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Natural Gas Price Forecast: Will Support at 1.52 Lead to a Reversal?
By: Bruce Powers | February 20, 2024
• Despite the current downtrend, natural gas could see a turnaround as support at 1.52 holds, prompting a potential rally towards key resistance levels. But a bullish signal is needed first, otherwise the downtrend could continue.
Natural gas has reached a price area where it might see support that could stop and reverse the decline. However, it is too early to say how the current situation will play out. Since February 5, natural gas has fallen with a consecutive series of lower daily lows and lower daily highs. There was only one day different and that was an inside day from last Friday.
Natural Gas Stalls Descent at April 2020 Low
The corrective low to date is 1.52. That matches solid support seen at 1.52 in March and April 2020. Although those lows were exceeded to the downside briefly in June 2020, the 1.52 level was shown as support over two months in 2020. Given that the current decline has stalled at 1.52, it remains a potential reversal point. A rally above today’s high of 1.62 would provide the first sign of strength that could lead to higher prices. Given that a rally above a prior day high is a clear change in the recent downtrend pattern, upside follow through may be seen.
Key Price Levels if Rally Triggers
Price levels to watch during a rally start with the 1.60/1.61 price zone from the March 2016 swing low followed by the 8-Day MA (light blue) at 1.70. It is quickly followed by a price level that was key support in September 2020 at 1.80. Further up are the prior trend lows from 1.95 to 1.97. The 20-Day MA (purple) is at 2.03 and marks a key near-term trend indicator. This is particularly true since the 20-Day line converged with the short downtrend line starting from around the gap down on January 29.
Lower Price Levels
On the downside, the downtrend is still intact and pointing to lower prices. Unless there is a bullish reversal signal first, natural gas may continue its correction and fall below 1.52. In that case, the next area to look for support is around 1.49. Reaching that price will complete a 127.2% Fibonacci extension (greater than 100% retracement) of the most recent rally that began from the December 13 swing low. Further down is possible support around 1.44, which is a 28-Year low reached in 2020.
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Today's Futures Heat Map • Weakest: Cotton, Heating Oil, Gasoline, Silver
By: Barchart | February 20, 2024
• Today's Futures Heat Map
Strongest: Cocoa, Wheat, Hard Red Wheat, Palladium
Weakest: Cotton, Heating Oil, Gasoline, Silver
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Back-Track. The Energy Report
By: Phil Flynn | February 20, 2024
It seems that the oil trade is backtracking on calls for ‘peak oil demand’ and is now more focused on the possibility of ‘peak oil’ production in the US and around the globe. Oil demand is on track to hit another record high. The failure of alternative energies to fill the void is raising concerns about the ability of the world to meet demand in the next few years. This comes as plunging natural gas prices may force a lot of US drillers out of business and some predictions that the shale miracle in the United States has seen its best days. I don’t believe that the shale revolution is behind us. I do believe that because of the push from the Biden administration away from US fossil fuel production, it will have long-term consequences for the US economy and the stability of the globe.
The Wall Street Journal reports that US crude oil output is expected to increase by just 170,000 barrels a day in 2024 from last year, that’s down from a jump of 1 million barrels a day in 2023, according to federal record-keepers. That is the smallest annual increase since 2016, not counting the pandemic. The Journals says that, “gushers of new U.S. crude have helped cap soaring oil prices despite OPEC production cuts and global turmoil, including most recently in the Middle East. The gains were driven by private producers that commandeered rigs after Russia’s invasion of Ukraine sent prices soaring to more than $120 a barrel in early 2022. Now, that growth is expected to slow dramatically. Declining oil prices led producers to lay down rigs last year. Then, many of the operators that had been drilling with abandon were acquired by bigger players looking for ways to expand in the U.S. Those big public companies have given priority to returning cash to shareholders over drilling new wells according to the Journal.
Oil prices are backtracking even after the Biden administration backtracked on their electric car push which is proving to be a disaster on so many levels. I am sure it will only be a matter of time before they blame President Trump for the lack of electric car sales that the Biden administration tried to force them to buy. The 2023 mandate by Biden to automakers required them to make sure that every 7 out of 10 cars that they sell is electric…whether we want them or not. The problem is they can’t force Americans to buy a product that they do not want, not only because it’s more expensive but also is not as reliable.
Reuter News reports that, “Joe Biden’s administration is set to ease proposed yearly requirements through 2030 of its sweeping plan to aggressively cut tailpipe emissions and ramp up electric vehicle sales, two sources told Reuters on Sunday. Automakers and the United Auto Workers had urged the Biden administration to slow the proposed ramp-up in EV sales. They say EV technology is still too costly for many mainstream U.S. consumers and that more time is needed to develop the charging infrastructure.”
