Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Price Caps Woking Some, What? The Energy Report
By: Phil Flynn | June 11, 2024
Oil prices had its best day in two months as the market got over its OPEC cut “taper tantrum”. The market seemed to awaken to the fact that with demand trends being what there are and production cuts by OPEC and falling rig counts in the US, we are sleepwalking into a global oil supply deficit. Yet at least according to U.S. Treasury secretary Janet Yellen, the sanctions on Russian oil were working “somewhat”. Well, if she means they are working for Russia, then she is right.
Russia built a new market for its oil and gas and according to data from the Russian finance ministry, Russia’s revenues from oil and gas surged by 73.5% in the January through May period of 2024 compared to the first five months of 2023. After raking in so much cash from places like China and India and other black-market buyers throughout Europe, they can afford to be a bit magnanimous when it comes to cutting back production to try to get in line with their promises to the OPEC cartel. The oil market took notice after it was announced that Russia made one of its deepest production cuts in a year, lowering their production in 9.393 million barrels a day. There was a cut of 344,000 barrels a day and while they are still about 34,000 barrels above their target range, it shows a sign of good faith that Russia is on board with the production cuts as we have been predicting for some time.
Still, some OPEC members are struggling or cheating on the production cut. I know, it’s shocking. According to a Platts Survey, OPEC increased output by 120,000 barrels a day despite Russia’s cut. The OPEC cheater list happens to be the usual suspects such as Iraq in Nigeria. On the compliance side, the gold stars go to not only Russia but Kazakhstan and Mexico. Mexico cut their oil output to a four year low. This came as Venezuela flooded the markets ahead of sanctions.
Janet Yellen tries to convince the world that price caps work somewhat yet the black oil market trade continues to flourish. Sanctions enforcement is abysmal.
According to Tanker Trackers, have witnessed or identified 221 shift oil transfer sessions in the Riau archipelago, which is double what they saw a year ago.
Bloomberg said, “Russia has shipped about 3.4 million barrels a day of crude so far this year, valued at about $37 billion at the point of export, and working around western sanctions has been part of that.
Russian oil proceeds to the state budget increased almost 50% in May from a year ago. And while Russia’s oil producers are set to flourish here in the United States a cutback in the right counts is starting to raise questions as to whether US oil production is getting close to a peak.
Yesterday the markets saw in report from Bloomberg that got a lot of attention that said that unless the US oil rig count starts to rise, then U.S. oil production could fall by as much as 1,000,000 barrels a day as existing oil fields start to see a decline.
Bloomberg pointed out that drilling in the US shale patch dropped to the lowest level in almost two-and-a-half years as operators vowed to make good on promises to investors for subdued production growth this year.
According to the article, Adam Rich, deputy chief investment officer at Vaughan Nelson, a Houston-based investment manager said that “We could probably keep the 12-13 million barrel-per-day level for six to nine more months, but if we don’t see rig counts really start moving up here, that’s going to be a big problem.”
Add to that threats by Senate Democrats who go after US shale oil producers for price fixing is going to create a situation that is potentially going to leave the United States very undersupplied and very dependent on foreign sources of oil. Will the madness ever end?
Regardless oil prices had a huge comeback day yesterday one of its best day of months after people started to realize that the OPEC “taper tantrum” regarding the OPEC production cuts was way overdone and the fact that we are facing a potential supply deficit later in the year.
And if you look at OPEC data, they expect the demand for their crew to add average roughly 43.65 million barrels a day of the second half of 2024 to that table that would imply a crude deficit leading to a drawdown of 2.63 million barrels a day,. That is assuming that they were going to maintain its April production of 41.02 million barrels.
Goldman Sachs also said in its latest report that it expects a supply deficit of up to 1.3 million bpd by the third quarter of 2024 as travel and cooling demand ramps up through the summer. That has been in line with what the energy report has been saying. Obviously, we’re glad the market is starting to come to that same assessment.
And while gasoline demand in the United States has been rocky it’s still not that far from being able to get back near record highs.
We know that air travel demand is the highest level that’s been since 2019 now there are signs that global demand is starting to pick up. There are even reports of shortages of jet fuel in Japan as the yen has made travel to Japan attractive.
So overall there seems to be a global oil demand bounce. Bloomberg reported that, “- Gunvor Group, one of the biggest independent oil traders, is snapping up benchmark-defining cargoes of crude oil that other companies are offloading, a possible indication of the firm being bullish. The Geneva-based company has kept 17 out of 18 North Sea crude cargoes that have been put into so-called forward chains so far this month. The total volume controlled by one single company is the highest since at least December 2019 when Bloomberg started compiling data. Each cargo is 700,000 barrels.
Years ago, I was involved in a potential refinery project that never got off the ground. The plan was to try to take advantage of the shale oil revolution. Te problem that we have in the United States that our US refineries were not really built refine the light shale oil. The idea was to build a refinery to solve that problem.
Yet that that time the inability to be able to hedge the niche market became a difficulty and was eventually a nonstarter for the potential investors.
Yet years later it seems that a refinery project that is looking to do exactly that is getting off the ground because on so many levels it makes sense. Yet they are facing some of the same challenges.
Reuters is reporting that, “Element Fuels Holdings, a Dallas-area startup proposing to build the first all-new U.S. oil refinery in nearly 50 years, on Thursday said it was relaunching efforts to build a large plant in South Texas.
The Brownsville, Texas, project has been proposed by entrepreneur John Calce at least twice before by his ARX Energy, and Jupiter startups, with one leading to a bankruptcy filing. The project was originally owned by a holding company that also owned Centurion Terminals.”
Element is looking to raise funds for the first phase, which will allow the refinery to process about 50,000 to 55,000 barrels per day of naphtha feedstock into gasoline. The company estimates the initial phase will cost about $1.2 billion, Calce said. The company said it was in talks with banks, private credit funds as well the U.S. Department of Energy for funding from the Inflation Reduction Act.’ I wish them luck.
Yesterday’s sharp rebound should have broken the downtrend for oil and products.
We should be in a buy the brake’s mode perhaps until the 4th of July. We have macro headwinds with inflation data and the Fed, but the trend is back up as demand should outpace supply.
We also get the American Petroleum Institute (API) report. We expect a draw of 2 million barrels on Crude oil. We also expect to see the same draws for gasoline and distillate. After massive crude adjustments in the Energy Information Administration (EIA)report as well as a hug surge in demand for other oils last week, we could be due for a very bullish report as the adjustments start to level out.
The mishmash energy policy of course is keeping people confused but now there is more pressure to give consumers the choice and what type of vehicle they buy and where they drive and when they drive it. Now in a pressed release “U.S. Senate Commerce Committee Ranking Member Ted Cruz (R-Texas) announced his plan to force a vote on President Biden’s anti-consumer EV mandate.
Cruz will introduce a disapproval resolution under the Congressional Review Act (CRA) to overturn a soon-to-be final rule from the National Highway Traffic Safety Administration (NHTSA) that would effectively ban gas-powered vehicles and mandate electric vehicles for American consumers. As proposed, NHTSA’s Corporate Average Fuel Economy (CAFE) standards for passenger cars and light-duty trucks would increase the price of a new gas-powered vehicle by nearly $1,000 with, at best, speculative benefits. When combined with the administration’s massive increase in CAFE civil penalties and the Environmental Protection Agency’s (EPA) vehicle emissions rule, the expected final rule will raise car prices for consumers and hurt U.S. auto workers.”
Natural Gas has been getting the nice rebound hitting the highest price since January on the hot temperatures and weather but one of the things that has been relatively quiet has been this start to the hurricane season that was being predicted to be so active. And while the Atlantic looks extremely quiet for right now Fox Weather is keeping an eye on the gulf. Fox Weather says that another window of tropical development is looking more likely this upcoming weekend for the Gulf of Mexico.
Read Full Story »»»
DiscoverGold
Hedge Funds have the lowest Oil positioning ever. Worse than 2020.
By: Macro Charts | June 10, 2024
• Hedge Funds have the lowest Oil positioning ever.
Worse than 2020.
Read Full Story »»»
DiscoverGold
Natural Gas Eyes Higher Targets After Key Breakouts
By: Bruce Powers | June 10, 2024
• With natural gas testing new highs, recent trendline and pennant breakouts indicate more upside potential if key support levels hold.
Natural gas continued its ascent today, reaching a new trend high of 3.10 before pulling back intraday. That high almost completed a 1.414 (3.11) Fibonacci extended retracement of the most recent decline that began from the May 23 peak. Today’s low of 2.86 successfully tested support at prior resistance from last Thursday’s high, as well as support of the long-term downtrend line that was recently broken. Although Monday looks like it will close weak, in the red and in the lower third of the day’s trading range, the bigger picture remains promising for the bulls.
Two Breakouts Confirm Strength
Today’s pullback follows three up days culminating in a long-term trendline breakout confirmed by last week’s close above the line. In addition, there was a bull breakout of a shorter-term pennant trend continuation pattern last week as well. The breakouts just began, so there should be more upside to go. However, how the price of natural gas behaves around key price levels will provide clues. All breakouts can fail and some follow through faster than others.
Watch Behavior Around Support
The pennant breakout should help maintain upward momentum (faster) as the long-term breakout of the trendline progresses (slower). Pullbacks should recover quickly and not retrace too deep. The area around support of the declining trendline is key for the bullish outlook to be maintained in the near term. However, if there is a daily close below the trendline, the risk of a deeper retracement rises.
There are several price areas to watch for support below the trendline. First, there is the top boundary line of the pennant. Thursday’s low is at 2.79 and be used as a guide as well since it bounced off support of the top boundary line. Further down is the 20-Day MA at 2.64 currently, and the 200-Day MA at 2.46.
Upside Targets Start with 3.18
On the upside, there is a target derived from the bull pennant up at 3.78. It remains to be seen whether that target will eventually be reached, and it could take a little time. Interim price targets include the swing high from January at 3.39 and the 2023 peak at 3.64. There is also the completion of an 88.6% Fibonacci retracement at 3.18.
Read Full Story »»»
DiscoverGold
Crude Oil Continues to Look For Buyers
By: Christopher Lewis | June 10, 2024
• The crude oil market rallied slightly in the early hours on Monday, as the market digests a lot of oversold conditions, and of course the attack on shipping over the weekend.
WTI Crude Oil Technical Analysis
Crude oil has rallied slightly on the 4-hour chart in the West Texas Intermediate Grade, and it looks like we are trying to continue the upward trajectory. Quite frankly, this is a market that had gotten far too oversold and now it looks like we are starting to come to grips with the idea of perhaps the worries about the economy were overdone because quite frankly, in the United States, we had a larger than anticipated jobs number that has people thinking that perhaps the demand for crude oil will continue to be strong in America.
That being said, we also have to worry about a lot of geopolitical concerns, and that could drive oil higher as well. There was an attack in the seas over the weekend so again, we’ll just have to see how this plays out. But clearly, this is an oversold market. I think at this point in time, short term pullbacks continue to be buying opportunities. But you probably want to be somewhat rapid to take your profit.
Brent Crude Oil Technical Analysis
The Brent four-hour chart looks pretty much the same as you would expect with the $80 level offer a little bit of resistance, but if we can clear that, then it’s possible we could get to the $82 level. Short-term pullbacks continue to be buying opportunities, and it is worth noting that both Brent and the West Texas Intermediate crude oil grades had hit a very low level that historically has been fairly well supported. So I think value hunters are coming in to pick up the market. With that being said, I like the idea of buying this dip and I have no interest whatsoever in shorting.
Read Full Story »»»
DiscoverGold
The Energy Report
By: Phil Flynn | June 10, 2024
Iranian backed Houthi rebels are kind of like cockroaches that you can’t get rid of. They keep coming back and attacking. Despite the Biden administration’s plan to stop them, so far it has not. Back in December of 2024, the Biden administration launched the so called, “Operation Prosperity Guardian” which was a coalition of more than 20 nations committed to defending international shipping and deterring Houthi attacks in the Red Sea yet the attacks continue. Over the weekend Houthi rebels attacked two commercial ships in the Gulf of Aden, increasing the number of launched attacks since Nov. 19, 2023, to 175 according to Reuters. This must be frustrating for the Biden Administration as it is another clear failure that they will have to find a way to blame on Donald Trump.
You would think the Houthis would be nicer to Biden because back in February of 2024 his administration tried to appease the rebels and Iran and removed the Houthis from the Foreign Terrorist Organization and Specially Designated Global Terrorist lists. Biden must have thought if you can’t trust a Houthi, then whom can you trust? But the real reason he did it was because his hated rival, President Donald Trump or that gentleman, as Biden calls him, originally put the Houthi’s on the terror list in the first place. It was just another thing Biden unwound from President Trump like border policies, Federal drilling policies and the politically vindictive killing of the Keystone XL pipeline.
Yet despite this appeasement it appears it has just made the Hothi rebels more aggressive. I guess when you’re not designated as a terror group you want to try harder to get the recognition you think you deserve.
So back in January Biden once again designated the Houthi rebel group as a terrorist organization. The Biden administration was forced to do an about face because after his move the Hothi rebels launched drone and missile attacks on U.S. military ships and commercial vessels operating in the Red Sea. The Biden Administration, empowering the rebels and their major funder Iran, became an international embarrassment, so they had to put them back, grudgingly, on the list.
Now it appears that before the weekend attack the rebels may now be in the hostage taking business. The AP reported that at least, “nine Yemeni employees of United Nations agencies have been detained by Yemen’s Houthi rebels under unclear circumstances, authorities said Friday, as the rebels face increasing financial pressure and airstrikes from a U.S.-led coalition. Others working for aid groups also likely have been taken.
For the oil market this is simmering geopolitical risk. It’s almost unthinkable that a small rebel group can disrupt global shipping lanes and the Biden administration continues to let it happen. Or at the very least has been very ineffective at stopping it.
