friday, following an initial breakdown from a symmetrical triangle consolidation pattern yesterday. The reversal triggered an upside breakout of the triangle with an advance above the 1.94 swing high from April 10. Resistance was seen just shy of the 2.01 swing high from March 5 at the day’s high of 2.00, leading to an intraday pullback.
A test of support around the top boundary line of the triangle is in process with a low for the day of 1.91, at the time of this writing. However, be aware that today’s gap up bullish reversal may be influenced by the change in the future’s contract as the chart shown is for continuous futures.
Out of Symmetrical Triangle, Eyes Higher Levels
The 1.94 swing high matches the previous trend low from April 2023 at 1.95. Therefore, it has some longer-term significance. It was exceeded to the upside over several days in early-March but there was no close above that price level. This means that a daily close above 1.95 will provide a sign of increasing demand and that a breakout above the 2.01 swing high is a bullish signal.
Also, notice that today’s advance exceeded the lower dashed blue declining parallel channel line, another sign of strength. Further, the trendline on the relative strength index momentum oscillator (RSI) was busted to the upside today. Nevertheless, what happens in the coming days will be more revealing than today’s price action.
Further Confirmation of Strength Needed
It doesn’t look like today will end above the 1.94 swing low. So, moving forward a daily close above that price level will provide confirmation of strength. And, on a daily close above the lower blue channel line, although it is more of a sign of strength rather than a reliable signal.
There are several upside price levels to watch, and more details will be discussed in the future. For now, the 38.2% Fibonacci retracement completes at 2.22. That area is also highlighted by the swing low from mid-December. If there is a rally above 2.01, higher targets become more likely of being tested.
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Stag Party. The Energy Report
By: Phil Flynn | April 26, 2024
Stagger Lee shot Billy DeLions and he blew that poor guy down. Yesterday’s gross domestic product showed higher inflation and lower growth than expected which brings back the memories of that 70s melody called stagflation wand blew that poor stock market down. Yet despite the turmoil, petroleum products remained resilient.
The US economy grew at just 1.6%, the slowest pace in almost two years, rising 3.4% in the fourth quarter of 2023, according to the Bureau of Economic Analysis (BEA). Economic forecasts had called for a deceleration of growth over the previous month, with the expectation that the economy would expand by 2.4%, according to a Reuters report. Janet Yellen, later in the day, tried to put a positive spin on the numbers claiming that the economy is really stronger than the numbers suggest. While that is partially true, it doesn’t explain away the sticky inflation. The personal consumption expenditures (PCE) price index, excluding food and energy prices — a key metric the Federal Reserve tracks to measure inflation — increased by 3.7% after rising to 2% in the fourth quarter. Inflation is going to be one of the biggest challenges for central bankers.
Oil prices shook off stagflation fears and rallied late in the session after trading down after the GDP report because overall the fundamentals for oil are looking more bullish. Not only do we have to price in geopolitical tensions going into the weekend, we also have to be concerned about the looming supply shortage that we are seeing in the global marketplace that will see all-time record demand next month.
Reports that Israel is stepping up its attacks in Gaza as they prepare for the Rafah invasion and the ongoing concerns about Ukraine’s attacks on Russia’s oil infrastructure, has geopolitical risk factors that continue to support prices. The World Bank is warning that a conflict in the Middle East could push the price of oil above $100 a barrel and that could reverse the recent downtrend in global inflation. They said that the recent drop and commodity prices have been leveling off even before the missile strikes in Iran and Israel, but they acknowledge that the complexity of rising commodity prices is going to make global central banks jobs more difficult especially when it comes to reversing the historic amount of interest rate increases. The World Bank is predicting that crude oil prices will average $84 a barrel this year but be careful because any disruptions could cause prices to spike.
On further review, the Energy Information Administration report is very supportive and while a lot of people are concerned about the weakness in US gasoline demand the record exports continue to support this market. The administration is very worried about the potential for a gasoline price spike going into the election and yesterday’s gross domestic product number didn’t help the overall mood of the market. Tanker trackers is reporting though that there’s been a record amount of ship-to-ship transfers totaling 116,000,000 barrels of Iranian crude oil worth $1.4 billion pre discount and were visually identified in the South China Sea all headed to China. The Biden administration continues to turn a blind eye to Iranian oil sanctions and even though the passage of new sanctions should allow it, Biden should really crack down on Iran. In fact, they have the tools to crack down on Iran, but they refuse to do so.
The Biden administration did impose new sanctions on Venezuela. It appears it’s not going to slow down Venezuelans oil exports completely. Not only will it not impact Venezuelan oil exports, they are already moving to cut deals with other countries.
Bloomberg News reports that, ”Spanish oil major Repsol SA expects production to climb with the addition of two oil fields in a joint venture with Venezuela, where the company is exempt from reimposed US sanctions. The company recently signed a deal with state-owned Petroleos de Venezuela SA that adds the fields to its operations, which in the next few months are expected to produce 20,000 barrels a day, doubling what the European major currently produces in one of its three ventures, Chief Executive Officer Josu Jon Imaz said in a call with investors Thursday. The expansion agreement was signed hours before the US reimposed sanctions last week on Venezuela’s oil and gas activities. Companies such as Repsol and Italy’s Eni SpA have said previously arranged waivers with the US government allow them to continue operating. The waivers allow Repsol “to continue operations as we have been doing so far, even with sanctions in force,” the CEO said.
How’s that green energy transition going for you. In Europe competitors are making energy decisions based on politics and not reality and is causing a huge backlash in the region. Not only have we seen riots break out with farmers angry about green energy regulations but now it appears that the EU once again has to pull back on some of its green energy mandates. There are reports that the EU countries are going to reverse a distilled fuel tax that had angered farmers that essentially could put them out of business. In the meantime, the German economy is struggling because of its green energy short sightedness mayor. This is a country that says that they want a carbon free future but then went ahead and closed down their nuclear power plants. Has the entire world lost all common reason and sense?
Reuters reports that The European Commission’s next sanctions package is expected to propose restrictions on Russian liquefied natural gas (LNG) for the first time, including a ban on trans-shipments in the EU and measures on three Russian LNG projects, three EU sources said. The Commission is in the final stages of ironing out its proposal and is engaged in informal talks with member states this week. The Commission declined to comment.