Of course, the electric car transition was never based on science as it takes much more greenhouse gas emissions to build an electric car and the EV is only as clean as the power it uses to charge its batteries.
The Wall Street Journal reported in some parts of the world, such as China, the electricity used to charge the batteries of the country’s growing number of EVs comes largely from CO2-heavy coal, diminishing an EV’s impact on combating climate change. In 2022, China’s electric power production, which runs largely on coal and oil, pumped 530 grams of CO2/KWH into the atmosphere.
Now The New York Times is reporting that, “In a concession to automakers and labor unions, the Biden administration intends to relax elements of one of its most ambitious strategies to combat climate change, limits on tailpipe emissions that are designed to get Americans to switch from gas-powered cars to electric vehicles, according to three people familiar with the plan.”
Geopolitical risk factors for oil are providing support. Bloomberg reported that, “The crew of a commercial ship in the Red Sea abandoned the vessel following a Houthi attack — the first such evacuation since the militant group began menacing trade in the vital waterway late last year. Two ship ballistic missiles damaged the Belize-flagged Rubymar on Sunday evening local time, US Central Command said Monday on social media platform X.” The Houthi rebels, that have caused so much concern about the safe passage through the Red Sea, have been bought and paid for with Iranian oil money. That money also funds and supports Hamas and Hezbollah.
Even the New York Times acknowledges that the Biden administration has been a total failure when it has come to enforcing sanctions on Iran. The New York Times reports that there is a $2.8 billion hole in U.S. Sanctions on Iran a Times investigation reveals how lax government oversight allowed shadowy oil tankers, covered by American insurance, to fund Iran’s regime. The Times writes that, “Treasury Secretary Yellen told Congress that her teams were “doing everything that they possibly can to crack down” on illegal shipments, and a senior White House adviser said that “extreme sanctions” had effectively stalled Iran’s energy sector. But the sanctions failed to stop oil worth billions of dollars from leaving Iran over the past year, a New York Times investigation has found, revealing a significant gap in U.S. oversight. The oil was transported aboard 27 tankers, using liability insurance obtained from an American company. That meant that the U.S. authorities could have disrupted the oil’s transport by advising the insurer, the New York-based American Club, to revoke the coverage, which is often required for tankers to do business.
Instead, the 27 tankers were able to transport shipments across at least 59 trips since 2023, the Times found, with half the vessels carrying oil on multiple journeys. The Treasury Department did not respond to a question about whether it was aware the ships had transported Iranian oil while insured by the American Club. The tankers exhibited warning signs that industry experts, and the Treasury, have said collectively warrant greater scrutiny.”
That is not a surprise to readers of the Energy Report as we have mentioned the fact that these sanctions have not been enforced. Anybody who’s been following this situation realizes that the Biden administration’s decision to try to allow Iran to export oil in return for some Iranian nuclear deal in better relations, was a major miscalculation based upon what’s been happening with Iranian oil money and its support for these terror groups around the globe.
Oh, by the way, the Houthi rebels are once again considered a terror group by the Biden administration. You remember they took them off of the terror list that President Trump put them on.
Also, the so-called sanctions on Russia, the toughest ever according to Biden, are not working either. Even CNN reports that, “Russia is entering its third year of war in Ukraine with an unprecedented amount of cash in government coffers, bolstered by a record $37 billion of crude oil sales to India last year, according to new analysis, which concludes that some of the crude was refined by India and then exported to the United States as oil products worth more than $1 billion. CNN says, “This flow of payments, ultimately to Moscow’s benefit, comes from India increasing its purchases of Russian crude by over 13 times its pre-war amounts, according to the analysis by the Centre for Research on Energy and Clean Air (CREA), exclusively shared with CNN.
More climate policy calamities. The FT reports that, “ExxonMobil has warned it is willing to withhold billions of dollars in climate-related investments in Europe unless Brussels cuts environmental red tape which the company blames for the “deindustrialization of the European economy”.
Oil prices continue to be solid but pulled back in a light volume Presidents Day trade. Oil demand concerns continue to be the mantra of the bears while with tightening global market is the base case for the bulls.
The bears are having a much harder time ignoring the tightening global oil supplies that we’ve been talking about was going to happen for many months more of the big banks are turning very bullish on oil despite today’s action.
We still see significant risk to the upside. OPEC is going to make sure that they regain control of prices and Russia can afford to help with their sanction money windfall. Tass Reports that, “Russia intends to fully meet its OPEC+ quota in February despite a decrease in refining, Deputy Prime Minister Alexander Novak said. “We will fulfill our obligations,” he told reporters when asked whether Russia will boost the export of oil in February to offset a decline in refining. Russia’s OPEC+ obligations imply a reduction of both supplies of oil and petroleum products.