On the supply side there are reports that Iraq’s oil minister sees a deal to allow more oil flow. Reuters is reporting that Iraq’s Oil Minister Hayan Abdel-Ghani said there has been progress in talks with Kurdistan region officials and representatives of international companies operating there for a deal to resume northern oil exports. Stay tuned.
Retail gasoline prices are sliding. US air travel continues to rise. According to the TSA US air travel is up 7.7% at 2019 numbers that’s incredible. On the ground there are still big questions about gasoline demand and weekly demand numbers that have been all over the map and while we’re seeing signs that demand is still relatively strong, there still seems to be some resistance from drivers because of being squeezed by inflationary pressures.
US oil production is at the very least straining on growth if not hitting a peak. Reuters reports that, “U.S. energy firms this week cut the number of oil and natural gas rigs operating to the lowest since January 2022, energy services firm Baker Hughes (BKR.O), opens new tab said in its closely followed report on Friday. The oil and gas rig count, an early indicator of future output, fell by six to 594 in the week to June 7, decreasing for the second time in three weeks. Baker Hughes said that puts the total rig count down 101, or 15% below this time last year.
Oil and petroleum held up rather well even in the face of a jobs report that seemed to blow away expectations and raise concerns that the Federal Reserve would not be able to cut interest rates. The market is starting to realize in the aftermath of the OPEC plus cartel session to extend their production cuts, that we are going to see a very tight market later this year.
Oil inventory declines are going to continue and if the jobs market numbers are correct the demand for gasoline should improve. In fact I would argue that gasoline demand has been underreported here in the last few months and we will expect to see it continue to recover.
The Biden administration has taken advantage of the weakness in oil to buyback oil for the reserve. Reuters reports that, “The administration of President Joe Biden said on Friday it has sped up offers to replenish crude oil for the Strategic Petroleum Reserve following its historic sale from the stockpile in 2022. Energy Secretary Jennifer Granholm said in an exclusive interview on Tuesday that the department could speed replenishment of the SPR this year, beyond a roughly 3-million-barrel month pace.” They still have a long way to go and I doubt the Biden administration is going to live up to Jennifer Granholm Holmes hopes that they could refill the SPR by the end of the year. At this point they better hope for the end of the decade.
European politicians are getting the green energy slap back as people in Europe realize these policies are not meant to save the planet, they’re just meant to take away their freedoms. Bloomberg reports that, “European voters handed gains to right-wing parties in many countries, while support for the Greens plunged, leaving the bloc more fragmented and its ambitious environmental goals in doubt. While Ursula von der Leyen’s center-right European People’s Party looks set to win the largest number of seats in the European Parliament, boosting her chances of a second term, dramatic losses for the governing parties of France and Germany upended the core of the European project.
In France, President Emmanuel Macron’s party was trounced so badly by Marine Le Pen’s far-right National Rally that he called snap legislative elections for June 30. In Germany, the anti-immigration won a bigger share of the vote than Chancellor Olaf Scholz’s Social Democrats, which recorded their worst-ever showing. Overall, the results present a setback for European unity and the chance of major reforms.”
The reality is that people in these countries realize that these policies from the global elitist are meant to take wealth away from them and put it into the hands of the powerful. They are trying to take away people’s rights in the name of so-called climate change and take away national identity. It’s only a precursor for more government control on individual’s rights. Their policies are failing and people are waking up to the fact that this sham about the energy transition is really about amassing more power for themselves.
As I have written many times before, the green energy policies of the leftist has made the world less secure and energy more expensive. This is especially true in Europe and people have had enough. Analyst Anas Alhajji also point out that the decline in the Euro relative to US dollar means higher energy bills for the EU, even if oil and gas prices remain flat! Funny that the largest energy subsidies to consumers in the world are in the EU and that includes “fossil fuel” subsidies! No wonder they want to send those that championed these crazy policies packing.
Read Full Story »»»
DiscoverGold
Oil: In contrast to futures market's expectations, Goldman Sachs forecasts a positive outlook for oil prices over the next 3 months
By: Isabelnet | June 10, 2024
• Oil
In contrast to futures market's expectations, Goldman Sachs forecasts a positive outlook for oil prices over the next 3 months.
Read Full Story »»»
DiscoverGold
COT on energy: OPEC+ ill-timed production hike announcement, when prices were under pressure from softer macro data, drove the #Brent long to a ten-year low last Tuesday. Potentially setting the stage for strong rebound once the tech. and/or fund. outlook turn more favorable
By: Ole S Hansen | June 9, 2024
• COT on energy: OPEC+ ill-timed production hike announcement, when prices were under pressure from softer macro data, drove the #Brent long to a ten-year low last Tuesday. Potentially setting the stage for strong rebound once the tech. and/or fund. outlook turn more favorable.
Read Full Story »»»
DiscoverGold
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | June 8, 2024
• Following futures positions of non-commercials are as of June 4, 2024.
WTI Crude Oil: Currently net long 224.6k, down 59.9k.
In the wake of a breach last week of a rising trendline from last December when West Texas Intermediate crude bottomed at $67.71, there was more selling this week, dropping 1.9 percent to $75.53/barrel.
From oil bulls’ perspective, the good thing is that the crude finished the week substantially off its low. On Tuesday, it tagged $72.48 intraday. This just about tested the low end of a range between $71-$72 and $81-$82 that persisted for 19 months before the upper end gave way 10 weeks ago and was subsequently lost early May.
The weekly produced a bullish hammer. Odds favor a rally. Immediate resistance lies just under $77.
In the meantime, US crude production in the week to May 31st was unchanged for 13 consecutive weeks at 13.1 million barrels per day; 15 weeks ago, output was at a record 13.3 mb/d. Crude imports increased 289,000 b/d to 7.1 mb/d. As did stocks of crude, gasoline, and distillates, which respectively grew 1.2 million barrels, 2.1 million barrels and 3.2 million barrels to 455.9 million barrels, 230.9 million barrels and 122.5 million barrels. Refinery utilization increased 1.1 percentage points to 95.4 percent.
Read Full Story »»»
DiscoverGold
Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | June 8, 2024
• Top Movers
Tokyo Rubber Futures 4.54 %
AU - Victoria Base-Load Electricity Futures 2.14 %
Tokyo Silver Futures 1.99 %
NSW Baseload Electricity Continuous 1.93 %
AU - Queensland Base-Load Electricity Futures 1.19 %
• Bottom Movers
ICE Newcastle Coal Continuous 2.13 %
LBMA Silver in USD 0.13 %
*Close from the last completed Daily
DiscoverGold
NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | June 8, 2024
This market made a new high today after the past 3 trading days. The market opened higher and closed lower. The immediate trading pattern in this market has exceeded the previous session's high intraday reaching 7625. Therefore, this market closed below the opening print while also closing down from the previous closing yet it was weak going into the close.
Clearly, this market has broken under the former broader cyclical support which now resides above the market at 7714 rendering it vulnerable to a further decline at this time. The market crossed that critical cyclical support seven sessions ago confirming a bearish trend and now only a rally back above this level would signal a reversal in the tone of the the market implying a rally ahead.
During the last session, we did close above the previous session's Intraday Crash Mode support indicator which was 7126 settling at 7555. The current Crash Mode support for this session was 7297 which we closed above at this time. The Intraday Crash indicator for the next session will be 7444. Now we have been holding above this indicator in the current trading session, and it resides lower for the next session. If the market opens above this number and holds above it intraday, then we are consolidating. Prevailing above this session's low will be important to indicate the market is in fact holding. However, a break of this session's low of 7521 and a closing below that will warn of a continued decline remains possible. The Secondary Intraday Crash Mode support lies at 7196 which we are trading above at this time. A breach of this level with a closing below will signal that a sharp decline is possible.
Intraday Projected Crash Mode Points
Today...... 7297
Previous... 7126
Tomorrow... 7444
This market has not closed above the previous cyclical high of 8062. Obviously, it is pushing against this resistance level.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Focusing on our perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bearish position at this time with the overhead resistance beginning at 7725 and support forming below at 7413. 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. Afterwards, the market bounced for 17 weeks reaching a high during the week of April 8th at 8455. Since that high, we have been generally trading down for the past 8 weeks, which has been a very dramatic move of 17.32% in a stark panic type decline. Nonetheless, the market still has not penetrated that previous low of 6771 as it has fallen back reaching only 7248 which still remains 7.044% above the former low.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a weak posture. 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 3 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 has made a low following the previous high of April at 7615. The fact that the market for May close below the previous month's low is a sign of near-term weakness with a possible decline into the next turning point on the Array. Currently, June has traded as rallied to exceed the previous month's high reaching 8157.
Some caution is necessary since the last high 8767 was important given we did obtain two sell signals from that event established during April. That high was still lower than the previous high established at 9503 back during September 2023. Critical support still underlies this market at 6760 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak trading beneath last month's low.
Natural Gas Price Forecast: Bull Breakouts Signal Strong Uptrend
By: Bruce Powers | June 7, 2024
• Following a new daily high close in the uptrend, natural gas surged on Friday, confirming a bull pennant breakout and triggering a trendline break.
Following a new daily high close for the uptrend yesterday, natural gas took off on Friday, confirming a bull pennant breakout and triggering a trendline break. Moreover, a bull trend continuation signal triggered above 2.92, on the way to the day’s high and a weekly high of 2.97. However, the market continues to trade near the highs of the day at the time of this writing, and it could reach a higher price level before the weekend.
Unless there is a pullback before today’s close, it is on track to close strong, in the top quarter of the day’s range and possibly above the prior trend high at 2.92. The stronger the close, the more likely it should be able sustain upward momentum.
Dual Breakout: Bull Pennant, Long-term Trendline
Today’s breakout is the latest technical clue that the uptrend in natural gas is improving and becoming more sustainable. Although there were two attempted breakouts of a bull pennant trend continuation pattern recently most of the structure of the pattern was retained. Given today’s strong momentum through a clear breakout level indicates that the market has recognized the change. The downtrend has defined dynamic resistance for the full trend beginning from the 2023 peak at 3.64. That peak is now at risk of being broken eventually if the uptrend continues to strengthen.
Improving Technical Clues
Keep in mind that today’s high puts the price of natural gas up by 95% from the February trend low. That is a healthy swing historically in a relatively short amount of time. Nevertheless, support was successfully tested near the 20-Day MA recently, indicating that the 20-Day line is a good near-term line to watch for the current trend. Also, today’s rise moves natural gas further away from the long-term 200-Day MA, a sign of long-term strength.
Pennant Target Above 2023 High
The measuring objective from the bull pennant offers an initial target of 3.78. That price target is above the 2023 high of 3.64. On the way up it must contend with possible resistance around the 78.6% Fibonacci retracement at 2.99 and the prior interim swing high resistance at 3.02. An interim prior swing high is at 3.39. The weekly chart also contains bullish clues after today as this week’s candlestick pattern should negate the prior two week’s bearish candles.
Read Full Story »»»
DiscoverGold
Soft Cuts. The Energy Report
By: Phil Flynn | June 7, 2024
Petroleum prices rallied yesterday but are dropping today ahead of the all-important monthly jobs report that is expected to show that the US added 190.000 jobs which may settle the question as to whether the Federal Reserve will actually cut interest rates and when they might do it.
Oil prices, which have suffered 3 weeks of losses on concerns about a softening global economy will get a boost from the fact that the Fed is about to embark upon a rate cutting campaign.
Oil prices and commodities surged as the European Central Bank (ECB) cut rates as expected rates now the pressure is on the Fed to do follow the rate cut leader.
The ECB Cut the deposit rate to 3.75% from a record 4.0%, but failed to signal whther that was on cut and done or just the beginning. This morning’s eurozone GDP came out as expected so that’s not going to give us a hint one way or the other. The Eurozone GDP Revised QoQ Actual 0.3% (Forecast 0.3%, Previous 0.3%) Eurozone GDP Revised YoY Actual 0.4% (Forecast 0.4%, Previous 0.4%)
Part of the rebound in the price of oil and petroleum was the fact that the market started to realize that they misinterpreted the OPEC plus plan to tapper back on production cuts. Both Russia and Saudi Arabia wanted to point out that the market had overreacted to their announcement.
The reason why they thought they could cut back maybe as much as 180,000 barrels a day is because they expect the demand for oil to increase by anywhere from 1.5 million barrels a day to 2,000,000 barrels a day.
They also wanted to make clear that if that demand growth didn’t happen then the taper would not happen.
The cuts that they are going to consider tapering what’s that 2.2 million barrel a day voluntary cuts from 8 different OPEC members.
OPEC Plus signaled that perhaps in October of 2024 to September of 2025 ahead of the winter demand period when they expect to see a supply deficit that some of these countries that we’re volunteering these cuts might start to incrementally add a few barrels back to the market.
The amount they’re talking about maxes out at 180,000 barrels a day. demand growth increases within their range later in the year the market is going to really feel these extra barrels at all .
In 2025 at the end of the year they were talking about bringing back about 200,000 barrels a day each month from January to September of 2025
Energy Intelligence reported that Saudi Prince Abdulaziz that “ Given the uncertainty around demand growth, the producers said the scheduled return of these volumes could be paused depending on market conditions. “We’re waiting for interest rates to come down. [We want to see] better trajectory when it comes to economic growth, global growth, not pockets of growth here and there. [We want to see] more certainty on the overall economic trajectory. That will probably cause demand to increase with a clear path,” said Prince Abdulaziz.
Zerohedge reported that Russia also is on board with trying to reassure the markets that they will not see a flood of oil.
““Our reduction against April continued in accordance with our OPEC+ agreements,” Novak told reporters on the sidelines of the St. Petersburg International Economic Forum, as quoted by Russian news agency TASS.