The new oil market action is very positive and the big question is how much of this is going to be geopolitical risk premium and how much of it is going to be based off supply and demand. We think that the market is still undervalued based on supply and demand and we think the talk of a huge geopolitical risk premium is overstated. While there’s no doubt there’s some geopolitical risk premium in the price of oil, there are reports saying it could be as much as $5.00 or $10.00 a barrel and that seems to be very high based upon the supply and demand realities that we face. For most of this year we have expected a supply deficit going into this part of the year and apparently it looks like that’s where we are headed. This is why we’ve been recommending staying hedged for most of this year and we still believe that there is upside price risk going into the end of the year and it could be significant.
Natural gas is trying once again to find some support even in the face of a very bearish weekly injection report. The supply glut is real and one of the big problems we continue to have with the natural gas market is Freeport LNG. Reduce flows to Freeport is a concern for this market because of the oversupply. We need to move as much gas as we can and it does not help when Freeport is down. The market is looking ahead to expanded Langport capacity in the future but the uncertainty surrounding the Biden administration’s study on LNG exports is going to continue to discourage investment in US energy.
Reuters reported that the second-largest U.S. liquefied natural gas (LNG) export facility has been running below 80% of its capacity due to technical problems, data from financial firm LSEG showed, denting U.S. exports. Since Jan. 15, Freeport LNG’s Quintana, Texas, liquefaction plant has been operating without at least one of its three gas-processing trains. In the last two weeks, it has taken barely enough gas for one of its trains to fully operate.
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Natural Gas Will Support Hold or Breakdown Continue?
By: Bruce Powers | April 25, 2024
• Natural gas broke down from a symmetrical triangle, finding support at 1.60. Monthly support is at 1.59.
Natural gas breaks down from a symmetrical triangle on a drop below Wednesday’s low before finding support at 1.60 and bouncing. The high for the day was 1.675, which completed a test of resistance at the long-term downtrend line. Support is around the most recent swing low of 1.59. If broken to the downside and natural gas stays below it, lower prices may be coming.
Breakdown in Play
The trend low of 1.52 from February is a significant support level going back 29 years. Although a breakdown from consolidation has triggered, downside follow through is key. Will selling pressure accelerate or support hold and eventually turn prices higher? There are no signs of it yet, but this possibility remains. A bullish sign will next be indicated on a rally above today’s high (at time of this writing) of 1.675. The key near term resistance level of significant is this week’s high of 1.84. Once there is a daily close above that price level the possibility of an upside continuation improves.
Monthly Support May Continue to Hold
Monthly support is also at the 1.59 swing low. During April natural gas has remained within the range from March forming a possible second sequential inside month. Therefore, a sustained breakdown below 1.59, if it occurs before the end of the month, will trigger an inside month breakdown from March. That’s a bearish signal that could be followed by an expansion of volatility.
Strong Support at or Above 1.52 May Continue
As noted above, the 1.52 price level is significant and may continue to act as support. Consequently, if volatility expands there is a possibility the 1.52 level is broken. If that happens the next lower target is around 1.44, a 29-year low. However, there is another price area to watch at 1.49. That is the target from an extended retracement of the six-month rally that began from the prior trend low a year ago.
Contraction in Volatility
If April ends without a breakdown below last month’s low, there will be two inside months further highlighting the decline in volatility experienced recently. As price compresses it prepares for its next move and a pickup in volatility. That could come from a bounce off monthly support or a breakdown.
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Supplying The World. The Energy Report
By: Phil Flynn | April 25, 2024
While the US oil and gas industry continues to get bashed by the Biden administration, the reality is that the US oil and gas industry is providing supply stability to the global economy. US petroleum exports hit 12,094 million barrels a day which is an all-time record high but gasoline demand in the US is tepid at best. Still, global economic growth continues to suggest that global oil demand will break records next month and if that demand is going to be met, it will be because of the efforts of the US oil and gas industry.
The Energy Information Administration (EIA) reported the first US crude draw in 5 weeks, and it was a whopper, down 6.4 million barrels to 453.6 million barrels, in what may be the first of many. Gasoline demand though continues to be weak in a sign that consumers are feeling the pain of inflation as the demand over the last four weeks averaged 8.7 million barrels a day, down by 3.7% from the same period last year.
Yet gasoline inventories still fell by 600,000 barrels from last week and are about 4% below the five-year average as we exported 778.000 overseas. Distillate fuel inventories did increase by 1.6 million barrels last week and are about 7% below the five-year average for this time of year.
The world is becoming more reliant on the United States energy producer to fill the void in the global market that was partly created by bad energy policy in Europe that led to the war in Ukraine. And there are open worries from our trading partners that Biden’s policies in restricting production and by pausing liquefied natural gas exports terminals, is going to leave our trading partners and the global economy in a precarious state.
This comes as we are seeing warnings that the geopolitical risk factors surrounding oil and gas have not gone away and warnings from trading partners in Europe that the natural gas crisis may reappear next winter. The tightening supply situation comes against high anxiety and geopolitical risk factors that may get worse before it is better. Bloomberg reports that, “European Gas Traders Are Already Worrying About Next Winter and that Gas capacity deals at Russia-Ukraine border set to end and that Next winter gas is trading at a premium to all other contracts. They write that, “While demand remains muted and the region exited the heating season with the highest stocks on record, industry players gathering at the Flame conference in Amsterdam this week see risks mounting. And prices are responding. Worries include uncertainty over remaining Russian flows through Ukraine and rebounding gas demand in Asia. A colder-than-normal winter spurring consumption at home is also seen as more likely after two consecutive mild ones. The concerns are showing up in the futures market. The contracts for next winter are the most expensive on the curve.
A Rigzone report says that, “recent reports indicate that Iran intends to disrupt operations in the Strait of Hormuz, Dryad Global stated in its latest Maritime Security Threat Advisory (MSTA), which was released on April 22. “The most recent incident, the seizure of the MSC Aries, demonstrates that Iran, despite being preoccupied with missile operations against Israel, continues to interdict and control vessel movement in the Strait of Hormuz, Persian Gulf, and Arabian Sea,” Dryad noted in the MSTA.