The natural gas crash on the other hand is creating major issues and could put many producers out of business. When the second polar vortex did not materialize, we flipped to an extremely warm pattern that just crushed demand for natural gas. The production continues to be high because of associated gas. Prices hit an inflation-adjusted 30-year low when front-month futures touch $1.58/MMBtu. That allowed gas inventories to hit a six-year high. This will force cutbacks in drilling. Since January 13, the price of gas has fallen by more than 40% to $1.6 for an MMBTU. Probably a time to buy some puts and calls.
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Crude Oil Continues to Look Bullish
By: Christopher Lewis | February 20, 2024
• The crude oil markets continue to look bullish overall, as the markets are in the midst of forming some kind of “rounded bottom” that the market participants can all see, and we have an obvious barrier just above.
WTI Crude Oil Technical Analysis
You can see that crude oil in the WTI grade has pulled back just a bit only to turn around and show signs of life. With that being the case, the 200-day EMA of course is an indicator that a lot of people will be paying close attention to, and it does look like it’s trying to offer a little bit of support. This is a market that continues to attract buyers based on value anytime the markets drop in the slightest.
If we can clear the $80 level, then I believe that the crude oil market, the WTI grade could go to $82.50, possibly followed by the $88 level. Underneath we have the 50-day EMA that comes into the picture as well, as it could offer significant support. This is a commonly watched technical indicator, so it makes a lot of sense that this is a region worth paying attention to.
Brent Crude Oil Technical Analysis
Brent continues to look very bullish at this point with the 200 day EMA offering support and the $84 level above offering resistance. If we can clear that level, then I think it’s likely we go to the $90 level. The 50 day EMA underneath continues to offer support with the $80 level, and I think that’s your short-term floor. I believe both of these are going to form rounded bottoms and take off to the upside. The seasonality certainly favors crude oil at the moment as we are getting ready to head into the summer season, which of course means more driving, more transportation, more flights, things like that.
So typically, crude oil does fairly well this time of year anyways. With that being said, everything is pointing to higher pricing. And I think that short-term pullbacks continue to offer buying opportunities in a market that is starting to see dwindling supply. So that of course comes into the picture. Furthermore, central banks around the world cutting rates could increase economic activity, and I think that is also something that traders are trying to get in front of as well.
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Natural Gas Seeks Support Amid Steep Declines
By: Bruce Powers | February 19, 2024
• Natural gas started the week with a gap down, falling to a trend low of 1.52 before finding support and bouncing. Today's low is a 46-month low, nearing a 28-year low of 1.25.
Natural gas started the week with a gap down opening, falling to a trend low of 1.52 before finding support and bouncing. Today’s low is a 46-month low, and it puts the price of natural gas within reach of testing a 28-year low of 1.25. There is nothing bullish about the current setup in natural gas, other than the short-term intraday bounce seen today that will put it in the green for Monday.
Sellers Remain in Control
Until there is at least an initial sign of a potential bottom or a low, the trend can be expected to continue. If today’s low is busted to the downside and natural gas keeps falling, then the 1.49 price zone is the next area of interest for potential buyers. That is where the 127.2% Fibonacci extended retracement completes. Further below there is the 28-year low.
Rally Above 1.58, Sign of Strength
A decisive rally above today’s high of 1.58 would provide the first sign of strength that may see further upside in prices. Once a new low is found that leads to a bullish reversal the subsequent advance could be sharp. That is given the fact that the price of natural gas was down as much as 55.5% today in only 25 days. Measured from the secondary high from January 25, it had declined by 47.5% in 17 days. Further, the drop seen from the high of the gap down day on January 29 is 29.7% in only 15 days.
Trend Resistance Levels Potential Upside Targets
Let us now consider a couple trend indicators as possible upside targets once a rally begins. The 8-Day MA (green) marks dynamic resistance of the downtrend in the short-term. Until natural gas gets above the line the short-term and longer-term trends are all down. It is currently at a price of 1.69. A rally above 1.69 would put natural gas at a five-day high and provide a good start to a potential bounce. The purple 20-Day MA has recently converged with the shorter downtrend line, and they are both identifying a similar price zone. It is currently 2.02. Interestingly, the long-term downtrend line is also currently identifying that price area as well.
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Natural Gas Price Forecast: Bearish Continuation or Reversal Signaled?
By: Bruce Powers | February 16, 2024
• Natural gas prices showed a minor shift today, ending an eight-day pattern of new lows. Despite this, the bear trend remains strong, with potential for further downside.