Asked about exact numbers for the May oil production, Novak said that the scale of the output cut would become clear in about a week.
When the OPEC+ members announced in early March their intentions to extend the cuts into the second quarter, Russia changed its production/export cut plan and said that it would reduce supply by 471,000 bpd in the second quarter in the form of cuts to oil production and exports. In April, Russia pledged to reduce production by 350,000 bpd and exports by 121,000 bpd. In May, the 471,000-bpd reduction would be in the form of a 400,000-bpd cut to production and 71,000 bpd cut to exports, and in June the Russian supply cut would be 471,000 bpd entirely from production reductions.
Output cuts were to account for most of the extra Russian supply cut this quarter, and they could be the result of reduced refining capacity with maintenance in Q2 and refinery rates estimated to have slumped due to Ukrainian drone attacks on Russian refineries.
I do not want to get corny but it’s notable that US Ethanol exports surged in April. Karen Braun at K KANNBWK pointed out that U.S. ethanol exports in April at 811M liters (214M gallons) were the second highest for any month on record and up 51% from the 3yr April avg. Canada accounted for 29%, United Kingdom 16% and India 9%. Huge monthly record for US ethanol exports to the UK.
You had better get ready for the heat wave that’s going to impact large parts of America not only could it affect crops but it’s going to add to demand for electricity as people try to keep cool.
Fox Weather reported that Triple-digit heat wave continues to scorch West as Las Vegas forecast to climb over 110 degrees. The dangerous heat has prompted the issuance of Excessive Heat Warnings from California to Arizona. Numerous record-high temperatures could fall throughout the region as temperatures rise as high as 25 degrees above average.
Natural gas prices are getting support from the heat even after the Energy Information Administration reported a higher-than-expected injection. EIA said that working gas in storage was 2,893 Bcf as of Friday, May 31, 2024, according to EIA estimates. This represents a net increase of 98 Bcf from the previous week. Stocks were 373 Bcf higher than last year at this time and 581 Bcf above the five-year average of 2,312 Bcf. At 2,893 Bcf, total working gas is above the five-year historical range.
Read Full Story »»»
DiscoverGold
Crude Oil Advances Amid Downtrend, Eyes Key Levels
By: Bruce Powers | June 6, 2024
• Crude oil rallies to 38.2% Fibonacci retracement, targeting 76.87 and 77.84 next, with potential resistance at the 20-Day MA and 200-Day MA levels.
Crude oil rallied to complete a 38.2% Fibonacci retracement today with a high of 76.0. It continues to trade near the highs of the day at the time of this writing and may continue to progress higher. The next higher target is the 50% retracement at 76.87, followed by the 61.8% Fibonacci retracement at 77.84. That higher price level looks interesting as it is close to the 20-Day MA, which is currently at 77.99. Since the 20-Day line has been declining, it may match the 61.8% level by the time crude gets near there. Also, be aware that the 61.8% retracement matches this week’s high at 77.81.
Bouncing Within a Downtrend
Currently, crude is within a downtrend with a larger symmetrical triangle consolidation pattern. It is now retracing its previous decline, but once complete a decline to test this week’s low of 72.73 may occur. Or the lower boundary area of the triangle could yet be tested as support. Potential resistance around the 20-Day MA is the anticipated high of the current bounce. However, resistance could turn crude back down at lower levels as well.
20-Day MA Marks Likely High Target
A daily close above the 20-Day MA would start to improve the near-term outlook in crude. Since it remains in a downtrend the expectation is for a continuation of the downtrend once the current bounce is complete. In addition to the 20-Day MA, the 200-Day MA is at a price of 80.04. It is close to the most recent swing high of 81.0, where resistance was seen. Together, the 200-Day line and swing high identify a potential resistance zone from 80.04 to 81.0.
Week’s Low Hits ABCD Pattern Target Then Bounces
Is there any significance to this week’s low of 72.73? It turns out that 72.56 completes a falling ABCD pattern when utilizing the two most recent downswings. The pattern is marked on the chart. Once price symmetry was matched between AB and CD legs of the pattern, a pivot is identified. The subsequent bullish reaction from that price zone confirms that the market seems to have noticed. It also improves the chance that crude can rally into higher targets before turning back down, if it is to eventually do so.
Read Full Story »»»
DiscoverGold
Natural Gas Price Forecast: Breaks Out of Bull Pennant
By: Bruce Powers | June 6, 2024
• Natural gas breaks out of a bull pennant pattern, rallying past 2.83 resistance, and aims for further gains with a strong close and trend confirmation.
Natural gas breaks up and out of a bull pennant pattern today with a rally above Tuesday’s 2.83 high. Resistance was seen near the top trendline with a high of 2.88 at the time of this writing. Today was the second test of resistance at the trendline. Natural gas is on track to close weak however, in the bottom half of the day’s range.
This would question the sustainability of the pennant breakout. Next, watch for bullish confirmation with a continuation above today’s high or a drop below the low. The low is currently at 2.72. If natural gas does not close in a strong position, the potential to dip back into the consolidation pattern increases.
Recent Peak of 2.92 Up Next?
The most recent trend high was at 2.92. If the bull trend continues that high should be easily exceeded. Whether the price of natural gas can continue to climb following a trendline break remains to be seen. But so far it is off to a good start. Following Thursday’s close, a daily close above today’s high will confirm the trendline breakout and a daily close above 2.92 confirms a continuation of the bull trend. Nonetheless, even if the progression higher stalls after a trendline breakout, if natural gas stays above the trendline, a continuation higher is the most likely scenario, unless there is a drop through trendline support.
Watching for Further Confirmation of Strength
After a confirmed trend continuation signal with a daily close above 2.92 natural gas would next be targeting two prior swing highs. The first is at 3.39 and the second is 3.64. That top target was the peak for 2023. That peak in October 2023 at 3.64 completed an 87.2% advance from the 1.95 swing low from April of last year. The current rally has already exceeded that advance on a percentage basis as it was up by 92.1% at the recent trend high of 2.92.
20-Day MA is Near-Term Support at 2.58
Regardless of the bull pennant breakout, until there is further confirmation of strength a failure remains a possibility. Key near-term support is at the 20-Day MA at 2.58. It happens to have converged with the lower boundary line of the pattern today and therefore each line identifies a similar support area. Below the 20-Day line is the 200-Day MA at 2.46. It has already been successfully tested once as support and should do so again.
Read Full Story »»»
DiscoverGold
OPEC and Other Oils. The Energy Report
By: Phil Flynn | June 6, 2024
Oil prices are trying to bottom, again, as OPEC Plus tries to calm the markets surrounding its oil production cut tapering plans and after the Energy Information Administration (EIA) report that suggests that while gasoline demand and diesel demand fell, the demand for those mysterious “other oils” surged.
Oh yes! The EIA has heads spinning again with data and adjustment numbers that, to say the very least, are raising some skeptical eyebrows.
Not only did the EIA have to use a massive 17.1-million-barrel adjustment number to make the data fit in all the right places, but the petroleum product demand data also raised more questions than answers.
The EIA seemed to feed into the weak gasoline and diesel demand mantra that has been permeating the marketplace, but other data seems to raise questions as to whether that data was really telling the whole story.
The EIA said that gasoline demand fell last week on the week that ended May 31st by 20300 barrels a day to week to 8.916 million barrels a day.
They also said that distillate demand fell 429,000 barrels a day to 3.367 million barrels a day.
Yet overall oil product demand rose because of the other oils category that a massive demand spike of 1.481 million barrels a day to 5.93 million barrels a day that shattered the seasonal record.
That surge in demand for other oils that include the gasoline additive naphtha as miscellaneous other products includes all finished petroleum products not classified elsewhere, including petrolatum, lube refining byproducts (aromatic extracts and tars), absorption oils, ram-jet fuel, petroleum rocket fuels, synthetic natural gas feedstocks, and specialty oils.
And we all know that we see a lot of demand for these other oils on Memorial Day weekend. Maybe some use them to cookout and BBQ! That is perhaps why the demand for those other oils is at an all-time high for this time of year.
And so, while the market has been bemoaning what they perceive as weak gasoline and diesel demand it’s amazing that we saw overall demand for all petroleum products hit 20.510 million barrels a day.
The data suggests that the demand numbers that have been perceived as weak are not as weak has a market has thought.
And as my good friend Tim Dallinger who is a mechanical engineer and a hydraulic specialist and energy analyst points out, the weak demand mantra the trade has been concerned about doesn’t really fit the reality. He points out that if you look at crude inputs from the EIA they are at a seasonal record.
Considering a 4-week moving average, the EIA product demand proxy matches 2019 high’s. Dallinger did say that the moving average for implied distillate demand is down but is only just 0.356 MMBD from the all-time peak.
EIA said that crude oil refinery inputs averaged 17.1 million barrels per day, which was 61 thousand barrels per day more than the previous week’s average. Refineries operated at 95.4% of their operable capacity last week. Gasoline production decreased last week, averaging 9.5 million barrels per day. Distillate fuel production increased last week, averaging 5.1 million barrels per day.
And if you look at the supply according to the Energy Information Administration, we are below average in every major quarter category, even more so if you consider that the Biden administration has drawn down the strategic petroleum reserve to historically low levels.
The EIA said that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.2 million barrels from the previous week. At 455.9 million barrels, U.S. crude oil inventories are about 4% below the five-year average for this time of year. Total motor gasoline inventories increased by 2.1 million barrels from last week and are about 1% below the five-year average for this time of year. Distillate fuel inventories increased by 3.2 million barrels last week and are about 7% below the five-year average for this time of year.
So, it’s very possible that the market has way overplayed itself to the downside based on this perception that the demand for oil products was falling apart. Perhaps the market got it wrong.
OPEC is suggesting that the market got it wrong and tried to ease concerns about the oil production cut taper tantrum that they created at the last OPEC meeting.
Yesterday Saudi Arabia raised demand concerns when they lowered their Arab like crude official selling price to northwest Europe and Asia. Some people theorized it was because they were worried about weakening demand. Yet OPEC suggests that the move was not inspired by weak demand nor was it an attempt to increase their market share but more than anything the move was to maintain their current market share.
This morning OPEC Secretary General Haitham Al Ghais of Kuwait addressed the OPEC oil taper tantrum. Not only did he say that he expects to see OPEC first quarter oil demand growth to grow by an impressive 2.3 million barrels per day he also wanted to remind people that OPEC had the option to pause or even reverse the will output increase.
He also said that even as they cut prices to Europe and Asia, he wanted to point out that he is not trying to increase open market share. I guess that means he’s just trying to defend what share they have.
Russian Deputy Prime Minister Alexander Novak also seemed to suggest the oil reaction to the oil taper was overdone by saying, “OPEC could react very quickly to changes in the oil market.”
So, if the unemployment report doesn’t scare the market into believing that the Fed is going to be unable to raise interest rates, more than likely the oil and petroleum products have more upside than downside from this point.
This comes against a backdrop of rising geopolitical risk. Joe Biden authorized Ukraine to use U.S. weapons to strike targets inside Russia, a major shift in American policy that has raised the risk of further escalation in the war the war that started on Biden’s watch.
Now Russian president Vladimir Putin has threatened Germany and the United States as a response he could provide long-range weaponry to NATO adversaries to strike targets in the West in response to the move by the two countries to authorize Ukraine to use arms it provided on sites within Russian territory.
True perhaps and to accentuate that threat, Putin is sending warships to the Caribbean for war games,
The AP reports that, “The U.S. has been tracking Russian warships and aircraft that are expected to arrive in the Caribbean for a military exercise in the coming weeks, in a Russian show of force as tensions rise over Western military support for Ukraine, U.S. officials said Wednesday. The ships also are expected possibly to make port calls in Venezuela and Cuba, as Russia establishes a Western Hemisphere military presence that the senior Biden administration officials said was notable but not concerning. And you know if the Biden administration tells us not to be concerned there’s nothing to worry about. Other than the possibility of nuclear annihilation.
Massive Venezuelan oil and product exports impacted US supplies last month as they dumped supplies as quick as they could ahead of U.S. sanctions. But even as U.S. sanctions go into place, it isn’t stopping Venezuela from negotiating with the US. We’re at least getting their high paid lobbyist to do so.
Bloomberg News reports that, “Venezuela’s opposition is ramping up lobbying efforts in Washington, trying to persuade the Biden administration to intervene in the court-ordered sale of Citgo Petroleum Corp.’s parent company in the US. The company is the South American nation’s most important foreign asset, and its shares are due to be auctioned by July 15. The opposition fears Nicolas Maduro could blame them for Citgo’s loss ahead of crucial presidential elections set for the end of next month.
Natural gas is getting hot as the weather heats up, driving electricity and cooling demand. Fox Weather is reporting that, “Dangerous heat continues to build across much of the West this week as an early-season heat wave grips the region.” Many areas will see temperatures in the 90s and triple digits later this week according to FOX Weather meteorologists.
On the positive side Fox Weather points out that despite the concerns about a record hurricane season, so far, while the season has just begun, we are lucky. Fox Weather said, “We’re just five days into the start of the Atlantic Hurricane season, and yet amazingly with no named storms so far, it’s the latest we have gone in the year without one in a decade.
Natural gas today will get its weekly inventory report Reuters reports that U.S. utilities likely added a smaller-than-usual 90 billion cubic feet (bcf) of natural gas into storage last week, a Reuters poll showed on Wednesday. That compares with an injection of 105 bcf during the same week a year ago and a five-year (2019-2023) average increase of 103 bcf for this time of year. The forecast for the week ended May 31 would increase stockpiles to 2.885 trillion cubic feet (tcf), about 14.5% above the same week a year ago and about 24.8% above the five-year average for the week.