Of course the Biden administration despite their policies that make oil and gas prices go higher, continue to insist they want to do things to get prices lower and we must admit that maybe they’ve succeeded in one area and that area would be Venezuela. Bloomberg reported that, “Chinese refiners are paying a little less for Venezuelan oil after the US reimposed sanctions on the South American producer. Merey crude, often used to make bitumen to pave roads in China, traded at a discount of $14 a barrel to ICE Brent in recent days on a delivered basis, according to traders. That compares to $11 before sanctions were reinstated last week, and $8 at the start of the year. China’s likely to draw more barrels from Venezuela after the US discontinued its six-month sanctions waiver, as other buyers, including India, shun embargoed oil to avoid run-ins with Washington. An average of 130,000 barrels a day previously bought by Indian refiners and 174,000 barrels a day of US-bound shipments could now be redirected to the world’s biggest crude importer, according to data intelligence firm Kpler.”
Reports of fires at refineries in Russia and Mexico are other reasons to be bullish for oil and products and we are not the only ones that are predicting record demand. Standard Chartered just put out a note that said that they expect that global oil demand will pick up strongly in May and June and will exceed 103 million barrels a day for the first time in May.
Once again, the preponderance of evidence continues to suggest there is significant risk of upside price movements in crude oil, gasoline and diesel over the coming weeks. We do think we’ll see a bounce back in US demand for gasoline when the weather starts to warm up, but the global demand will continue to keep US supplies very tight. Our global partners continue to be astonished how the United States it’s continuing to make politically motivated decisions to appease the environmental base while the global economy hangs in the balance.
Sure, you can contact me to find ways to hedge and trade this coming crisis. The commodity Supercycle is coming into play once again and copper recourse is one of the markets that we have to keep a real close eye on. Bloomberg reported that, “BHP Group Ltd. proposed a takeover of Anglo-American Plc that values the smaller miner at £31.1 billion ($38.9 billion), in a deal that would create the world’s top copper producer while sparking the industry’s biggest shakeup in over a decade. The No. 1 mining company proposed an all-share deal in which Anglo would first spin off controlling stakes in South African platinum and iron ore companies to its shareholders before being acquired by BHP. The total per-share value of the non-binding proposal is about £25.08, BHP said, a 14% premium to Anglo’s closing share price on Wednesday. A tie-up with Anglo would give BHP roughly 10% of global copper mine supply ahead of an expected shortage that many market watchers have predicted will send prices soaring.”
We do have natural gas inventories today and we’re expecting to see an injection of 85 BCF. The industry is going through some significant challenges domestically. The Biden administration needs to start signaling to the world that we are going to continue to be the world’s largest liquefied natural gas exporter. We need to stop playing politics with US energy and get back to reality that natural gas is going to be the best way to reduce greenhouse gas emissions in emerging markets along with increase use of nuclear power.
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Natural Gas Faces Breakdown Risk Amid Symmetrical Triangle Pattern
By: Bruce Powers | April 24, 2024
• Natural gas price faces a critical juncture as it tests support within a symmetrical triangle pattern, with implications for a potential breakdown. The current price action highlights the challenges of relying on patterns within consolidation.
Natural gas turns down and drops to a five-day low as heads towards a test of support at the lower boundary line of a symmetrical triangle. At this time of this writing the low for the day was 1.63, and trading continues near the lows. Today’s bearish reversal is occurring within a symmetrical triangle consolidation pattern, so the implications are less than if today’s bearish action occurred in a different part of the trend. However, that will change if a breakdown triggers a decisive decline below the lower boundary line. The prior swing low of 1.65 from last week has already failed to provide support.
Weekly Support Fails
This puts the weekly bullish reversal of a hammer candlestick pattern that triggered on Wednesday at risk of failure. If the 1.63 price level is the lowest for the day, a drop below it will trigger a breakdown of the triangle pattern. Clearer bearish confirmation is indicated on a decline below the 1.59 swing low from March 25. The next lower target would then be the trend low of 1.52. That is the second lowest support level seen in natural gas in about 29 years. The lowest was 1.44 seen intraday, but the price quickly recovered, and the day ended back above the 1.52 level. In other words, 1.52 is a significant support area.
Support Seen at Bottom of Triangle
Today’s bearish price action is an example of why patterns within consolidation are less reliable to follow through. That is what is happening today following five days of positive performance and a strong close yesterday. It looks like today’s test of support at the lower boundary line may be the lowest price for the day thereby providing a third touch of the line. If it continues to act as support a bullish reversal may yet take natural gas back up towards the top line of the triangle.
Reaction Following Test of Support to Provide Clues
Thursday’s closing price will provide a clue. If natural gas can end the day above last week’s low of 1.65 it will be a slightly stronger close than being below last week’s low. But what happens next should provide further clarity. Either natural gas bounces off today’s low or breaks through it triggering a breakdown of the triangle.
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Not Over. The Energy Report
By: Phil Flynn | April 24, 2024
Oil prices rebounded yesterday from signs that the geopolitical tension may not have eased as much as previously believed. After the close we saw the American Petroleum Institute (API) report that petroleum supplies came in tighter than the market was expecting. The API reported the crude oil inventories fell by 3.23 million barrels where the market expectation was that they were going to increase by 1.8 million barrels. We also saw a 595,000 barrel drop in gasoline inventories and distillate inventories eked out a gain of 724,000. Attacks on Russian oil infrastructure and commitments by Russia to lower oil production and keep exports steady should provide some support for diesel. We did see some weakness in a report that Chinese refinery runs fell by 919 kb/d to a seven-month low but that could be offset by signs that maybe this week US demand is going to look robust, at least compared to recent weeks.
The reduction of the war premium in oil came when it appeared that the global tensions between Israel and Iran had calmed down, yet that war premium is creeping back in on reports as Israel is warning civilians to get out of Rafah as they prepare an invasion. Reports say that Israel is getting ready to find tents for Palestinian civilians they intend to evacuate before the invasion. There’s also some speculation that Israel’s response Iran’s attack isn’t over yet and it’s just biding its time before it sends Iran a real message.