There was a minor change today in the pattern of declining prices seen over the past couple of weeks. On Friday, today, the price of natural gas ended a consecutive decline of eight days with lower daily highs and lower daily lows. Natural gas is on track to complete Friday with an inside day. This doesn’t diminish the bear trend, just presents a one-day pause. Nonetheless, it reflects a slight decrease in downward momentum. Regardless, the downtrend remains well intact, and the expectation is for a bearish continuation signal leads to lower prices for natural gas.
Drop Below 1,573 Signals Lower Prices
A drop below today’s low of 1.575 will signal a likely bearish continuation of the downtrend. Likely, because there needs to be downside follow through to further confirm weakness. Yesterday’s low of 1.573 would also need to be exceeded to the downside. Notice that today’s price range is relatively narrow, and it is contained in the lower half of yesterday’s range, reflecting remaining selling pressure.
Strength Will be Indicated on Advance Above 1.64
Nevertheless, natural gas has been testing a support zone for the past few days. If there is a decisive rally above today’s high of 1.64, it will indicate strengthening. But a bullish reversal with some legs will need to start with a decisive advance above yesterday’s high of 1.67. A daily close above that price level will confirm strength thereby opening the door to higher prices. A rally above yesterday’s high could be sharp as the decline was relatively fast. This doesn’t mean it will be, just that it could be and to be on the lookout. Historically, you can see on the chart how bottoms have frequently led to sharp reversals over the past year.
Daily Close Above 1.67 Confirms Strength
If a daily close above 1.67 occurs, natural gas will then have a decent chance of rising to test prior support levels as resistance. In addition, there is a gap starting at 2.17 on January 29 that has not been filled. A confirmed bullish reversal should, at a minimum, pullback to test the prior trend lows at a range from 1.95 to 1.97. That zone was previously the lows for the downtrend. In addition, the previous swing low at 2.31 is a potential target.
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Today's Futures Heat Map • Strongest: Silver, Natural Gas, Orange Juice, Copper
By: Barchart | February 16, 2024
• Today's Futures Heat Map
Strongest: Silver, Natural Gas, Orange Juice, Copper
Weakest: Cocoa, Hard Red Wheat, Wheat, Russell 2000 E-Mini
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | February 17, 2024
• Following futures positions of non-commercials are as of February 13, 2024.
WTI crude oil: Currently net long 209.6k, up 17.7k.
On December 13th – the day the Fed made a dovish pivot – West Texas Intermediate crude bottomed at $67.71, which approximated an intraday low of $67.05 posted in June. After the June low, the crude rallied all the way to $95.03 through September.
Once it bottomed in December, WTI has been making higher lows, with last week’s low of $71.41 defending the lower bound of a 14-month range between $71-$72 and $81-$82.
This week, the crude ($78.46/barrel) poked its head out of the 200-day ($77.41); the average stopped rally attempts going back three months. This time around, WTI has a decent chance of staying above the 200-day and then head toward $80, where it has struggled the past three months. Should things evolve this way, the door opens up to at least the upper bound of the range.
In the meantime, as per the EIA, US crude production in the week to February 9th was unchanged week-over-week at 13.3 million barrels per day. This is a record and was first hit in the week to December 15th, then four more times after that. Crude imports decreased 437,000 b/d to 6.5 mb/d. Gasoline and distillate inventory also declined – down 3.7 million barrels and 1.9 million barrels respectively to 247.3 million barrels and 125.7 million barrels. Crude stocks, on the other hand, increased 12 million barrels to 439.5 million barrels. Refinery utilization dropped 1.8 percentage points to 80.6 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | February 17, 2024
NY Crude Oil Futures closed today at 7846 and is trading up about 9.50% for the year from last year's settlement of 7165. As of now, this market has been rising for this month going into February reflecting that this has been only still, a bullish reactionary trend.
Up to now, we still have only a 1 month reaction rally from the low established during December 2023. We must exceed the 3 month mark in order to imply that a trend is developing.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Focusing on our perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 7811 and overhead resistance forming above at 7847. The market is trading closer to the resistance level at this time. An opening above this level in the next session will imply that a bounce is unfolding.