Read Full Story »»»
DiscoverGold
Natural Gas Bull Pennant Signals Potential Rally
By: Bruce Powers | June 5, 2024
• Natural gas traces a bull pennant pattern, indicating a potential breakout by June 17, with targets at 3.39, 3.64, and 3.78.
Natural gas further traces out a bull pennant trend continuation pattern on Wednesday, as it traded inside Tuesday’s trading range. This pattern is forming on support of both the 20-Day MA and 200-Day MAs. The range of the pennant is tightening as natural gas gets closer to the apex of the pattern on June 17. This means that a bullish breakout or bearish pattern failure from the pennant will happen by then.
Upside Breakout Triggers Above 2.83
An upside breakout of the pennant is indicated on a decisive rally above yesterday’s high of 2.83. Once the recent trend high of 2.92 is broken to the upside, a bullish breakout of the declining trend channel will also occur. If that happens, the prior swing high of 3.39 becomes the next higher target, followed by the 2023 peak at 3.64. Higher up is the target derived from the measuring objective of the pennant pattern. Its target is 3.78.
Strong Bullish Position
The pennant pattern is in an interesting position, holding support of the 20-Day and 200-Day MAs, while further testing resistance at the top trendline. It has the potential to lead to an explosive rally in natural gas. The pullback from the recent trend high has been minor, not even reaching the 38.2% Fibonacci retracement.
This is a sign of strength as buyers could have been waiting for lower prices to get more aggressive. As the price of natural gas consolidates within the pennant pattern it is building up energy for the next swing. The 0.95-point rally prior to the consolidation left a clue as to what may come next. Typically, a bull flag has the potential to match or exceed the rally prior to the consolidation pattern occurring.
Lower Support Levels
On the downside, maintaining support above the 20-Day MA, currently at 2.545, is key to the current environment. The 20-Day MA showed strength recently as it rose above the 200-Day line recently after being below it since February 2. Notice that the 20-Day line is close to converging with the bottom boundary line of the pennant pattern. Following lower interim support levels being tested, natural would likely be headed towards an eventual test of support around 2.25 to 2.23. That first level is the 50% retracement.
Read Full Story »»»
DiscoverGold
Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | June 5, 2024
• Top Movers
Coffee (NYCSCE) Futures 3.24 %
Gold / Silver Ratio 2.98 %
Cotton 1.45 %
US - Dow / Gold Ratio 1.29 %
Wool 0.97 %
• Bottom Movers
NY Natural Gas Futures 6.17 %
Kuala Lumpor Palm Oil Crude Futures 3.8 %
NY Silver COMEX Futures 3.79 %
Orange Juice (NYCE) Futures 3.54 %
Palm Kernel Oil 3.45 %
*Close from the last completed Daily
DiscoverGold
Energy Rice Bowl. The Energy Report
By: Phil Flynn | June 5, 2024
While the petroleum markets try to shake off an almost ridiculously bearish weekly American Petroleum Institute (API) that showed a larger than expected 4.05-million-barrel increase in crude supplies and an equally bearish 4.026 million barrels increase in gasoline supply and a 1.975 million barrel increase in distillates, the longer term issues of global energy security remain.
The short-term focus of the market weakness is on conerns that that OPEC’s production cut taper might mean a flood of oil that would be released, Also concerns that weak gasoline demand is because inflation is hammering the poor in middle class in this country.
As politicians continue to pursue inflationary policies and an anti-fossil fuel policies and attack US oil and gas that will not do anything to ease their burden.
In the US we pay lip-service to energy security with grandiose plans and a false vision of trying to drive our economy by interruptible sources of energy with wind and solar and the pipedream of electrifying of car fleet to get rid of the pipe, the reality is that we have and aspirational energy policy that is based on politics and ideology and not cold hard realities.
While the day-to-day fundamentals shift with the season and sometimes the algo traders, the reality of under investment in reliable energy sources and wasted money on many alternative sources of energy raises the risk of our country being woefully under supplied. The question you must ask is whther or not the US will choose to hold their energy rice bowl in its hand, because if we do not, we know that our competitors like China will. How do I know that! Well because they said so.
Ok I am not sure exactly what holding your energy rice bowl in your hand actually means but it sounds more coherent than recent energy polices coming out of Washington.
What I do know is that China has a much more realistic energy approach that includes not only alternative energy but fossil fuels as well.
China has a plan to “accelerate the construction of a new energy system and improve the ability to guarantee the security of energy resources.”
The Chinese National Energy Association (NEA) wrote that “Energy is an important material foundation and power source for economic and social development, and is related to the national economy, people’s livelihood and national security.”
They went on to say that “Based on the national conditions of energy, China has comprehensively promoted supply-side structural reforms, vigorously enhanced domestic resource production guarantee capacity, and continued to increase high-quality and effective supply. We have implemented a series of strategic measures such as releasing advanced coal production capacity, vigorously improving oil and gas exploration and development, and building a new power system, and completed and put into operation a number of world-leading century projects such as Baihetan Hydropower Station and “Hualong No. 1” Nuclear Power Plant, which have historically solved the problem of electricity consumption for the population without electricity.
They say that They “led the world in the development of non-fossil energy, achieved remarkable results in the clean and efficient utilization of fossil energy, further consolidated and improved the diversified supply system of coal, oil, gas, new energy and renewable energy, and continuously improved the level of safe production.”’
The Biden administration always seems to tout and seem to be envious of Chinas advancements in solar panels and other alternative energies and electric cars yet maybe they should understand that Chinas success is based on the fact of them everything in the above energy policy. They include all forms of energy such as coal oil and natural gas mixed in with renewable energy.
I do know that suddenly, the Biden administration is making big steps towards making nuclear right again the reality is that they are political ideology and their anti-fossil fuel agenda is hurting our economy and will do so in the future unless they change course.
Yet instead, the Biden Administration contuse to attack US oil and gas.
May 3Oth the AP reported that “Senate Majority Leader Chuck Schumer and 22 other Democratic senators are calling on the Department of Justice to “use every tool” at its disposal to prevent and prosecute alleged collusion and price-fixing in the oil industry. In a letter Thursday to Attorney General Merrick Garland and other officials, the Democrats said a recent Federal Trade Commission investigation into a high-profile merger uncovered evidence of price-fixing by oil executives that led to higher energy costs for American families and businesses.
The FTC said earlier this month that Scott Sheffield, the former CEO of Pioneer Natural Resources, colluded with OPEC and OPEC+ to potentially raise crude oil prices. Sheffield retired from the company in 2016 but returned as CEO in 2019. After retiring again in 2023, he continued to serve on its board.
The case against Scott Sheffield does not measure up to the realities of the global energy market nor does it add to US energy security. In Fact, it weakens it.
I have just been reminded of a speech given by Darren Woods of Exxon Mobil gave in November of 2023 where he said that “ Climate change is real, Human activity plays a major role, And, it is one of the major problems facing the world today – the need to address the very real threat of climate change. But it is not the only one. Here’s another global problem, equally important – the need to continue producing affordable energy to maintain and raise living standards around the world.
Mr Wood Said that “Three billion people fall short of modern living standards, and far too many remain trapped in extreme poverty with no access to electricity or clean cooking fuels. The global North-South divide will only be bridged when we commit to solving the world’s energy and emissions challenges simultaneously.” Oil and gas are at the center of both. Combusting them is a leading source of man-made greenhouse gas emissions. That is the societal cost, and it’s real. At the same time, the societal benefits of oil and gas are unmatched in human history. They have done more to grow economies, eradicate poverty and improve quality of life than anything else.”
Oil and gas companies reliably provide affordable products essential to modern life. Making them into villains is easy. But it does nothing – absolutely nothing – to accomplish the goal of reducing emissions.
In fact, it puts the reliable supply of energy at risk…destabilizing global economies, degrading people’s standards of living, and, as we saw in Europe, raising emissions. The better approach – the constructive approach – is to harness the industry’s capabilities for change.
Mr wood begs “Put us to work. We have got the tools – the skills, the size, and the intellectual and financial resources – to bend the curve on emissions.”
Yesterday U.S. Treasury secretary Janet Yellen said that “a Russian oil price cap is still somewhat effective.” So, we got that going for us.
US gasoline demand has been horrible. Prices in many markets are coming down but prices in Chicago is almost 70 ahead of the national average. The market’s reaction to the OPEC production taper is overdone especially because the compensation production should more than offset most of the so-called tapering of the supplies.
This problem the OPEC cartel right now seems to be Iraq which continually overproduces. That’s going to raise tensions in the cartel unless they start to cut back production very shortly. The reimposition of sanctions on Venezuelan oil could also tighten up supplies as we will see a reduction in Venezuelan exports which surged over 30% in the month of May.’
The markets are trying to hold these levels even after the bearish API report keep an eye for the Energy Information Administration status report to see if it shows better demand than the API is suggesting.
If they do, then we probably have a good case at the bottoms end if not get prepared for a test of $70 on crude.
Natural gas is getting support because we’re going to get our first significant heat wave.
Fox Weather reported that “ Just a handful of days into meteorological summer, and heat is already becoming life-threatening in the western U.S. Heat alerts have been issued for parts of California, Nevada, Utah, Arizona, New Mexico, and Texas. It’s possible that Las Vegas could set a record for its earliest 110-degree day during this heat wave.
Fox Weather also reports that “Rare June atmospheric river storms are dumping rain on the Northwest this week. The first ended earlier Monday before the second one arrived Monday evening. Flood alerts are up for parts of Washington.
A region of Kilauea volcano in Hawaii that hasn’t erupted since 1974 became active Monday. Officials said the eruption is happening in a remote area and is low in volume, but “vog” (the visible haze s of gas and aerosol of tiny particles and an acidic droplets created when sulfur dioxide and other gases emitted from a volcano chemically interact with sunlight atmospheric oxygen and moisture and dust could become a problem for areas downwind of the volcano. “
Read Full Story »»»
DiscoverGold
Bull Signal Says Buy Oil Giant Ahead of OPEC+ Meeting
By: Schaeffer's Investment Research | June 5, 2024
• Chesapeake Energy stock has been ascending in a channel of higher highs
• Running alongside CHK’s ascending channel’s floor is its 50-day moving average
Since we last checked in with the stock in September, Chesapeake Energy Corp (NASDAQ:CHK) has been busy. Back in January, the energy giant revealed a $7.4 billion all-stock deal to combine with Southwestern Energy (SWN). The merger created one of the largest natural gas producers in the nation -- and follows in the footsteps of oil and gas leaders Exxon Mobil (XOM) and Chevron’s (CVX) own recent billion-dollar mergers.
Since then, Chesapeake Energy stock has been ascending in a channel of higher highs, that culminated with a fresh annual peak of $93.58 on April 30. The shares have since consolidated and traded sideways, even after announcing layoffs of 80 workers in its Oklahoma City location to sharpen focus and efficiency boosting. Those sort of workforce reductions often translate to a short-term bounce, and a lack of distinct upward movement from CHK underscores how the equity may have run out of steam.
The drawdown – although minimal in the long term – comes at an interesting time, with all eyes on the Organization of the Petroleum Exporting Countries and their allies’ (OPEC+) highly-anticipated conference on June 2. The meeting could trigger unrest in the sector if the group fails to extend voluntary output cuts by several months.
Running alongside CHK’s ascending channel’s floor is its 50-day moving average, of which the stock has come within one standard deviation of. Per Schaeffer’s Senior Quantitative Analyst Rocky White, this tends to be a historically bullish signal for the energy stock. CHK has spent a significant period of time above the 50-day, defined for this study as having traded north of this trendline 80% of the time in the past two months, and in eight of the past 10 trading days.
Per White, seven similar signals occurred during the past three years, with CHK averaging a 5% one-month gain, finishing positive 86% of the time. A move of this magnitude from the equity’s current perch of $90.65, would put the shares at $95.18 -- a fresh annual high.
Chesapeake Energy stock looks ripe for a short squeeze, which could catch bears off guard, as bearish bets have increased by 11.8% in the most recent reporting period, and the 17.74 million shares sold short now accounts for a hefty 14.2% of the stock’s total available float. At the security’s average pace of trading, it would take shorts 10 trading days – two full weeks! – for shorts to buy back their bearish bets, an ample amount of buying power that could snap CHK out of its recent slump. Even better, options are looking affordable, per the stock’s Schaeffer’s Volatility Index (SVI) of 19%, which ranks in the low 23rd annual percentile, suggesting options traders are pricing in low volatility expectations at the moment.
Keeping a close eye on the June 2, OPEC+ meeting remains an overhang in the coming weeks for energy bettors. However, with options affordable and a bull signal flashing, now could be the perfect time for bulls to move in on Chesapeake Energy shares.
Read Full Story »»»
DiscoverGold
Natural Gas Bullish Breakout Fizzles, Testing Support Levels
By: Bruce Powers | June 4, 2024
• After an initial bullish breakout, natural gas faces resistance and is testing support levels, with eyes on the 20-Day MA and 200-Day MA.
Natural gas triggered an upside breakout of a bullish flag on Tuesday, but quickly showed signs of failure by falling back into the consolidation pattern. A bullish breakout triggered a rally above yesterday’s high of 2.80 earlier in the session. However, resistance was seen at 2.83, leading to a decline. At the time of this writing the bears remain in charge and natural gas is trading near the lows of the day. It looks to be heading for an eventual test of support near the lower boundary line of the pennant consolidation pattern. That price level is estimated at 2.54 if reached today and is close to the 20-Day MA, currently at 2.52.
Pennant Pattern Failure May Lead to Resized Pattern
Although today’s breakout is showing signs of failure, it is also possible that the pennant pattern expands into a larger consolidation pattern. Certainly, it is too early to say but how the price of natural gas behaves near potential support levels should leave clues. Nevertheless, a new top pennant boundary line has been added to the chart using today’s high.