The House and Senate passed new sanctions on Iran. Last week Biden announced sanctions against Iranian steel and drone companies as well as 16 individuals on Thursday in response to last weekend’s aerial attack by Tehran against Israel. Yet the Biden administration is fearful to enforce sanctions on Iran? At first it was an attempt to appease Iran to try to cajole them into a new Iranian nuclear accord that supposedly fixed all the problems with the previous accord that President Trump rightly pulled out of. Now it appears that Iran just used the negotiations to fortify their economic position and their oil production and now it is seeing their exports hit a six-year high. Iran used its Biden oil windfall of course to fund their operations and support groups like Hamas, Hezbollah and the Houthi rebels.
While the Biden administration fails to enforce sanctions on Iran, the truth is that innovation in the oil and gas industry in the US could replace Iranian oil production if there was incentive to do so. Reuters reported that, “Technology advances are making it possible for U.S. shale oil and gas companies to reverse years of productivity declines, but the related requirement to frontload costs by drilling many more wells is deterring some companies from doing so. While overall output is at record levels, the amount of oil recovered per foot drilled in the Permian Basin of Texas, the main U.S. shale formation, fell 15% from 2020 to 2023, putting it on par with a decade ago, according to energy researcher Enverus.
Reuters writes that, “That is because fracking, the extraction method that emerged in the mid-2000s, has become less efficient there. In the technique, water, sand and chemicals are injected at high pressure underground to release the trapped resources. Two decades of drilling wells relatively close together, resulting in hundreds of thousands of wells, have interfered with underground pressure and made getting oil out of the ground more difficult. “Wells are getting worse and that is going to continue,” said Dane Gregoris, managing director at Enverus Intelligence Research firm.
But new oilfield innovations, which began being implemented more widely last year, have made it possible for fracking to be faster, less expensive and higher yielding. The advances in the past few years include the ability to double the length of lateral wells to three miles and equipment that can simultaneously frack two or three wells. Electric pumps can replace high-cost, high maintenance diesel equipment. “Companies now can complete (frack) wells faster and cheaper,” said Betty Jiang, an oil analyst with Barclays.
A drawback to the new simultaneous fracking technology, also called simul-frac, is that companies need to have lots of wells drilled and ready to move to the fracking phase in unison before they can proceed. Pumps inject fluids into and get oil and gas out of two or three wells at the same time, instead of just one. Because these act as an interconnected system, wells cannot be added piecemeal. But companies eager to cut costs have not deployed enough drill rigs to capitalize fully on the potential of the innovations.”
The Biden administration is very anti fossil fuel production in the United States. While they are trying to take credit for record oil and gas production, it’s clear that most of the gains have been made by innovation by the oil and gas industry and most of it has been done on private lands. Private oil and gas companies have been flourishing despite the attempts by the Biden administration to accuse them of war profiteering and price gouging. Matador Resources Co. pumped more oil than expected in the first three months of 2024 at a time when most US producers have pledged flat to moderate output growth this year.
Bloomberg reports that Matador’s 2% production over-performance to start the year was done while spending less money on drilling than projected, the company said. During the first quarter of 2024, Matador’s average oil production of 84,777 barrels per day beat its guidance of 83,500 barrels, the company said. “We now expect full-year production for 2024 at the high end of our previously announced average production guidance for oil of 91,000 to 95,000 barrels of oil per day,” the statement said.
The commodity super cycle comes in waves. Coffee and cocoa are making historic moves and industrial and precious metals are back in vogue. Major players have been taking notice and shifting their investments back to the futures. Bloomberg News is reporting that, “Some of the world’s biggest energy trading companies are returning to metals, years after getting burnt in the notoriously difficult markets. Vitol Group, Gunvor Group and Mercuria Energy Group are among the traders building out their metal’s teams, as they look to deploy capital generated by record profits. The shift comes as forecasters turn increasingly bullish on copper, aluminum and other metals, where long-anticipated production shortfalls are starting to take shape. Many commodities house’s also see strong links between metals usage and power markets — another growth area for traders according to Bloomberg.
What are we going to do with the electric car glut. The Biden administration says that we are in a race with China to control the EV market. The problem is that the Chinese consumers, like the American consumers, just don’t not want them. Oh sure, the International Energy Agency claims that, “over 20% of global car sales this year are projected to be electric, driving a transformative shift in the auto industry and cutting oil use for transport.” Yet these are the same folks that predicted that global oil demand would peak years ago.
Reuters reported that, “By most measures, the last thing China needs is more electric cars crowding a market with more losers than winners, driving down prices at the expense of profit and taking the fight for market share beyond China. And that’s just what it is getting. Automakers are expected to launch 110 EVs and plug-in hybrids in 2024, many at the Beijing auto show that starts Thursday. Those new offerings, dominated by Chinese brands, will join By contrast, there were just over 50 EV models on sale in the United States last year. But while there is a peril in China’s overcapacity, there is also a power in the hyper-competition it has unleashed, analysts, suppliers and executives say. China’s leading EV makers have found ways to slash vehicle development time, combining speed to market with new features and a pricing advantage rivals outside cannot match. the almost 400 “new energy” models already in China’s showrooms, according to industry data.” But the main problem is still sales, which even though they are growing in China, are not growing at the pace to get rid of the oversupply. And there doesn’t appear to be any plan to deal with the batteries once they start to go bad in 10 years.
Natural gas is still trying to put in a little bit of a bottom here. It has a tough road ahead. We are looking for an injection of 85 BCF this week.
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Oil CTAs (Commodity Trading Advisors) maintain a positive outlook on oil, increasing their long positions in oil futures
By: Isabelnet | April 24, 2024
• Oil
CTAs (Commodity Trading Advisors) maintain a positive outlook on oil, increasing their long positions in oil futures.
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Natural Gas Potential for Bullish Momentum Builds
By: Bruce Powers | April 23, 2024
• Natural gas remains stuck in a symmetrical triangle consolidation pattern, starting to break out above last week's high.
Natural gas has begun to break out above last week’s high of 1.806 as it again tests that price area as resistance with Tuesday’s high of 1.808. At the time of this writing, it is on track to end the session with a bullish continuation hammer candlestick pattern. Moreover, notice that the blue 8-Day MA was successfully tested today as support with the day’s low of 1.745. It is the first time in nine days that the 8-Day line has represented support, and it shows improving demand for natural gas, although still a minor change.