On the weekly level, the last important low was established the week of December 11th at 6771, which was down 2 weeks from the high made back during the week of November 27th. We have been generally trading up for the past week from the low of the week of February 5th, which has been a move of 10.30%. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 7929 made 2 weeks ago. Still, this market is within our trading envelope which spans between 6591 and 8227.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in February, this market has held above last month's low of 6928 reaching 6928.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | February 16, 2024
• Top Movers
• Bottom Movers
AU - Victoria Base-Load Electricity Futures 37.35 %
NY Natural Gas Futures 4.74 %
NY Heating Oil Futures 2.96 %
NYMEX RBOB Gasoline Futures 2.57 %
London IPE Gas Oil Futures 2.03 %
*Close from the last completed Daily
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Border Security. The Energy Report
By: Phil Flynn | February 16, 2024
Big news! Finally, they are taking steps to secure the border and building fortified enclosures and making contingency plans to deal with an influx of refugees. Oh no, not our borders but in Egypt. Oil prices surged as a pathetic retail sales report put rate cuts back on the table and geopolitical risk concerns started to creep back into the price of oil and products. Dow Jones U.S. retail sales fell a seasonally adjusted 0.8% in January from a month earlier, the Commerce Department said Thursday. The larger-than-expected loss came after a strong round of holiday shopping in December, which the report revised to a 0.4% gain. Excluding autos, sales were down 0.6%; economists expected an increase.
This comes as the International Energy Agency and OPEC continue to have different outlooks for demand growth as the US process starts to cut rigs and major players are killing environment, social, and governance (ESG) policies before it kills them. The FT is reporting that, “Two of the world’s biggest asset managers are quitting an investor group set up to prod companies over global warming and a third is scaling back its participation, in a major setback to the ambitions of Climate Action 100+. JPMorgan Asset Management and State Street Global Advisors both confirmed they were leaving Climate Action 100+. BlackRock, the world’s largest money manager, is pulling out as a corporate member and transferring its participation to its smaller international arm.” OPEC is tightening the screws and even the cheaters are vowing compensation. Iraq and Kazakhstan vowed that they would cut overproduction over the coming 4 months. Israel is on the offensive and the AP reports that Russia’s prison agency says that imprisoned opposition leader Alexei Navalny has died. He was 47. The mingling of all these factors along with our belief that this will cause demand to outstrip supply sets up a very bullish outlook for oil and products.
Let’s start with the US supply outlook. John Kemp at Reuters points out that the WTI squeeze is on. Kemp writes that, “U.S. crude futures show increasing signs of a squeeze on inventories around the NYMEX delivery point at Cushing in Oklahoma. The calendar spread from March to April 2024 has surged in the run-up to next week’s expiry of the March contract. We are also seeing reports that standard charter JP Morgan as saying that we need to see Brent crude above $90.00 a barrel to reflect the actual fundamentals of the market. Standard Charter for one has said that we still have to see prices go a lot higher to accurately reflect the rapid tightening of the market as well as the recent escalation of geopolitical risk. This comes since we pointed out yesterday that while the International Energy Agency continues to downplay global demand, they have acknowledged that the global supply side is the tightest it’s been in many years. “Global observed oil stocks plummeted by about 60 mb in January, preliminary data indicate, with on-land inventories falling to their lowest level since at least 2016” according to IEA.
While U.S. oil supply surged this week, Cushing didn’t benefit even with the refining issues in Whiting IN and seasonal maintenance. U.S. oil production seems to be leveling off and it’s a possibility that we have peaked for U.S. oil production. Even Occidental Petroleum, which had awesome earnings, said they plan to not increase production and cut two Permian Basin rigs as well as Cap X.
Seeking Alpha said that OXY Q4 production ticked up ~7K boe/day from the year-earlier quarter to 1.234M boe/day, exceeding the midpoint of company guidance by 8K boe/day, but the average realized price for oil fell by ~2% Y/Y to $78.85/bbl; Q4 production from the Permian Basin rose 4.1% Y/Y to 588K boe/day. Occidental (OXY) said it will trim capital spending in shale and exploration by ~$320M this year and idle two rigs in the Permian Basin, citing “efficiency and moderating activity,” while increasing capex in the Gulf of Mexico, chemicals, and the enhanced oil recovery business.
US producers are cutting back based upon plunging natural gas prices and the lesson learned that has given them fiscal discipline along with mixed signals from the Biden administration that have been hostile to the US oil and gas industry and US oil and gas workers. Scott Disavino at Reuters writes that, “U.S. natural gas producers are slashing spending and reducing drilling activity following a sharp decline in prices, companies said this week during earnings presentations and analyst calls. For months of relatively low gas prices, many producers kept output mostly steady on expectations that demand would rise in 2024 and 2025 when several liquefied natural gas (LNG) export plants entered service. However, this week’s collapse in gas prices to a 3-1/2-year low convinced some drillers to reverse course.