In addition to possible support of the 20-Day line mentioned above, the 200-Day MA is at 2.45. It is a key long-term trending indicator and had one successful test as support last week with a 2.475 swing low. Therefore, it should act as an area of support again, or strong support is seen at a higher price level.
Key Trend Support at 20-Day MA and 200-Day MA
The 20-Day MA may provide a higher price level to find support than the 200-Day line. It has not yet been tested as support since the price of natural gas gapped above it on April 26. Notice that the 20-Day MA is on its way to converging with the lower boundary line of the pennant and it now matches the price level from the minor interim swing low at 2.52. Two indicators pointing to the same price add to the potential significance of the identified pivot. Therefore, natural gas is anticipated to retain a bullish posture if it stays above the 200-Day MA average.
Read Full Story »»»
DiscoverGold
Crude Oil Drops to New Lows, Eyes Key Support
By: Bruce Powers | June 4, 2024
• WTI crude oil continued its decline, hitting a new low of 72.73, with key support levels between 72.12 and 71.38 in focus.
WTI crude oil continued to weaken on Tuesday as it fell to a new retracement low of 72.73. Support showed up from there leading to an intraday bounce. That low put crude oil 17.3% below the most recent swing high of 87.89. Notice that today’s low was essentially bouncing off a bottom trend channel line. It was also just above the 78.6% Fibonacci retracement at 72.12. If today’s low is exceeded, that retracement level becomes the next lower target zone.
Also, keep an eye on the lower rising trendline that makes up part of a large developing symmetrical triangle type pattern with the apex around mid-September. Does this mean that crude oil may further trade within the boundaries of the rising and falling trendlines? Not necessarily. But it does mean that it will break out of that pattern before mid-September.
Bottom of Large Triangle Consolidation May Offer Support
The lower uptrend line will soon converge with the 78.6% retracement level presenting a more formidable potential support zone. Also, monthly support (daily swing low) from February was 71.38. It can be combined with the other price levels mentioned above to generate a larger support zone from 72.12 to 71.38. Notice that February’s swing low began an accelerated rally that peaked at 87.89 in April. Maybe a test of the February support zone will complete a round trip and set the stage for the next advance. However, a decline below 71.38 followed by further weakness will trigger a breakdown from the symmetrical triangle consolidation pattern.
Moving averages are showing turning bearish. Recently, the short-term 20-Day MA fell back below the 200-Day MA, and it continues to point down. The 50-Day MA has also begun to turn down. If it crosses below the 200-Day line, another bearish signal will be generated.
Rise Above Today’s High Will Show Strength, But Sustainability Questionable
On the upside, it wouldn’t be a bad idea to allow for a day or a few to occur to see how the market in crude develops. There are no current signs that a spike bullish reversal may be coming soon. An advance above today’s high of 74.39 will provide the next sign of strength. But, given the potential for a test of support at the bottom of the triangle and the lack of buying signs so far, it may not be sustainable just yet.
Read Full Story »»»
DiscoverGold
OPEC’s Little Taper Tantrum. The Energy Report
By: Phil Flynn | June 4, 2024
Somewhere, Former Fed Chairman Ben Bernanke may be smiling. It seems OPEC has created its own little taper tantrum causing the massive sell off in the price of oil and products and raising concerns about the broader strength of the global economy. Oil fell over 2% this morning, hitting the lowest level since February after OPEC failed to convince the market that their tapering off voluntary cuts was going to be data dependent.
So many times, the price of oil seems to be a barometer for the confidence of the global economy and after OPEC laid out the possibility that they may start to have an exit strategy from voluntary production cuts, the market has not been pleased. It hasn’t helped of course that here in the US we have seen some surprising crude builds in oil inventories over the last couple of months but now we may have an answer as to why that has happened.
Part of it has been subpar gasoline demand but also it has been because Venezuela was dumping oil and products ahead of the reimposition of US sanctions going into place. The Biden administration lifted sanction on Venezula, in return the Maduro government promise to hold a free and fair election. After the Maduro government failed to live up to its commitment of holding a free and fair election (I know you are shocked), the Biden administration had no choice but to reimpose sanctions that were supposed to start June 1st. So, Venezuela jumped to oil as fast as they could, causing their exports to rise over 30% last month.
Reuters reported that a total of 50 vessels departed Venezuelan waters last month carrying an average 708,900 barrels per day (bpd) of crude and fuel, and 614,000 tons of petrochemicals and oil byproducts, according to internal PDVSA documents and shipping data from financial firm LSEG. The volume of oil shipped in May was 30% larger than in April, and 7% above the same month a year earlier. Exports of petrochemicals and byproducts were the highest in 13 months, the data showed.
While the market frets about a potential exit strategy of some of the OPEC production cuts, we are going to get a cut from Venezuela’s exports that should start showing up in the data in June. It’s possible that Venezuela exports could be cut in half after the sanctions reducing exports to about 354,000 barrels a day and it could be even worse if the Biden administration decides to really enforce these sanctions.
Of course, the Biden administration’s record of enforcing sanctions, judging by what’s happening with Iran, hasn’t really been promising.
As the shakedown in the oil market seems to be spreading to other commodities, we’re seeing pressure built in things like copper and silver and some weakness in the Dow Jones futures this morning as well as the S&P. Brent crude breaking down below 80 is significant from a psychological viewpoint and it raises concerns that the drop in price is signaling something more ominous to the market. Of course we believe the market got the wrong signal from OPEC just like Ben Bernanke when he first started to talk about tapering it caused a big shake up in the market because people reacted more to the punch bowl being taken away as opposed to the reality that the market was probably justifying that it was time for the Federal Reserve to start tapering back on bond purchases.
It may take a day or two for the oil market to realize that they are overreacting to this news, but the real true test of course will be oil inventories tonight we get the American Petroleum Institute report and if the whisper numbers are correct, we should see a substantial drop in the crude supply number.
But the key thing will be demand. Gasoline demand has been erratic to say the least and even when we saw the report on consumer confidence rising last week, the true test of consumer confidence may be in the gas tank. Are consumers cutting back on gasoline purchases because inflation is getting more ominous at the same time consumers are going to be hit with higher taxes.
In the meantime, the Biden administration announced that 3-million-barrel buyback for the Strategic Petroleum Reserve. While they may say that they made money by selling high and buying it lower, the reality is the use of the reserve for political purposes should never happen again.
The government intervention in the market to try to control gasoline prices is simple market manipulation. It does longer term damage to the market. If the government is going to get involved in the market on a regular basis it can discourage investment in refining capacity and oil production. The normal market mechanisms can be impacted. The SPR shouldn’t be used to get a couple of cheap political approval points.
On the product side, Mother Nature has bailed out the diesel market and that has helped demand fall to multi-decade lows.
Reuters reported that, “U.S. diesel demand fell to its lowest seasonal level in March since 1998, while crude oil output rose to a multi-month high, data from the U.S. Energy Information Administration showed on Friday. Demand for distillate fuels, which includes diesel and heating oil, has been hit sharply this year under pressure from sluggish manufacturing activity, milder-than-expected winter weather and booming renewable fuel supply.
While petroleum is falling now, we’re seeing natural gas now pushing higher. That was the inverse of what we saw a few months ago. Production restraint, increased demand for LNG exports as well as hot temperatures is giving the market a bit of a bounce. As we look out here for the next few weeks it seems like the demand for air conditioning will be humming. Hopefully you put on some of those long-term options that we recommended a few months ago.
Read Full Story »»»
DiscoverGold
Unfortunately #USO failed to follow through from last week’s Bullish setup
By: Intelligent Investing | June 4, 2024
• Unfortunately #USO failed to follow through from last week’s Bullish setup. It can happen, as not all charts turn into golden eggs. And that’s what stops are for.
Read Full Story »»»
DiscoverGold
Natural Gas Bull Pennant Forms with Breakout Above 2.80
By: Bruce Powers | June 3, 2024
• Consolidating near trend highs, natural gas shows bullish potential with a pennant pattern, supported by the 20-Day and 200-Day MAs.
Natural gas has started to trace out a potential bullish pennant pattern as it further consolidates near recent trend highs. It has formed above support represented by both the 20-Day MA and 200-Day MA. An intermediate bullish signal was started last week as the 20-Day line crossed above the 200-Day MA. Today, Monday, natural gas showed strength as it broke out above Friday’s high of 2.62 and kept rallying to a high of 2.80. That high provided a third touch of the top declining boundary line of the pennant, before sellers took back control leading to an intraday pullback.
Small Bull Pennant
The pennant pattern takes the form of a small symmetrical triangle that follows a relatively sharp advance, referred to as the pole. This is a bullish trend continuation pattern that does not become valid until there is a decisive break out of the pattern. Given its small size, a breakout of the pattern will happen within five days or so.
Since this is a bullish pattern, an upside breakout is initially anticipated. Also, the pattern forming around support of the moving averages, especially the 200-Day MA, increases the chance for a bullish breakout. However, a failure of the pattern is always possible. A decline through the lower boundary line signals a pattern failure and increases the chance for a deeper retracement in natural gas.
As it stands now, an upside breakout is triggered on a rise above today’s high, with strength further indicated on a rally above the 2.85 minor swing high. A breakout would be confirmed with a rise above the recent trend high of 2.92, followed by a daily close above that price level.
Target From Pennant
We can calculate a measuring objective from the pattern to identify an initial target of 3.75. To calculate a potential target the pole for the pattern is assumed to have begun at 1.97 on May 2. That is the initial daily breakout that began a period of accelerated upward momentum culminating with the 2.92 trend high. In summary, the pennant identifies a sharp advance that is followed by a consolidation rest period, and then has the potential to lead to another sharp advance. The expectation is that an upside breakout has the potential to rise in an amount equal to or greater than the preceding rally.
Read Full Story »»»
DiscoverGold
Crude Oil Continues to Fall
By: Christopher Lewis | June 3, 2024
• The crude oil market fell a bit in the early hours on Monday, as the market is seemingly at a crossroads. This is a market that has to be watched closely, as the major support barrier underneath is in focus in both markets we follow.
WTI Crude Oil Technical Analysis
Looking at the WTI 4-hour chart, you can see that the market has pulled back just a bit to show signs of negativity yet again on Monday. The question here is going to be whether or not this support holds. We are most certainly in an area that it needs to. If we break down from here, then it’s likely that we could make a move towards $75.
Quite frankly, this is a time of year that is generally strong for crude oil. So this goes against the cyclicality of the markets. There are a lot of concerns out there as to whether or not the economy is going to tank. This might be one place where traders are playing that idea. But I think if we can turn around and gain the market reaching above the $77.50 level, then it becomes a buying opportunity.
Brent Crude Oil Technical Analysis
Brent looks very much the same, both look pretty weak. I think if we turn around and go looking to the $81.50 level and overcome it, then it’s a buying opportunity. But I have to say that oil looks rather weak at the moment, and I do think that it’s easier to stand out of the way because I do believe sooner or later it’s going to get a lot of buying pressure based on the time of year, geopolitical issues and things like that.
I don’t really like shorting oil on the whole, so I will probably step on the sidelines and just wait for buying opportunity such as the two that I’ve mentioned in this video, but if we do fall from here, then I’ll be looking below at potential support levels as they appear.
Read Full Story »»»
DiscoverGold
$WTIC $OIL - Could still go lower into red box or even to the Shaded-Band...
By: Sahara | June 3, 2024
• $WTIC $OIL - Heads-Up
Wanted to share the alert as I Know some of you have followed me. Cos oil now clipped both those lwr-targets.
Could still go lower into red box or even to the Shaded-Band. Meanwhile I will be looking for a buy op next...
Read Full Story »»»
DiscoverGold
Spinning Barrels. The Energy Report
By: Phil Flynn | June 3, 2024
OPEC Spins Barrels like plate spinners trying to dazzle the market without breaking anything. While the market seems confused as to what this meeting accomplished, and the tiers of many production cuts and production baselines, the reality is that OPEC exceeded expectations by extending most of its existing production cuts into the new year even as they then start to wind some cuts down.
So, it’s best to take the cuts one at a time. In the beginning OPEC plus had originally agreed in October of 2022 to cut oil production by two million barrels a day. During the meeting, that original production cut will stay in place not only through the end of this year, but into 2025 year as well. Think of this as the granddaddy of all the production cuts. Later Saudi Arabia tried to get members to agree to an additional cut and produced a voluntary cut to the tune of 1.66 million barrels a day. The reason why that production cut had to be voluntary was because of a disagreement between the original baseline from which many of the producers had to start counting from.
The United Arab Emirates for example wanted to produce more oil because they have that capability, and they wanted the bigger chunk to the pie. The UEA did get an upgrade to its official production quota yesterday as they get to increase it by 300,000 barrels a day. That came after a previous adjustment of 200,000 barrels a day from 2024. This new quota is supposed to be phased in January and their ability to produce oil will be a 3.519 million barrels by September of 2025.
So, the voluntary cuts were meant to send a message to the market that while they did not actually change their quota, members would voluntarily do their part to try to support prices and make those speculators “Ouch like hell”, to steal a phrase from Saudi energy minister Prince Abdulaziz bin Salman. At the meeting they agreed to extend that cut into 2025.
A at the same time they are setting the stage for unwinding some cuts next year and are telling the market that the reduction is going to be gradual and it’s going to be predicated on the demand for actual barrels of oil. So in other words, if the demand for oil falters these cuts more than likely will stay in place. On the other hand, if demand starts to exceed supply this is the amount of oil that they can bring on without even changing their original quota.
The third round of cuts of the voluntary 2.2 million barrels a day that was announced between June and November of last year and were supposed to run out at the end of this month. They will be prolonged for another three months until the end of September and after that they’re going to start phasing the production caps out over the next year. This phase out and production cut is being done based upon what OPEC perceives as a demand for their product. Saudi energy minister Prince Abdulaziz bin Salman said following the announcement of the deal that, “We maintain the choice that we could pause or could reverse. This is not new; we’ve been doing it over the last three years, and I think it has proven to be effective.”