Watch for Weekly Breakout
A decisive rally above today’s high will trigger a bullish continuation of the advance that began from the most recent swing low at 1.64. That low tested support around the bottom of a symmetrical triangle consolidation pattern. Once support is seen at the bottom of a triangle and it turns up, a continuation towards the top boundary line of the pattern to test resistance is most likely. Also, since the triangle is well formed, with four points creating the boundaries of the pattern, a breakout can happen from the current advance.
Next Target is Top of Triangle
Resistance may not halt the advance at the top boundary line and instead a breakout could occur. However, keep in mind that upward momentum is essentially beginning from the recent swing low. So, even if the top line is broken there may not be enough demand on the sidelines to keep prices rising in the short term. An alternative bullish scenario would be to see signs of resistance around the top line on the initial approach. And that resistance leads to either consolidation or a pullback as natural gas sets up for a new entry that leads to a decisive upside breakout.
The short-term bearish scenario would see resistance around the top boundary line, leading to a retracement that takes natural gas back down to test support around the lower boundary line. That scenario increases the chance for a bearish breakdown from the triangle pattern.
Weekly Pattern is Bullish
As discussed in Monday’s article on natural gas, the weekly chart pattern shows a breakdown of a bearish shooting star candle last week, followed by a bullish breakout of a hammer candlestick this week. In other words, the market on a weekly basis gave a clear bearish signal, and then flipped around the gave a clear bullish signal. This type of flip from bear to bull in a short period of time is what can lead to sharp moves. In this case up. Certainly, there are no signs of it yet, however.
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$WTIC $OIL - Here the Daily Dotted-Grey 150/MA Spprt
By: Sahara | April 23, 2024
• ... $WTIC $OIL - Here the Daily Dotted-Grey 150/MA Spprt.
Where I said prior if it fails to hold it will target the 2/Day 150/MA (Not shown) for a 'Truncated-(e) in the 'Coil' (Shaded Bands). If that fails then it will want to head to the Lwr-Band of 'Coil for full Wave-(E)...
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Who’s The Leader. The Energy Report
By: Phil Flynn | April 23, 2024
Who’s the leader of the club that was made for me. JOE-BID-eeeen. Joe Biden, Joe Biden forever hold your banner high. High, High. For those of you young folks that missed being a part of the Micky Mouse Club, at least you have a chance to become a member of Joe Biden’s “American Climate Corp”. Joe Biden, in an effort to win back the hearts and minds of young, disgruntled Biden voters or perhaps in an attempt to get them to stop protesting at US college campuses across the land, is offering 20,000 jobs to young environmentally minded young folks so the can save the planet from what he sees as the biggest threat to mankind and to “ensure that poverty, race and ethnic status do not lead to worse exposure to environmental harm”. To try to inspire young people and their hearts and minds and votes that he has lost, Biden is trying to summon his inner Franklin D. Roosevelt by trying to copy a 1936 summer camp for underprivileged youth that Roosevelt called the Civilian Conservation Corp (CCC) to help create jobs during the Great Depression. Now Biden hopes that he can win back some votes by getting them to join this fine club.
While this youthful group cannot wear Mickey Mouse ears, perhaps they could wear caribou antlers because at the same time Biden has decided to block 40% of all oil and gas development in the Alaska National Petroleum reserve in an attempt to protect the so-called native habitat of the caribou and polar bears. Now normally the population of the caribou thrive near warmer oil pipelines but that’s a story for another day.
The Biden team also wants to block a road in Alaska that can bring out the precious metals that we would seemingly be needing if we’re going to electrify our economy. But perhaps he’s a little bit worried about putting some of those slave labor kids out of work in the cobalt mines. Maybe he could send those kids some of some of those cute caribou antler hats to make up for it.
Biden’s energy policies are raising real concerns about the future of energy security in the United States. People in the oil and gas industry and the mining industry are just scratching their heads wondering why the president continues to encourage the production of oil and gas and rare earth minerals in other countries while continuing to try to stymie the US. It’s very disturbing to many in these industries that the Biden administration continues to make short term political decisions regarding energy without any concept of the longer term damage that it’s doing to the US energy space. There are warnings from the American Petroleum Institute and others that are saying that Biden’s policies are creating the next major energy crisis but if you can’t beat them, I guess just join the club.
In the meantime, the market doesn’t seem to be too phased by the sanctions that are being placed in Iran. There’s a growing sense that new sanctions are not needed but also what we must do is enforce the sanctions that are already on the books. Javiar Blass at Bloomberg agrees writing that, “if you believe the Chinese government, the country doesn’t import any oil from Iran. Zero. Not a barrel. Instead, it imports lots of Malaysian crude. So much that, according to official Chinese customs data, it somehow buys more than twice as much Malaysian oil as Malaysia actually produces. Impossible? Well, of course. The reality is that China simply rebrands every barrel of Iranian crude it imports as Malaysian — the easiest and cheapest way to defy US sanctions, according to oil traders. It isn’t a small matter: “Malaysia” was China’s fourth-biggest foreign oil suppler last year, behind Saudi Arabia, Russia and Iraq. He says that, “The truth is, the US doesn’t need new sanctions on Iranian oil — it needs to enforce the ones it already has. For the last several years, either the White House has turned a blind eye to surging Chinese purchases of Iranian oil, with Biden seeming to be more concerned about rising oil prices than increased Iranian oil output, or the web of Chinese and Iranian obfuscation has outwitted US officials. I’m not sure which would be worse, but the result is the same: Iranian oil production last month surged to a six-year high of 3.3 million barrels a day, up 75% from the low point of 1.9 million barrels during the “maximum pressure” sanctions applied by former US President Donald Trump in late 2020.
I would take it a step further. I would argue that the lifting or the failure to enforce sanctions on Iran has made the world a more dangerous place. There’s absolutely no doubt that a lot of the turmoil that we’re seeing in the world today is because Iran has been able to fund terror groups like Hamas, Hezbollah and the Houthi rebels. Don’t believe the talking point that the reason why Iran is lashing out is because of Donald Trump and that he stepped away from the Iran nuclear accord. The reality is that Iran was never in the business of not wanting to get a nuclear weapon and that Iran nuclear accord would have stopped them.