The Biden administration’s politicization of LNG exports is the best hope for the globe to reduce greenhouse gas emissions unless we build a lot of nuclear power plants and it did get some pushback from the US House of Representatives. Reuters reported that, “A bill to strip the power of President Joe Biden’s administration to freeze approvals of liquefied natural gas exports passed in the Republican-controlled U.S. House of Representatives on Thursday, but faces an uphill battle in the Senate. The House approved the bill sponsored by Representative August Pfluger of gas-producing Texas 224-200 on a mostly party-line vote. The legislation needs to be passed in the Democratic-controlled Senate and signed by Biden to become law, both of which are unlikely.
The markets are pulling back because we were a bit overbought. The key today will be the inflation data and the concerns about geopolitical risk going into the weekend. For natural gas, the pain is going to be felt by many producers and we will see many start to go out of business and put pressure on the banks that loan them money. The the seeds are being sewn for a bottom and the cutback in production but with strong oil prices, it might not happen as fast as people think. In the meantime, make sure that you are hedged just in case. Natural gas options are cheap and by next year prices should look a lot better for oil and gasoline and diesel we think there’s still significant upside risk.
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Crude Oil Continues to Bounce
By: Christopher Lewis | February 16, 2024
• Crude oil markets continue to see buyers on dips as the resiliency and the stabilization of the market becomes much more apparent.
WTI Crude Oil Weekly Technical Analysis
As you can see, theWTI market has shown itself to be rather resilient over the last couple of weeks as we are now testing the 50-week EMA. I think given enough time, we are going to break above there and then go looking to the $80 level. If we can clear $80, then that would be a very positive sign, perhaps allowing the market to go much higher. This remains a buy on the dips market, as Middle Eastern tensions alone could cause market basically participants to jump in and try to cover and protect themselves.
Brent Crude Oil Weekly Technical Analysis
Brent is very much in the same situation right now with the $80 level offering support. If we can break above the top of the last couple of candlesticks and by extension the 50-week EMA, it’s likely that the market will go looking to the $90 level and then eventually the $95 level. Either way, I think that every time oil dips you have to look at it as a potential gift that you can buy into. The crude oil market has been forming a basing pattern for a while and I think we’re starting to see it play itself out as we go higher heading into the crucial summer driving season.
Keep in mind that geopolitical concerns in the Middle East, central banks loosening monetary policy, and the idea that perhaps there is going to be an engineered “soft landing” in the United States has oil traders bullish at the moment, not to mention the fact that we had recently tested a major low from a technical analysis standpoint.
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Natural Gas Price Forecast: Natural Gas Hits 1.57, Lowest in Trend
By: Bruce Powers | February 15, 2024
• Natural gas price hits new trend low of 1.57, marking the eighth day of continuous decline, indicating prolonged bearish sentiment.
The sellers remain in control of the price of natural gas as it hits a new trend low of 1.57, for the eighth consecutive day of lower daily highs and lower lows. Despite signs of strength seen earlier in Thursday’s trading session it continues to trade near the lows of the day, at the time of this writing. A daily close below yesterday’s low of 1.59 will indicate more weakness than a close above yesterday’s low. Nevertheless, natural gas remains in an aggressive decline following a drop to a new trend low last Thursday.
Continues to Test 1.60 Price Zone for Support
For the past two days natural gas has been trading in an area of possible support around 1.61/1.60. Wednesday closed right at that price zone. But a daily close below 1.60 will indicate further weakness and an increased likelihood that selling could continue and not reverse at 1.60. That would put the next lower target zone of 1.52 in sight. That price area is part of the historical price structure, and it marked a monthly support area in 2020. An extended retracement of the most recent rising multi month trend channel targets 1.49. Further down is the 28 and a half year low of 1.44.
Downtrend Shows No Signs of Letting Up
Certainly, natural gas is getting extended on the downside. As of Thursday’s low, it had fallen as much as 53.6% below the January 9 swing high of 3.39 (C). That’s more than a 13% greater decline than seen in any prior peak to tough measurement since the February 2023 trend low. It speaks to the degree of bearishness currently in the market.
Nonetheless, the trend continues until it changes. Since there are no signs yet of it changing, the expectation is for a further slide. However, when the bottom and subsequent bullish reversal arrives it could arrive quickly and be followed by an enthusiastic rally up towards prior support levels.
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Today's Futures Heat Map • Strongest: Pork Cutout, Silver, Crude Oil, Palladium
By: Barchart | February 15, 2024
• Today's Futures Heat Map
Strongest: Pork Cutout, Silver, Crude Oil, Palladium
Weakest: Wheat, Sugar, Natural Gas, Hard Red Wheat
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The Energy Report. Disagreeable/St Valentine’s Day Natural Gas Massacre
By: Phil Flynn | February 15, 2024
OPEC and the International Energy Agency can’t seem to agree on anything. Not only has a war of words broken out between these two groups, they continue to see the global energy markets from different world views.