So, if you do the math, if OPEC unwinds the cut as scheduled oil production by OPEC could increase by about 500,000 barrels a day to about 34.35 million barrels by the end of the year. Other producers that have been overproducing should reduce that a little bit because they are supposed to compensate for their overproduction. By the end of September 2025, it would imply that oil production could rise by an additional 1.92 million barrels a day to 36.27 million barrels a day which would basically have the market keep up with demand growth.
We think that the extension of cuts and the modest increases that are going to be dated, should be supportive to the market. While oil prices are not rising from this level, we seem to be building a base at the lower end of the trading range.
It’s going to come down to demand a summer driving season kicks into high gear. Demand in recent weeks has been surprisingly weak and concerns about geopolitical risk factors have taken a back seat to concerns about rising interest rates.
Reuters reported that, “An aide to Prime Minister Benjamin Netanyahu confirmed on Sunday that Israel had accepted a framework deal for winding down the Gaza war now being advanced by U.S. President Joe Biden, though he described it as flawed and in need of much more work.” There are reports that Netanyahu is ready to go ahead with the first phase of this plan.
Demand ultimately, we still predict, will be a very tight market into the second half of the year. We still recommend that this is a good time to be locking in some long-term options as we believe they is going to go up.
Like Black Rock CEO Larry think had a wakeup call in a speech over the weekend he is warning that the world is going to be short on power and that the power-to-power data centers are not going to be able to be maintained with uninterruptible power sources. “The world is going to be short power, short power. And to power these data companies you cannot have just this intermittent power like wind and solar. You need dispatchable power because you can’t turn off and on these data centers.” Is the same guy who was telling us to divest from fossil fuels. I think finally reality is starting to set in.
Fox Business reported in August of 2022 that, “A conservative consumer advocacy group issued an alert Wednesday urging Americans to be wary about investments managed by BlackRock, the world’s largest investment firm. Consumer Research warned that BlackRock uses its massive clout to push a “radical agenda” on consumers. BlackRock, which manages an $8.5 trillion global portfolio, has pushed so-called environmental, social and governance (ESG) standards prioritizing green energy infrastructure like wind and solar development over traditional fossil fuel investments, the group said in the warning.
“BlackRock is using money that doesn’t belong to them to push an extreme agenda with no regard for American families who are paying the price not only now, but through their pension funds which are being weaponized to the detriment of their potential profits,” Will Hild, the executive director of Consumers’ Research, told FOX Business in a statement. “Consumers deserve to know where their investments are going, especially when it’s leading to higher costs everywhere from gas pumps and groceries to rent prices and housing costs,” he continued. Maybe they got through to Fink.
Natural gas is back on the rise! EBW Analytics reports that returning heat into early this week, strong LNG feedgas, and falling storage surpluses remain supportive for natural gas over the next 30-45 days.
Technical suggest deeper consolidation after the steep May run higher, however—and near-term volatility may persist.
Read Full Story »»»
DiscoverGold
$WTI - The May 2023 low ended major wave A. Major wave B has probably been unfolding as a contracting triangle
By: CyclesFan | June 1, 2024
• $WTI - The May 2023 low ended major wave A. Major wave B has probably been unfolding as a contracting triangle. I expect a wave D low in July at the 30 month MA, then a wave E up into Q4. Major wave C could take crude oil down to as low as 26 in the recession year of 2026.
Read Full Story »»»
DiscoverGold
Energy stocks $XLE get a jolt into end of month
By: TrendSpider | June 1, 2024
• Energy stocks get a jolt into end of month $XLE
Read Full Story »»»
DiscoverGold
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | June 1, 2024
• Following futures positions of non-commercials are as of May 28, 2024.
WTI Crude Oil: Currently net long 284.4k, up 29.1k.
After three consecutive weeks of defending a rising trendline from last December when West Texas Intermediate crude bottomed at $67.71, oil bulls could no longer defend the support this week. West Texas Intermediate crude dropped 0.9 percent to $76.99/barrel. It rallied as high as $80.62 on Wednesday, but only to attract sellers. The crude failed to recapture the 200-day ($79.81), which is now slightly turning lower, in all of May.
In the end, resistance at $80, or the top end of a range between $71-$72 and $81-$82 that persisted for 19 months before the upper end gave way nine weeks ago and was lost early May, held. A weekly shooting star formed this week.
At this stage, bulls have their back against the wall, and they must defend near-term horizontal support just south of $77.
In the meantime, US crude production in the week to May 24th was unchanged for 12 consecutive weeks at 13.1 million barrels per day; 14 weeks ago, output was at a record 13.3 mb/d. Crude imports increased 106,000 b/d to 6.8 mb/d. As did gasoline and distillate inventory, which grew two million barrels and 2.5 million barrels respectively to 228.8 million barrels and 119.3 million barrels. Stocks of crude went the other way, down 4.2 million barrels to 454.7 million barrels. Refinery utilization increased 2.6 percentage points to 94.3 percent.
Read Full Story »»»
DiscoverGold
Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | June 1, 2024
• Top Movers
LME Aluminum Alloy 4.27 %
Gold / Silver Ratio 2.68 %
US - Dow / Gold Ratio 2.42 %
Kuala Lumpor Palm Oil Crude Futures 2.08 %
Tokyo Gold Futures 0.87 %
• Bottom Movers
NY Palladium Futures 4.78 %
Coffee (NYCSCE) Futures 4.57 %
Orange Juice (NYCE) Futures 4.37 %
Tokyo Palladium Futures 4 %
NY Silver COMEX Futures 3.47 %
*Close from the last completed Daily
DiscoverGold
NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | June 1, 2024
NY Crude Oil Futures closed today at 7699 and is trading up about 7.45% for the year from last year's settlement of 7165. This price action here in June is reflecting that this is within the scope of a bearish reactionary move on the monthly level thus far.
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 7769 and support forming below at 7670. 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 been generally trading up for the past week from the low of the week of May 20th, which has been a move of 5.869%. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a weak posture. 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 neutral on our weekly Momentum Models warning we have overhead resistance forming and support in the general vacinity of 7689. Resistance is to be found starting at 8106. Looking at this from a wider perspective, this market has been trading up for the past 24 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 has made a low following the previous high of April at 7615. The fact that the market for May close below the previous month's low is a sign of near-term weakness with a possible decline into the next turning point on the Array. Currently, May has traded as rallied to exceed the previous month's high reaching 8157.
Some caution is necessary since the last high 8767 was important given we did obtain two sell signals from that event established during April. That high was still lower than the previous high established at 9503 back during September 2023. Critical support still underlies this market at 6760 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
Natural Gas Intraday Bounce in Natural Gas Sparks Short-Term Optimism
By: Bruce Powers | May 31, 2024
• Despite bearish risks, natural gas shows strength with today's intraday bounce and key moving averages crossing.
Natural gas fell below Thursday’s low today to reach 2.52. Buyers stepped up from there leading to an intraday bounce. At the time of this writing natural gas is in the green and has reached a high of 2.62. But trading continues near the highs of the day. If it can remain near the upper quarter of the day’s range the day may end with a bullish hammer candlestick pattern.
Strength Indicated by 20-Day MA Rise Above 200-Day MA
Today’s low is a higher low than the recent swing low at 2.475, a very minor sign of strength as it is not known whether it will remain a low. Also, the short-term 20-Day MA has started to cross above the long-term 200-Day MA today. This is another sign of strength. Potential support around the moving averages therefore is critical for the sustainability of the rally. The 200-Day line is now at 2.455 and the 20-Day line is at 2.47.
Key Support at 2.46
A decisive decline below the recent swing low and moving averages will signal a deeper retracement. Depending on when it happens, a double top may also be triggered. This week’s high would create the second top. However, the double top is just a possibility until a breakdown triggers. At that point an eventual test of support around the 50-Day MA, now at 2.06, is a possible target. Higher price areas to watch for support include the area around the 50% retracement at 2.25 and further down is the 61.8% Fibonacci retracement around 2.10. Notice that the 20-Day MA has not been tested as support since the gap up on April 26.
Further Consolidation is a Possibility
An alternative scenario may see the price of natural gas further consolidate above the 200-Day MA. Initial resistance would be around the blue dashed downtrend line. Since it is a declining line the price level represented will be falling over time. Subsequently, if the 200-Day line remains an area of support the price range would be narrowing.
Keep an Eye on the Weekly Chart
The weekly chart should also be watched. Both last week and this week have large topping tails and the candlestick patterns are bearish shooting stars. Last week’s low of 2.49 was broken to the downside earlier this week but natural gas quickly recovered and is set to close above that low this week. Nevertheless, these are bearish indications but only if there is a decisive drop below the weekly lows.
Read Full Story »»»
DiscoverGold
$WTIC $OIL - Latest Update...
By: Sahara | May 31, 2024
• $WTIC $OIL - Latest
Decided to follow my Red-Route for a final wave lwr. Unless the 'Truncated-(e)' holds it will target my Red-Box.
That said it is vying for a hold of the Dotted Gold as a deep B/Test. Along with the 'Bowl' perimeter. (Also the Wkly is sat atop its 150/EMA)...
Read Full Story »»»
DiscoverGold
Demand Drag. The Energy Report
By: Phil Flynn | May 31, 2024
Oil prices had a terrible month in May as demand concerns continue to plague the market as we head into a new era of uncertainty. On one side, we had disappointing numbers come out on diesel and gasoline demand and weak manufacturing in China. On the other side were geopolitical risks that are rising as we have the Biden administration ramping up the possibility of a major escalation in the Russian Ukraine war. The political show trial in New York City against Donald Trump is also raising concerns about the integrity of the US justice system and the future of the United States.
People of reason and intellect realize that what happened in New York City is a very dark day in the history of the United States. When people like prosecutors and judges use the US justice system to abuse their power and trample on constitutional right of a person to get a fair trial in the name of furthering their own leftist political agenda, we have entered a most dangerous time in the history of our fragile republic. Judges willing to soil their own dignity and reputations and be bought and insult the offices that they are supposed to represent, one can only pray that people of virtue speak up and act. Pray for our country.
While the press is so focused on this show trial in New York, the possibility of the US being drawn into Russia Ukraine war is more likely every day under the leadership of Joe Biden. The Wall Street Journal reported that ‘in a significant policy reversal, the Biden administration on Thursday said for the first time that it would allow Ukrainian forces to do limited targeting with American-supplied weapons inside Russia.
The new policy will allow Ukrainian forces to use artillery and fire short-range rockets from Himars launchers against command posts, arms depots and other assets on Russian territory that are being used by Russian forces to carry out its attack on Kharkiv in northeastern Ukraine. But the policy doesn’t give Ukraine permission to use longer-range ATACMS surface-to-surface missiles inside Russia.
We are also seeing a demand disconnect from what we have heard from AAA and the talk of record-breaking TSA numbers and the EIA data and from the jump in consumer confidence data.
Despite US refinery runs hitting a 4-year high, the demand for gasoline and diesel was disappointing. The Energy Information Administration (EIA) reported a surprising drop in both gasoline and diesel demand reflecting not consumer confidence, but consumers getting hit by Biden’s inflationary policies. The EIA said gasoline fell by 166,000 barrels a day down from 9.315 million barrels a day versus last week’s report of 9.148 million barrels. Distillate fell from 3.883 million barrels a day in last week’s report to 3.795 this week’s report.
Yet despite plunging crack spreads refiners were born to run. The EIA put U.S. crude oil refinery inputs averaged 17.1 million barrels per day during the week ending May 24, 2024, which was 601 thousand barrels per day more than the previous week’s average. Refineries operated at 94.3% of their operable capacity last week. Gasoline production decreased last week, averaging 10.0 million barrels per day. Distillate fuel production decreased last week, averaging 5.0 million barrels per day.
The supply side was also mixed with the bigger than expected drawdown in crude oil inventories but bigger than expected increases in gasoline and diesel. The EIA said that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.2 million barrels from the previous week. At 454.7 million barrels, U.S. crude oil inventories are about 4% below the five year average for this time of year.
Total motor gasoline inventories increased by 2.0 million barrels from last week and are about 1% below the five-year average for this time of year.
Both finished gasoline and blending components inventories increased last week.
Distillate fuel inventories increased by 2.5 million barrels last week and are about 6% below the five-year average for this time of year.
Propane/propylene inventories increased by 2.1 million barrels from last week and are 15% above the five-year average for this time of year. Total commercial petroleum inventories increased by 12.7 million barrels last.
Reuters report that, “Analysts have lowered their 2024 oil price forecast for the first time since February, reflecting lower risks to supply from ongoing wars in the Middle East and Ukraine, a Reuters poll showed on Friday, as markets gear up for a meeting of OPEC and its allies this weekend.
A poll of 41 analysts and economists surveyed by Reuters in the last two weeks saw Brent crude LCOc1 averaging $84.01 per barrel in 2024 with U.S. crude CLc1 at $79.56 – down from April forecasts of $84.62 and $80.46, respectively.
We think oil prices are oversold at this point and the crack spreads should start to turn just a bit unless the economy really takes a turn for the worse. We’re definitely seeing signs of stress in the economy but that could also mean the Federal Reserve will be able to follow through on their desire to cut interest rates. Fed speakers continue to play good cop/bad cop when it comes to interest rate expectations and today’s CE inflation may be more telling than anything you hear out of a fed official. They may try to shock and awe us with their meeting officially on Sunday. That could lead to a very interesting opening Monday evening. Reports that China is still ramping up refinery activity despite the slowdown is suggesting that we will see China’s demands start to perk back up.