WTI prices hit over $83.00 a barrel today before pulling back in a normal 3:00 AM central time sell off. The market did get a bit of a pullback on signs that manufacturing growth overseas is slowing while inflation continues to be strong. We get the S&P flash US services purchasing managers index today and we also get the flash US manufacturing purchasing managers index. The market is going to look at the rate of growth but also the inflation component and that could be a market mover for oil today. We also will get the American Petroleum Institute supply report, and the expectations are that we will see a pretty good draw across the board.
We’re seeing diesel prices gain on Rbob gasoline prices suggesting that refiners are starting to get caught up with gasoline inventories. If that gets confirmed from today’s report and tomorrow’s Energy Information Administration supply report, it could mean that we could be getting close to a peak on gasoline prices.
Natural gas prices are trying to hold steady. The big picture is there are still concerns about the Biden administration’s pause on liquefied natural gas exports approvals. Insiders continue to believe that this is just a political sideshow to try to win favor from Biden voters. Still, if the United States lives up to its potential as the largest natural gas exporter, then world will be a cleaner place. The best chance for developing nations to reduce their greenhouse gas emissions is to replace coal plants and oil plants with liquefied natural gas. It’s realistic and doable and affordable and ultimately good for the planet.
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Crude Oil Price Forecast – Crude Oil Continues to Be Volatile
By: Christopher Lewis | April 23, 2024
• The Tuesday session has been all over the place in the oil markets, as we continue to see a lot of uncertainty as to where we are going.
WTI Crude Oil Technical Analysis
The West Texas Intermediate Crude Oil Market initially rallied during the trading session on Tuesday but has struggled to show signs of being able to hang on. So, with that being the case, I think we just continue to hang around and look for some type of reason to get involved based on support and a bounce.
The $80 level in the WTI market, I think, continues to be a major floor. And the 50-day EMA, I think, kind of comes into the picture as well. If we can take out the highs of the day, then we could go look into the $85 level. But right now, it seems like everybody is breathing a little bit of a sigh of relief as the war in the Middle East has at least not spread further. So that of course helps. Nonetheless, I do think that this area around $80 continues to be important.
Brent Crude Oil Technical Analysis
Same thing over here in Brent, the $84.50 level is an area that I think a lot of people will pay attention to, as it’s between the 50 day EMA and the 200 day EMA. Again though, we need to take out the highs of the day to be truly impressive to the upside. And at that point, then I think you’ve got a situation where we could go look into the $90 level regardless.
I am a buyer of oil, but maybe not right now. I need to see a little bit more in the way of stability because we have been all over the place in the last three trading days. I think at this point we will start to form some type of supportive action though, and that might be your sign to get long.
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Natural Gas Bullish Weekly Setup on Deck
By: Bruce Powers | April 22, 2024
• Natural gas continues to trade within last Tuesday's range, hinting at a potential breakout of last week’s hammer candlestick pattern on a rally above 1.81.
Natural gas rises on Monday but continues to trade within the price range from last Tuesday with momentum and volatility muted. Tuesday’s high was 1.80 and it was briefly exceeded to the upside on Friday, with a high of 1.81. It looks like natural gas is eventually heading towards the top line of the symmetrical triangle consolidation pattern to test resistance.
If it were hit today the line would represent approximately 1.92. However, given the lack of enthusiasm in the advance so far, further consolidation may come first. The long-term downtrend line is an area to watch for support during short-term pullbacks.
Weekly Bullish Hammer Candle Setup
A key price level for natural gas is last week’s high of 1.81. If exceeded, the upper range of the triangle becomes the next target zone. Also, last week ended with a bullish hammer candlestick pattern. Therefore, a bullish breakout above 1.81 will trigger that candlestick pattern. Interestingly, the prior week ended with a bearish shooting star candlestick pattern, and it was triggered to the downside last Monday.
This provides a potential setup on the long side that could lead to a pickup in momentum. What we have is the potential for a bullish reversal in the weekly time frame, following a bearish reversal that was triggered the previous week. This type of “whipsaw” is what can sometimes begin sharp moves.
Next Opportunity for Breakout is with the Current Advance
Once a breakout of the triangle triggers, the price of natural gas should see a clear increase in momentum. The triangle pattern is well defined with five touches of the boundary lines so far. Given the clear establishment of the pattern a breakout, either up or down, can follow.
However, given that natural gas has been rising following the most recent swing low of 1.65, the next potential breakout would likely be to the upside. Either the current advance breaks through the top line and then rises above the most recent swing high of 1.94, or resistance is seen near the top line that leads to a turn lower. If the turn lower is brief, another attempt at an upside breakout could follow.
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Sanction Hokum. The Energy Report
By: Phil Flynn | April 22, 2024
Oil prices are pulling back as well as silver and gold on the reduction of risk of war and more sanction hokum. Both Israel and Iran seemed to suggest that the tit for tat responses to their escalating tensions had ended but at the same time because of Iran’s attack on Israel, the US has put on mores sanctions. Iran may be shaking in its boots because of the way the Biden administration enforces sanctions instead of their oil exports hitting a 6-year high, they can now go for a 7-year high.
Reuters reported that, “The package, which includes billions of dollars of aid for Ukraine, Israel and the Indo-Pacific, contains several measures on Iran sanctions. Two “could explicitly impact Iranian petroleum exports if implemented and enforced”, according to ClearView Energy Partners, a non-partisan research group. The first, the Stop Harboring Iranian Petroleum Act, or SHIP, would impose sanctions on ports, vessels and refineries that “knowingly engage” in shipping, transfers, transactions and processing of Iranian crude oil and products, ClearView said. Ships that violate the ban would be barred from U.S. ports for two years. However, the bill includes 180-day waivers that Biden could invoke that would avert oil price spikes. Election day USA is 197 days away. That is just a coincidence, I am sure. It was expected to pass the Senate and will be signed by Biden. Yet the Whitehouse is going to have a say on how, when and if the sanctions are going to be enforced. With a looming election and consumers already complaining about inflation and gas prices, it’s unlike the Biden team will enforce sanctions and Iran once again gets away with murder.
Sanctions, of course, may be the best example this week of wishful thinking since the International Monetary Fund last week thought that OPEC and Russia might start lifting gradually their production cuts in July. IMF assumes a full reversal of oil output cuts at the start of 2025 which I guess could be possible and more than likely we will need oil. Yet last week three anonymous OPEC+ sources who spoke to Reuters indicated that OPEC+ was considering an extension of its voluntary production cuts into the second quarter to lend further support to the market. What’s more, the sources suggested that the group could keep the voluntary cuts in place through the end of this year.