The IEA has changed its mission from securing energy security into a political lobbying group for green energy. As I have written many times before, they are willing to forgo energy security and affordable energy prices and do almost anything to further their green agenda.
OPEC for their part has called out the IEA as it warns like many others in the energy industry that we are green-walking our way into a major global energy crisis and ignoring the fact that we are massively underinvested in fossil fuels and the record investment in green energy has not been enough to change that reality now or in the near future.
Today the IEA is again predicting that oil demand growth will slow while OPEC believes the opposite. In the past the IEA has consistently underreported demand because let’s face it, they are talking from their green energy book. They need to downplay demand so they can convince governments to forgo their energy security and economy to pay homage to the big green energy industry.
The IEA in their most recent report says that, “Global oil demand growth is losing momentum, with annual gains easing from 2.8 mb/d in 3Q23 to 1.8 mb/d in 4Q23.” They cite, “A sharp drop in China underpinned an 830 kb/d decline in global oil demand to 102.1 mb/d in the last quarter of 2023. The pace of expansion is set to decelerate further to 1.2 mb/d in 2024, compared with 2.3 mb/d last year. China, India, and Brazil will continue to dominate gains.” Yet if demand is so bad, is it not the least bit disturbing to the IEA that supply is so tight? In their own report, they write that “Global observed oil stocks plummeted by about 60 mb in January, preliminary data indicate, with on-land inventories falling to their lowest level since at least 2016. “World oil supply in January posted a sharp decline of 1.4 mb/d m-o-m after an Arctic blast shut in production in North America and as OPEC+ deepened output cuts.” Yet they justify that by writing that, “Record output from the US, Brazil, Guyana and Canada will nevertheless help boost non-OPEC+ supply by 1.6 mb/d this year compared to 2.4 mb/d in 2023, when total global oil supply rose by 2 mb/d to an average 102.1 mb/d.”
The IEA also says that, “Refinery throughputs are set to accelerate from a seasonal low of 81.5 mb/d in February. Atlantic Basin activity will recover from US weather-related disruptions that cut runs by up to 1.7 mb/d, despite a pickup in planned maintenance and as new capacity comes online in the non-OECD. For 2024 as a whole, refinery crude runs are forecast to rise by 1 mb/d to 83.3 mb/d, as a 330 kb/d decline in the OECD mitigates non-OECD gains.” They also point out the sharp increase in refinery margins. The IEA says that refining margins recovered from early-January weakness in the Atlantic Basin, led by the US Gulf Coast following the mid-month winter freeze. Although Singapore margins posted a narrow m-o-m gain, the $4.50/bbl increase on average in USGC margins was driven by the late-month rally in cracks that pushed Atlantic Basin margins to their highest level since late September.
Refining activity in the United States dropped to the lowest level since 2020 in yesterday’s Energy Information Administration (EIA) report. That sharp drop in refining runs led to an incredible 12 million barrel plus increase in crude supplies but because the products did not fall as much as they did in the American Petroleum Institute report, the market pulled back a little bit even though the supplies the product are too tight to be comfortable. A big part in the drop in refining activity was due to the shutdown at the BP Whiting IN refinery. A power outage that led to flaring has kept that refinery down longer than anyone had anticipated we have seen a big spike in gasoline prices in the Midwest and jobbers are getting smaller allocations keeping supplies very tight.
That explained why U.S. crude oil refinery inputs averaged just 14.5 million barrels which was 297 thousand barrels per day less than the previous week’s average. Refineries operated at only 80.6% of their operable capacity last week. Gasoline production increased last week, averaging 9.2 million barrels per day. Distillate fuel production decreased last week, averaging 4.1 million barrels per day. That put U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) up 12.0 million barrels from the previous week. At 439.5 million barrels, U.S. crude oil inventories are about 2% below the five-year average for this time of year. Total motor gasoline inventories decreased by 3.7 million barrels from last week and are about 2% below the five-year average for this time of year but they did not fall as hard as the API Reported. Distillate fuel inventories also decreased by 1.9 million barrels last week and are about 7% below the five-year average for this time of year.
The people I am talking to in the natural gas industry are calling it the Saint Valentine’s Day natural gas massacre. Reuters pointed out that U.S. natural gas prices have fallen to the lowest level for more than 30 years after adjusting for inflation as the market is hit by persistent over-production. Ultra-low prices are sending the strongest possible signal to reduce drilling as well as maximize gas-fired power generation according to Reuters and that is being echoed by people I am talking to in the industry. This recent price crash when adjusted for inflation is going to be a crisis for small producers as well as a problem for banks that lent them money. That is happening now as many companies have to adjust to the natural gas massacre.