Natural gas pulled back after a bearish weekly inventory report, but the outlook long term continues to brighten. The bigger than expected increase in inventories could have been due to storms creating power outages in places like Texas and other southern states. The EIA working gas in storage was 2,795 Bcf as of Friday, May 24, 2024, according to EIA estimates. This represents a net increase of 84 Bcf from the previous week. Stocks were 380 Bcf higher than last year at this time and 586 Bcf above the five-year average of 2,209 Bcf. At 2,795 Bcf, total working gas is above the five-year historical range.
The EIA though reported that U.S. summer natural gas consumption forecast for electric power matches 2023 record. The EIA forecasts that the natural gas consumed for electricity generation this summer in the United States will reach near the record set last year. EIA says that despite a 3% increase in overall U.S. electricity generation this summer, we do not expect natural gas consumption for electricity generation to grow. Growth in electricity generation will be largely driven by increased renewable energy production. In our May 2024 Short-Term Energy Outlook (STEO), we forecast natural gas consumed to generate electricity will average 44.7 billion cubic feet per day (Bcf/d) in the United States during the peak summer months of June through August, matching the record high set in the summer of 2023.
Read Full Story »»»
DiscoverGold
Speculators have built the largest Brent Oil short position since 2020
By: Barchart | May 30, 2024
• Speculators have built the largest Brent Oil short position since 2020.
Read Full Story »»»
DiscoverGold
Crude Oil Drops Further into Consolidation Range
By: Bruce Powers | May 30, 2024
• Crude oil's failed breakout above 81.00 leads to bearish continuation, with key support levels and a broadening pattern in focus.
Crude oil attempted to break out of a consolidation bottom on Wednesday with a new 20-day high of 81.00, a whole number. Resistance was quickly encountered off that high leading to a weak close yesterday, and a bearish continuation today, Thursday. Tuesday triggered an upside breakout above the 200-Day MA and downtrend line. Each was a sign of strength. However, upside follow through never happened and instead sellers took back control.
Broadening Formation Continues to Form
So, there is a potential bottom or bearish continuation broadening formation that has formed. It can breakout in either direction. Purple lines mark the boundary of the pattern, and they point away from each other. It is a consolidation pattern where volatility expands over time rather than contracts. Each line was already established from prior price action, and the top line provided a short-term upside target. Therefore, the lower line is a potential target for the pullback that is just starting. The current low of the pattern is 76.60 and support represented by the lower declining boundary line is slightly lower.
Since the advance earlier in the week could not hold onto gains following an attempt to breakout above key resistance lines, the downtrend remains dominant. That would include both the near-term downtrend as well as the longer downtrend that began from the March 2022 peak. Nonetheless, a 61.8% Fibonacci retracement completes at 75.49 for the downside.
Bottom Boundary Line Support Target
For a bullish scenario, support should be seen either before 76.60, around it, or near the lower boundary line. Aggressive traders will likely look to enter off that lower line if crude falls that far. The 200-Day MA is at 80.15 and presents a benchmark level to watch on the upside. However, be aware that crude oil is more recently within a large symmetrical triangle consolidation type pattern as the price range narrows. This means the 200-Day MA trending indicator is not as reliable as it would be in a more trending environment. But, in this case it has converged with the long-term downtrend line and can be used from that perspective, as a key pivot.
Read Full Story »»»
DiscoverGold
Natural Gas Faces Possible Double Top Amid Bullish Signs
By: Bruce Powers | May 30, 2024
• Natural gas may form a double top at 2.85, with the 20-Day MA nearing a bullish crossover above the 200-Day MA, indicating potential demand strength.
Natural gas continued to pull back on Thursday, filling yesterday’s gap before hitting a low of 2.57 for the day. That led to an intraday bounce, which continues. Yesterday’s high of 2.85 looks like it may be a second top thereby setting up a possible double top pattern.
Meanwhile, the 20-Day MA continues to strengthen and is close to crossing above the 200-Day MA. Those two moving averages together provide a more solid potential support zone than either on their own, at 2.46 and 2.44, respectively. A bullish crossover of the 20-Day line above the 200-Day line will provide another sign that underlying demand for natural gas is strengthening.
Possible Double Top
The potential double top pattern is triggered by a drop below the recent swing low of 2.48. Of course, the two moving averages are close by as well. Therefore, all three levels must be busted to the downside to indicate a decisive bearish trigger for the double top that may be sustainable. Given the significance of the support zone that would be busted an accelerated decline may follow. Potential support levels below 2.48 include a price zone from 2.25 to 2.23, defined by the 50% retracement and prior swing low from December, respectively. Further down is the all important 50-Day MA at 2.05.
Weekly Bearish Candlestick Pattern
In addition, last week ended with a bearish shooting star weekly candlestick pattern. It triggered this week briefly but quickly recovered. A second decline below last week’s low of 2.49 may not be so forgiving. Of course, that level should be used along with the other price support levels noted above.
Upside Breakout Starts Above
Notice that the second top from yesterday 2.85 was lower than the first at 292 and tracked resistance around the top declining trendline with a lower high. A decisive rally above Wednesday’s high will provide a sign of strengthening and increases the chance for a retest of resistance around the trendline. Of course, that would also open the door to a possible breakout above the line. Once that occurs last week’s top is at risk of being broken to the upside. That would trigger a continuation of the developing rising trend as well.
Read Full Story »»»
DiscoverGold
OILBRENT
Brent Oil
82.255
-1.12 (-1.34%)
Volume: 1
Day Range: 82.165 - 83.575
Last Trade Time: 12:35:22 PM EDT
Crude Inventories Declined By 4.2 Million Barrels
By: Vladimir Zernov | May 30, 2024
Key Points:
• Strategic Petroleum Reserve increased from 368.8 million barrels to 369.3 million barrels.
• Domestic oil production remained unchanged at 13.1 million bpd.
• Oil markets are losing some ground as traders react to the EIA report.
On May 30, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories declined by 4.2 million barrels, compared to analyst consensus of -1.95 million barrels. At current levels, crude inventories are about 4% below the five-year average for this time of the year.
Gasoline inventories increased by 2.0 million barrels, while analysts expected that they would decline by 0.4 million barrels. Distillate fuel inventories grew by 2.5 million barrels.
Crude oil imports increased by 106,000 bpd, averaging 6.8 million bpd. The four-week average for crude oil imports is 6.8 million bpd.
Strategic Petroleum Reserve increased from 368.8 million barrels to 369.3 million barrels as U.S. continued to buy oil for reserves.
Domestic oil production remained unchanged at 13.1 million bpd. Current oil price levels are not attractive to raise production above current levels.
WTI oil is trying to settle above the $79.00 level as traders react to the EIA report. While the significant decline in crude inventories is a bullish sign, rising gasoline inventories may put some pressure on the market. At this point, WTI oil needs significant positive catalysts to settle above the nearest resistance level at $79.00 – $80.00.
Brent oil settled near the $83.00 level after the release of the EIA report. The technical picture for Brent oil remains unchanged as it needs to settle above the resistance at $83.50 – $84.50 to gain sustainable upside momentum.
Read Full Story »»»
DiscoverGold
Punching Bowl. The Energy Report
By: Phil Flynn | May 30, 2024
Take away the punch bowl just as the party is getting started! Fed Officials did not like the Memorial Day price explosion in the commodity complex and did their best to cool off expectations by threatening an interest rate hike to spoil the party. Minneapolis Fed President Neel Kashkari put it best when he said yesterday that, ”Interest-rate hikes aren’t out of the question” and added “If we get surprised by the data, then we would do what we need to do” like whatever it takes, I guess. We know that Neel and his colleagues continually get surprised by data quite often, so the markets retreated.
Even oil, after what most would say was somewhat bullish data from the American Petroleum Institute, seems to have lost the demand driven momentum that started this new week. The API seemed to make up for lost time with a whopping 6.490-million-barrel crude oil draw that was led by a long-awaited 1.706 million barrel drop from the Cushing OK delivery point. That came on the backs of reports of record demand for air travel as TSA reported an all-time high number of passengers at US checkpoints and automobile travel and farmer demand from planting over the weekend. Corn planting that was way behind caught up with 83% planted as of May 26, 2024, just ahead of the 5yr average of 82%.
Surprisingly, we saw a 2.45-million-barrel increase in distillate inventories even with all that demand. That raised some eyebrows about the overall data.
Gasoline inventories came in pretty much in line with expectations, dropping about 452,000 barrels last week.
Now today, because of the holiday, we will see the inventory numbers at 10:00a central time from the Energy Information Administration (EIA). I expect that if the EIA shows similar data. At the end of the day, the markets should shake off their concerns about what the Federal Reserve may or may not do when it comes to interest rates. The reason why I believe that is more than likely is that a large crude drawdown in supply could be the first of many in the coming weeks.
The market will also look at gasoline demand very closely to see if the momentum that we saw in last week’s report continues. Crack spreads have been relatively weak for gasoline.
Oil may also garner some support from OPEC Plus their favorite co-conspirator Russia. The word on the street is at the cartel is debating about prolonging the oil supply cuts amid rising global oil inventories. It seems like the cartel is concerned that we saw some crude builds here in the United States which was a bit of a surprise. Also, there is more talk about commitment by OPEC cheaters to offer compensation cuts for their overproduction. Saudi Arabia is leading the cartel and is continuing to curtail their oil production. JODI said that Saudi Arabia’s crude production fell by 38 kb/d in March to 8.97 mb/d while its crude exports rose by 96 kb/d to 6.41 mb/d.
Geopolitical risk factors for oil continue to simmer in the background. Another disturbing story about the possibility of escalation in the Russia Ukraine conflict is making many people cringe, raising the possibility that the US could be drawn into a more active role in the conflict. Not only did the Biden administration consider sending U.S. military advisers to train Ukrainian troops in Ukraine, not dissimilar to how we sent advisers to Viet Nam. Now there’s reports that US Secretary of State Anthony Blinken suggested that the US might allow Ukraine to use American made weapons for strikes inside of Russia. That would be a dangerous policy shift and would raise the stakes and the possibility of the war growing beyond the current battlegrounds. It also increases that the odds that the college students protesting against Israel might have to change to protesting stopping the draft because that could be next if things keep going the way they’re going with this administration.
Now don’t tell Joe Biden the fossil fuels may be with us a lot longer than people think. It might make him start screaming again. Yet in the energy space guys like Warren Buffett are really betting on long term oil which place like Occidental, and we continue to see mega deals in the energy space. The Wall Street Journal reports that, “ConocoPhillips COP -3.12%decrease; red down pointing triangle has agreed to acquire Marathon Oil MRO 8.43%increase; green up pointing triangle in an all-stock deal valued at $17.1 billion in a bid to catch up with rivals as drillers race to secure new oil and gas wells. Under the terms of the agreement, Marathon Oil stockholders will exchange each share for 0.255 shares of ConocoPhillips, representing a nearly 15% premium based on Marathon Oil’s closing share price on Tuesday. The deal allows ConocoPhillips to expand its presence in several key U.S. shale basins including in Texas and North Dakota.
For the entire oil complex, we are looking to see demand numbers start to turn up. The reason why the market is conflicted and caught in a trading range is because they are not sure that they should focus on current fundamentals or what may happen with demand if the Fed decides to increase interest rates. From my perspective I think it’s unlikely that the Federal Reserve will be able to raise interest rates especially with an election ahead. The flipping back and forth on rate expectations is keeping the oil market subdued.
If demand starts to perk up in the US, China and India, which it looks like it’s going to do, then I think that we are very close to the bottom. Reuters is reporting that, “Asia’s imports of crude oil rose to the highest in 12 months in May, with the strength being driven by India as the region’s second-biggest buyer is on track to see record arrivals. The world’s top crude importing region is expected to have arrivals of 27.81 million barrels per day (bpd), up from 26.89 million bpd in April, according to data compiled by LSEG Oil Research. That’s an increase of 920,000 bpd month-on-month, with the bulk of the gain being accounted for by India, where imports are expected to rise to an all-time high of 5.26 million bpd, up 710,000 bpd from April’s 4.55 million bpd.
The other deal with traders is keeping an eye on is Saudi Arabia’s further listing of shares to own a part of Saudi Aramco. Rumors have the listing at the value of the listing is estimated to be around $10-$11 billion.
Amena Bakr is reporting that the announcement for the Aramco listing is likely to happen today after the market closes- sources familiar with the matter are telling her.
Once again hedgers probably should use this dip to put on some longer-term positions, we really expect to see a big surge in prices at some point later in the year.
Natural gas prices pulled back after the incredible comeback. The key today will be the report that will be released on time at 9:30 central Standard Time. Reuters is reporting that US utilities added a smaller than usual 78 billion cubic feet of natural gas and this storage last week as low prices earlier this year controllers to cut output. The 78 billion cubic feet injection compares with an injection of 106 BCF during the same week a year ago and average of 104 BCF in recent weeks the market has been surprised by this number and has been a catalyst for the market to move higher if once again this number comes out on the bullish side of the equation, we would expect natural gas to make new highs for the move.
Long term the demand outlook for natural gas looks strong from the liquified natural gas front as well as power generation. In the United States we still must keep in mind that we’re heading into hurricane season and that could impact natural gas demand either positively or negatively, depending on when and if these storms hit and where they hit.
Gas output in the Lower 48 U.S. states fell to an average of 97.7 billion cubic feet per day (bcfd) so far in May, down from 98.2 bcfd in April, according to financial firm LSEG. That compares with a monthly record of 105.5 bcfd in December 2023. There were 63 total degree days (TDDs) last week compared with a 30-year normal of 63 for the period, according to data from financial firm LSEG. TDDs measure the number of degrees a day’s average temperature is above or below 65 degrees Fahrenheit (18 degrees Celsius) to estimate demand to cool or heat homes and businesses.