These new sanctions and the OPEC production cut extension comes as AAA comes out this morning about gas prices. They pointed out that the average price of gas increased by 27 cents in the first two weeks of April 2024, and AAA anticipates the cost will continue to rise. Yet they did point out that, “Lackluster domestic demand for gasoline paired with decreasing oil prices led to the national average for a gallon of gas climbing just four cents to $3.67 since last week.” Currently their latest data shows that gasoline prices are $3.675 a gallon for regular unlimited. That is slightly higher than yesterday, about four cents a gallon higher than a week ago about $0.14 higher than a month ago. Yet amazingly we’re just slightly higher than we were a year ago.
The wildfire in Canada may impact oil production as well as natural gas. Bloomberg reported that A 74-acre (30—hectare) wildfire in the Canadian oil sands prompted an evacuation alert for a community near Fort McMurray, the biggest city in the region. Residents of Saprae Creek, located about 25 kilometers (16 miles) by car southeast of the oil sands capital, were told to prepare for possible evacuation if wildfire spreads toward the community, the Regional Municipality of Wood Buffalo said in an alert. The fire is one of two out-of-control blazes in Alberta, home to the Canadian oil sands, the world’s third-largest crude oil reserves. The warning was issued after massive forest fires burned down whole swathes of Fort McMurray, forcing tens of thousands of residents to evacuate for more than a month. Those fires also prompted the suspension of more than 1 million barrels a day of oil production.
EBW Analytics reports that the May natural gas contract initially tested as low as $1.649 last week before a brief fire scare in Alberta threatening supply reinforced support. Extended Henry Hub weakness averaging just $1.57/MMBtu April-to-date may be a bearish indicator for the June contract, however. Still, dry gas production scrapes continued to grind lower to offer support while weather also edged higher. If LNG demand can rebound from last week’s lows, initial strength is probable early this week before trader positioning into final settlement biases risks lower.
We definitely have seen the rebound in the stock market and the big sell-off in silver and gold as the risk of World War 3 breaking out over the weekend seems to be reduced pretty substantially. Still the supply and demand situation remains very tight and this false perception that supplies are really ample could be changed dramatically over the next couple of weeks. The 3rd test seems to be more interested in the Brent crude than the WTI. Most of the tightness on that side of the pond, at the same time here in the US, complacency on gasoline demand may be our undoing. Weekly demand numbers are very volatile. Our expectation is that if the weather turns a bit better across the country we could see a real uptick in demand.
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Will Energy stocks bounce back in the second half of April? History says yes
By: TrendSpider | April 21, 2024
• Will Energy stocks bounce back in the second half of April? History says yes.
Over the last two decades:
70% win rate and average return of +4.38%.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 20, 2024
• Following futures positions of non-commercials are as of April 16, 2024.
WTI Crude Oil: Currently net long 300.1k, down 32.9k.
West Texas Intermediate crude had its back-to-back down week. On Friday last week, it ticked $87.67 intraday. This week, it rose as high as $86.18 on Tuesday, before ending the week down 3.8 percent to $82.22. Friday’s session was volatile with a high of $85.64 and a low of $81.13; in the end, traders decided the Israel-Iran conflict is not likely to spiral out of control – not yet anyway.
The crude has come a long way from last December’s bottom at $67.71. Traders will be particularly tempted to lock in profit if breakout retest at $81-$82 fails. WTI went back and forth between $71-$72 and $81-$82 for a year and a half before pushing through the upper end three weeks ago. The breakout is currently being tested.
In the meantime, US crude production in the week to April 12th was unchanged for six consecutive weeks at 13.1 million barrels per day; eight weeks ago, output was at a record 13.3 mb/d. Crude imports increased 27,000 b/d to 6.5 mb/d. As did crude inventory, which rose 2.7 million barrels to 460 million barrels. Stocks of gasoline and distillates, however, dropped 1.2 million barrels and 2.8 million barrels respectively to 227.4 million barrels and 115 million barrels. Refinery utilization dropped two-tenths of a percentage point to 88.1 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | April 20, 2024
NY Crude Oil Futures closed today at 8222 and is trading up about 14% 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. As of now, 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 currently trading below last month's close of 8317.
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.
Looking at the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bearish position at this time with the overhead resistance beginning at 8250 and support forming below at 8056. The market is trading closer to the resistance level at this time.
On the weekly level, the last important high was established the week of April 8th at 8767, which was up 17 weeks from the low made back during the week of December 11th. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed beneath that low which was 8455. This was a very bearish technical indicator warning that we have a shift in the immediate trend. We are still trading neutral on the Weekly Momentum Indicators and this is a warning that initial support has been breached. This strongly implies we should pay close attention now to the Weekly Bearish Reversals. If we begin to elect Weekly Bearish Reversals, then we are dealing with a more sustainable near-term correction. 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 1 week ago. Still, this market is within our trading envelope which spans between 5637 and 10351.
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.
Natural Gas Stuck Inside Consolidation Range
By: Bruce Powers | April 19, 2024
• Historical context suggests that 1.52 support is significant, suggesting that a drop below it could lead to further selling, and if it is retained there is the potential for an eventual upside breakout.
Natural gas shows signs of strength but cannot sustain it. A breakout above the three-day high of 1.80 triggered today before resistance was seen around 1.81. That led to a selloff that took natural gas down to the lower half of the day’s range.
Although the breakout to a four-day high is a sign of strength, the potential close in the lower half of the range is not. Moreover, Thursday also closed in the lower half of the range. Nevertheless, this is the type of uncertainty that can be expected when trading occurs inside a clear consolidation pattern.
Directionless Choppy Outlook Until Breakout
A bear pennant trend continuation consolidation pattern has been forming and the swing low at 1.65 that was reached on Tuesday further confirmed the pattern. That swing low has been followed by a low momentum advance. The logical target is an eventual test of resistance at the top boundary line of the pattern. If resistance is then seen, a possible drop to test the lower line may occur. In other words, until there is a clear breakout of the pennant momentum and volatility will be diminished.