Food inflation has been a big issue and cattle prices are probably going to continue to break record highs. Yet cattle fell on a report that China was blocking US beef shipments from the JPS meat plant in Greeley Co. The reason why is China blocked the beef shipments because they identified traces of a feed additive called Ractopamine which has been approved for use in the United States but not in China or in the European Union for that matter.
Read Full Story »»»
DiscoverGold
Commodity Trading Advisors (CTAs) currently hold a bullish view on oil
By: Isabelnet | May 30, 2024
• Oil
Commodity Trading Advisors (CTAs) currently hold a bullish view on oil
Read Full Story »»»
DiscoverGold
Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | May 30, 2024
• Top Movers
LME Aluminum Alloy 14.05 %
Cocoa (NYCSCE) Futures 6.03 %
Oats (CBOT) Futures 1.96 %
Tokyo Silver Futures 1.9 %
Kuala Lumpor Palm Oil Crude Futures 1.87 %
• Bottom Movers
NY Natural Gas Futures 5.63 %
Cheese 2.69 %
Cotton 2.53 %
Orange Juice (NYCE) Futures 2.05 %
Sugar World (CSCE) Futures 2.03 %
*Close from the last completed Daily
DiscoverGold
Natural Gas Faced Resistance After Strong Opening Surge
By: Bruce Powers | May 29, 2024
• Natural gas continued to strengthen after testing 200-Day MA support, but bearish reactions raise uncertainty about the uptrend’s sustainability.
Natural gas continued to strengthen on Wednesday, following a successful test of support around the 200-Day MA earlier in the week. The high of the day was 2.85 and it was reached on a gap at the opening of the session. It provided a retest of resistance around recent highs. Last Thursday a trend high of 2.92 was reached before sellers took charge and a pullback began. Although today’s high shows remaining strength in demand for natural gas, resistance was seen following the high and the sellers took back control. At the time of this writing trading continues near the low of the day, which was 2.655.
Failure Following Strong Opening is Bearish Behavior
Such a bearish reaction to a strong opening is not bullish behavior. It creates further uncertainty as to whether the uptrend may have more upside to go before a deeper retracement, or if today creates a second high that leads to a bearish continuation. The 200-Day MA at 2.46, along with the recent swing low of 2.475 are the near-term price levels to watch for support. However, a retest of support around the 200-Day line could lead to a failure and a deeper retracement that targets lower price levels.
Correction Can Include a Retracement and/or Consolidation
The correction, if it does continue, could take place with a deeper retracement or consolidation. As of today, a possible consolidation range would have a high of 2.92 and a low of 2.475. But since the 200-Day line is so close to the recent swing low, they can be watched together. Notice what is happening with the purple 20-Day MA. It is rising and heading towards the 200-Day line. If natural gas further consolidates above the 200-Day line, the 20-Day line may continue to rise. It is leaning towards a possible crossing above the 200-Day line, which would be bullish overall and a sign that demand is improving. The 20-Day MA is now a match with the 38.2% Fibonacci retracement at 2.41.
20-Day MA is Current Trend Support to Watch
For the current advance the 20-Day line is the key trend support line to watch during weakness. If it remains a support boundary the chance for a continuation higher in the price of natural gas remains. Alternatively, a drop below the line increases the chance to a test of support at lower prices. The 50-Day MA at 2.03 being one of the lower price levels. That should be the maximum of a retracement, but certainly support can be seen higher.
Read Full Story »»»
DiscoverGold
$WTIC $OIL - We may see a final wave in a Bull 'Wedge' play out to the $75 level (Final Target from that 'H&S')... (Gold)
By: Sahara | May 29, 2024
• $WTIC $OIL - Popped the Dn/Trend Channel (Gold).
But still not convinced, as we may see a final wave in a Bull 'Wedge' play out to the $75 level (Final Target from that 'H&S')...
Read Full Story »»»
DiscoverGold
Can’t Keep Them Down. The Energy Report
By: Phil Flynn | May 29, 2024
Despite some of the most challenging inflationary conditions in many Americans lifetime, it seems you cannot keep that American Spirit of adventure down. Oil markets are coming back from a big uptick in US consumer confidence that surged to 102% according to the Conference Board. That was accentuated by a record amount of air travelers and a surge in gasoline demand from the USA, the world’s leader in travel. A report the from the UN World Tourism Organization that said that the US regained that title from China. OPEC Plus will at the very least reaffirm voluntary cuts with the outside of and extension and perhaps announcement of compensation cuts.
Oh, sure we saw a report from the International Monetary Fund that raised their forecast for China economic growth to 5% from 4.6% which today if offsetting concerns about Chinese oil demand. The market has been disappointed with reduced refinery runs in China for plastics production and their manufacturing, but domestic demand remains strong. The IMF suggested that that China’s economy has exceeded their expectations and now with China’s biggest cities rolling out major easing of conditions for homebuyers, that could support the economy even more not to mention more oil demand as well.
Now if we look to India there are more reports and suggestions that India’s demand for oil and natural gas are going to absolutely surge in the coming months and years. S&P global raised its outlook for India’s economy to positive from stable and this of course means that their growing appetite for oil and natural gas is going to grow. That will create a very tight global market later in the year and price might not matter.
Petroleum Economist says that even with oil surges to over $100 a barrel, it’s possible that India’s oil demand will continue to grow. The Petroleum Economist is saying that India is expected to register steady growth in crude oil consumption during 2024 given its ability to shrug off relatively high prices.
Analysts and officials believe prices would need to rise significantly and for a sustained period of time to start really hurting demand. The data so far this year backs up this assertation: there has already been solid growth in demand for crude oil and finished products during the first four months of the year despite prices being well above $80/bl.
There seems little to fear in terms of demand destruction. From January to April, India’s appetite for oil has barely been quelled. Consumption increased by 4.8% during that time compared with the same period. And it is not just oil. It is India’s demand for natural gas. Reuters is reporting India’s natural gas demand will surge 7% on stronger demand industrial demand fertilizer.
Side issues that seem to be supporting are reports that the Buzzard oil field in the North Sea is experiencing a temporary production outage that will reduce oil production maybe by as much as 60,000 barrels of oil a day.
Political risk factors are also rising and inexplicably there are reports that the Biden administration is standing up for Iran and their nuclear program. It’s almost as if like the Biden administration wants Iran to get nuclear weapons. The New York Post reports that, “The White House is begging Britain and France not to formally rebuke Iran over the theocracy’s growing nuclear program. Administration officials have been pressuring the US allies and other European nations to vote against censuring Iran at a meeting of the International Atomic Energy Agency’s (IAEA) board of governors next month, diplomats close to the discussions told the Wall Street Journal.” The US is also preparing to abstain from the IAEA vote, the diplomats added, with some suggesting censure could further destabilize Iran following the death of its president, Ebrahim Raisi, in a May 19 helicopter crash.” If I were the Biden administration, I wouldn’t worry about that. I think Iran could use a little destabilizing myself. Then they maybe they couldn’t use their increasing oil revenue that has exploded under the Biden administration to fund terror groups like Hamas, Hezbollah and the Houthi rebels who attacked more ships in international waters.
The other concern of course for oil and natural gas is going to be the weather. Hurricane season is starting and already the National Hurricane Center has its eye on the potential of the developments of storms as we start the hurricane season June 1st. Yesterday the National Hurricane Center was monitoring three tropical waves, yet they do not seem to be developing into anything yet. Weather in the Atlantic is very conducive for the possibility of an early start to the hurricane season. We’ve already seen the weather conditions cause havoc with the slew of tornadoes.
Fox Weather is reporting that powerful thunderstorms rocked the Dallas-Fort Worth Metroplex on Tuesday, leaving more than 800,000 utility customers in the dark as severe weather barreled across the region and produced baseball-sized hail, hurricane-force wind gusts and significant damage in several communities.
If your power is out, can you change your electric car? Anas Alhajji give us an electric car update by pointing out that Toyota EV sales increased in Q1 by a whopping 86% year over year!!! That 86% = 1,617 cars! Whoopee! At that rate maybe the Biden administration’s billion-dollar car charger can actually meet that type of demand.
Read Full Story »»»
DiscoverGold
Crude Oil Poised for Bullish Continuation Amid Breakouts
By: Bruce Powers | May 28, 2024
• WTI crude oil shows strength, challenging the 80.64 consolidation high, and breaking above key price levels, indicating potential upside continuation.
WTI crude oil shows signs of strength today and challenges the consolidation high of 80.64. It looks like crude oil is starting to decide how it will resolve recent uncertainty as seen over more than two weeks of consolidation. It is showing strength as it broke out above several price levels today and is on track to close strong, in the top quarter of the day’s range and above each of the price levels, including the 200-Day MA.
False Breakdown Leads to Sharp Rally
Today’s advance is the third day up after crude oil triggered a false breakdown from recent consolidation last Friday. Buyers subsequently took charge and have managed to see the price of crude advance into the third day, today. The bullish continuation today has taken crude oil above both the downtrend line and purple 20-Day MA, as well as the uptrend line.
Notice that the 20-Day MA and downtrend line mark a similar price of 79.11 around the breakout area. In other words, a significant pivot level has been busted to the upside. Today bullish price action points to likely upside continuation.
Attempting Four-Week Breakout
Again, today the high is marked as potential resistance by two price levels, the most recent swing high at 80.64 and the long-term downtrend line. It is also a weekly high. The downtrend line starts from the March 2022 peak of 130.61. A decisive rally above 80.64 will trigger a bullish continuation on both the daily and weekly chart, which will be confirmed on a daily close above that price level. Once that happens, in the short term the next higher target would be the 50-Day MA at 82.04.
Watch Long-Term Downtrend Line
The long-term downtrend line has some significance for crude oil. It was initially broken to the upside on April 1, but it subsequently failed to hold as support and a breakdown occurred on April 30. That was followed by a correction to last week’s low. A second bullish breakout of a long-term trendline is bullish. That happened today and will likely be confirmed by a daily close above the line.
Read Full Story »»»
DiscoverGold
Natural Gas Likely Test of Resistance Before Return to Key Support Levels
By: Bruce Powers | May 28, 2024
• Natural gas is expected to retrace and consolidate after a 92% advance, with key support at the 200-Day MA around 2.46.
Key support for natural gas remains around the 200-Day MA at 2.46. It has been bouncing from that price area following a pullback low of 2.475. Given the sharp 92% advance that culminated with last week’s high of 2.92, natural gas is due for a period of retracement and consolidation. It looks like it has started.
If correct, the advance off the area around 200-Day MA will eventually be met with resistance that turns the price of natural gas back down to retest support around the 200-Day line, and possibly fall below it. Certainly, given recent volatility a drop through the 200-Day MA, even if it is brief, would not be a surprise.
Bounce Into Resistance
Areas to watch for resistance during a bounce includes a price zone from 2.61 to 2.63. That zone encompasses support seen on two different days out of the previous three. Friday’s low provides the 2.63 price level. If natural gas can close above Friday’s 2.71 high, it may have a chance to test recent highs. Otherwise, the expectation is for resistance to be seen on the bounce, followed by a deeper pullback or at least a retest of the 200-Day line.
Potential Bearish Weekly Candle Remains
As noted yesterday, last week natural gas completed a bearish shooting star candlestick pattern and ended near the lows of the week’s trading range. It is matched by the 50-Week MA, currently at 2.50. Therefore, the 200-Day line on the daily chart also represents the 50-Week MA. Since they are together, this week’s low of 2.475 takes on greater significance as the breakdown below it indicates a failure of two long-term moving averages to hold as support. A daily close below 2.475 will confirm the breakdown and increase the chance for an eventual test of lower price levels.
Lower Price Levels
The first lower price area to watch is around the 20-Day MA at 2.73. That moving average is a key trend indicator for the current sharp trend. It has not yet been tested as support since a gap above it on April 26. Therefore, it is due to happen. Keep in mind that the line is rising, and the price represented by the line when approached may change. Below the 200-Day line is a prior interim swing low 2.31. But the 50% retracement at 2.25, along with a more significant swing low of 2.235 from December 2023, have identified a similar price zone.
Read Full Story »»»
DiscoverGold
$USO - It has been a while since we posted about #USO but once it came very close to our targets in early April we exited and it has been correcting since
By: Intelligent Investing | May 28, 2024
• $USO
It has been a while since we posted about #USO but once it came very close to our targets in early April we exited and it has been correcting since.
However, today, it features a nice technical breakout and we expect the blue 50d SMA and upper red dotted DT line to be reached, at least, potentially much higher if it can clear the Ichimoku Cloud! Contingent on holding above the red 200d SMA.
Read Full Story »»»
DiscoverGold
Followers
|
99
|
Posters
|
|
Posts (Today)
|
0
|
Posts (Total)
|
10766
|
Created
|
04/21/06
|
Type
|
Free
|
Moderators DiscoverGold |
Welcome to: Oil & Natural Gas - Energy - Commodities - Resources
Under Contruction:
OIL & GAS STOCK NEWS.COM
TICKER SPY.COM for DD & research
PLEASE READ - This is concern for all , market maker signal for shares.
100-I need shares
200-I need shares badly,but do not take it down
300-take the price down to get shares
400-trade it sideways based on supply and demand
500-gap one way or another,to the direction of the 500 trade.
ADDING THIS 4/22/06: In my experiences I Noticed When In Sub Penny Add a Zero!! - Mick
***DISCLAIMER***
- The Board Monitor and The Board Assistants herewith, are not licensed brokers and assume NO responsibility for the actions, investment decisions, and or messages posted on this forum.
- We do NOT recommend that anyone buy or sell any securities posted herewith. Any trade entered into risks the possibility of losing the funds invested.
- There are no guarantees when buying or selling any security.
PLEASE MARK BOARD & MODS -- PLUS SIGN UP FOR OUR EMAIL LIST!
Volume | |
Day Range: | |
Bid Price | |
Ask Price | |
Last Trade Time: |