Upside Breakout Would Be Bullish
Although this pennant is considered bearish since it is within a downtrend, a bullish reversal can also occur. On the downside, a decline below this week’s low of 1.65 indicates that a breakdown has started. The first target would then be the trend low at 1.52. However, if the breakdown follows through as it normally might, a decline to new trend lows is likely. Given that, it is important to consider historical context.
Sitting On Strong Support
In June 2020 natural gas reversed from a swing low of 1.44. That low was the lowest traded price in natural gas of the past 28 years. The prior low was 1.52, which is where it found support most recently. Further, the decline below support of 1.52 to the new low of 1.44 occurred in only one day.
A daily close above the 1.52 level occurred the next day and it was followed by a sustained rally. What this seems to indicate is that another drop below 1.52 could be a big deal and lead to further selling and risks seeing natural gas fall below 1.44. Also, there is a good chance that 1.52 is not broken to the downside given its significant, and an upside breakout of the pennant eventually occurs.
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Fear Strike Out. The Energy Report
By: Phil Flynn | April 19, 2024
A wild evening of risk on and risk off as the market fear cages had a significant test and geopolitical events are on the cusp of our worst nightmares. Now the market must decide whether the tensions are closer to the beginning or closer to the end.
Oil popped and dropped after it was reported that Israel responded to Iran’s attack on their country with a missile strike or drone strike or a combination of both. The early indications seem to suggest a limited response by Israel, perhaps in an attempt to not escalate the conflict but is already being criticized by some in Israel as a ‘weak” response” and calls for more significant action. Iran overnight also seems to be downplaying the attack.
The Wall Street Journal reported that, “The strike targeted the area around Isfahan in central Iran, one of the people said. Iranian media and social media reported explosions near the city, where Iran has nuclear facilities and a drone factory, and the activation of air-defense systems in provinces across the country after suspicious flying objects were detected. Much remained unclear about the extent or the impact of the Israeli action. State-run news agency IRNA said Friday morning that its reporters hadn’t seen any large-scale damage or explosions anywhere in the country and that no incidents were reported at Iran’s nuclear facilities. Flight restrictions imposed overnight by Iran were lifted in the morning.” This came after Iran was already seeking to lower tensions.
Bloomberg News reported that Iran is prepared to de-escalate tensions with Israel provided that it agrees to stop further military moves against Tehran’s interests, Foreign Minister Hossein Amirabdollahian said at the United Nations. “Iran’s legitimate defense and countermeasures have been concluded,” Amirabdollahian told the UN Security Council Thursday. Israel “must be compelled to stop any further military adventurism against our interests.” If not, he said, Iran will “give a decisive and proper response” that will make Israel “regret its actions.” So after some pretty dramatic moves and the risk on markets such as bonds, oil and gold, we seem to be pricing in that the worst may be over the rumors that Israel was going to hit Iran hard after the Passover holiday and talk of two other attacks on Iran being canceled seems to suggest that at least for the near term, the worst may be over.
Yet will it be enough to believe that this is over going into the weekend? It’s very possible that they will retaliate again. So, the fears of some of the worst-case scenarios of a major oil disruption seems to be on the back burner at least for now. I guess Iran can go back to celebrating the fact that they just saw their oil exports hit a new six year high yesterday according to the Financial Times giving the country an extra $35 billion dollars that they can spend on more global terror groups like Hamas, Hezbollah and the Houthi rebels.
The Iranian state media reported that the air strike by Israel’s Air Force was targeting their 8th tactical air base of the Iranian Air Force. The attack was near some of their nuclear facilities. According to the reports coming out of Iran, none of them were damaged and its business as usual. So, I guess that means that their secret nuclear weapons program is still on going. Oops I forgot, it’s supposed to be a secret.
No secret that the Biden administration did turn a blind eye to Iranian sanctions in the hope to reinvent the Iranian nuclear deal but at the same time now they need that oil if they’re going to win the election. The Biden administration now is in another desperate attempt to please the environmental base and is now restricting drilling and mining in Alaska. The Biden administration says they took steps to limit both oil and gas drilling on public lands and conserve 30% of US lands and water to combat climate change. The Interior Department finalized a regulation to block oil and gas development and 40% of Alaska’s National Petroleum preserve they say in an attempt to protect habitats for polar bears and Caribou and other wildlife in the way of life for indigenous communities. Biden also said that he was proud that his administration was taking action to conserve more than 13 million acres in the western Arctic.
Many experts believe that Biden’s action is going to jeopardize our future not only for oil and gas production but also for the production for the type of minerals that we would need if Biden is ever going to have a chance to achieve his dream of electrifying the US transportation fleet. By restricting mining but increasing the demand for metals, Biden is going to make the US more dependent on other countries for our economy to survive. This is not a good long-term strategy for U.S. economic growth nor is it a good strategy for the average American family.
For commodity traders, we’re seeing some great volatility and great opportunities to try to pick up some big moves. This means the volatility in commodities isn’t just in your normal risk assets where we’re seeing explosive moves in cocoa, coffee as well as industrial and precious metals. Be prepared to play both sides of the market but hedges should use sharp breaks to lock in hedges. Because after the dust settles and the geopolitical risk goes away, the underlying fundamentals for food and industrial and precious metals is that supplies are just too darn tight.
Natural gas, after what a bearish report, is attempting to rise from the ashes. There is a possibility and the market is hopeful that production cuts and reductions of drillings of wells would stop the bloodletting.
Yesterday Market Watch reported that the Energy Information Administration on Thursday reported a weekly increase of 50 billion cubic feet in domestic supplies for the week that ended April 12. On average, analysts had forecast a climb of 44 billion cubic feet, according to S&P Global Commodity Insights. Still with some base of seeing natural gas prices at historic lows there will still be more pain for the producers.
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$OIL $XLE $BPENER - We had a reaction from the Red-Zone. Now watching the BPENER MA's to see if we get the confirmation or not as we sit on the Spprt-Lines in OIL & XLE...
By: Sahara | April 19, 2024
• $OIL $XLE $BPENER - Latest
We had a reaction from the Red-Zone. Now watching the BPENER MA's to see if we get the confirmation or not as we sit on the Spprt-Lines in OIL & XLE...
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