Seeking Alpha wrote that, “Comstock Resources, Inc. has suspended its dividend and is going from seven rigs to five rigs. This helps reduce its projected 2024 cash burn, but it still may end up with close to $200 million in cash burn at current strip prices. Comstock appears to be able to manage through weak 2024 natural gas prices but will want significantly improved 2025 natural gas prices.
Comstock will be the first of many. While the cutbacks and rigs should at some point reduce production and put in a bottom on natural gas because we know that always low prices eventually cure low prices, it may take longer than it did the last time. Many producers can produce oil and use gas as basically a waste product if they’re making enough money on crude the associated gas can be basically given away. Of course, many producers cannot just give it away. Last time we saw a price crash we saw prices recover pretty dramatically in just 12 months we went from below $2.00 to above $6 down the road that could happen again but it may take longer this time because of that associated gas production.
This comes at a time when the US power grid is getting worse because of the Green New Deal. Naureen S Malik from Bloomberg writes that we are seeing the growing risk of unpredictable power surges that threaten not only the US power grid but also maybe the safety of your own home. She wrote the story of her own home that was damaged by fire due to a power surge. She wrote that, “An electric substation, which had been dealing with a rodent infestation, had a sudden, unstable surge in voltage. She warns that, “At least 1 million US homes are at risk because of something most Americans don’t have much knowledge about: dangerous power quality. Malick writes that, ‘When homes experience good, or stable, power quality, it means that the flow of electricity powering lights and appliances is being delivered at an even and predictable pace, ensuring electricity consumption is perfectly matched with supply every minute of the day. But she says that It’s the sudden surges or sags of voltage that can lead to disaster.
Malik said that, “Typically, utilities, municipalities, and regulators lack the technology and reporting mechanisms for finding and disclosing that connection. In some ways, the lack of knowledge and public reporting around this threat makes it appear more menacing. Interviews with more than two dozen experts, along with exclusive data, public reports, and regulatory filings, paint the picture of a country dealing with power quality that’s rapidly worsening, with potentially deadly consequences.
These issues have existed for decades, with grid operators responsible for minimizing and controlling the danger. But as the US grid comes under increasing stress, the problems are getting much worse.
She quotes Eversource which has been involved in two incidents put out emailed statement that said, “Stress on the nation’s electric grids is accelerating at an unprecedented clip. Demand is climbing just as aging infrastructure strains under the massive overhaul needed to adapt to renewable energy. This convergence is making it harder to maintain safe, reliable power quality, and some regulators and utilities aren’t tracking the problem. It’s an issue that has a potential national price tag of hundreds of millions of dollars, if not more.
Malick said that, “Fire departments responded to an average 46,700 home fires a year involving electrical failure or malfunction in 2015-2019, according to the National Fire Protection Association. These blazes caused about $1.5 billion annually in property damage along with being responsible for 390 civilian deaths and more than 1,300 injuries, She says that, “Stress on the nation’s electric grids is accelerating at an unprecedented clip. Demand is climbing just as aging infrastructure strains under the massive overhaul needed to adapt to renewable energy. This convergence is making it harder to maintain safe, reliable power quality, and some regulators and utilities aren’t tracking the problem.
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Natural Gas Price Forecast: What’s Next for Traders?
By: Bruce Powers | February 14, 2024
• Natural gas prices continue a 7-day decline, with potential for further drops to lower support zone of 1.52-1.44.
Wednesday is the seventh day in a row that the price of natural gas will end in the red with a lower daily high and lower low. Support was seen off the day’s low of 1.59 leading to a stall in the decline with only a minor intraday bounce. Nothing convincing to indicate the selloff may be over. Regardless, the decline is closer to the end than the beginning. A previously identified support zone at 1.60/1.61 has stopped the decline so far. Yet, the minor bounce and likely weak close shows no letup in selling pressure. At the time of this writing, natural gas is looking like it will close within the bottom 25% of the day’s range.
Sellers Remain in Control
Selling momentum accelerated last week as weekly support at 2.02 failed to stop prices from falling further. This week, the potential 1.80 support zone was breached with little hesitation and prices have now fallen to the 1.59/1.61 price zone. That zone was a significant swing low back in March 2016, and it was support several times in the first half of 2020. Today’s low completed a 56.4% decline off the October 3.64 peak. Given the minor rejection of price from this support area and a weak close natural gas remains in a bearish position with a continuation lower the next most likely scenario unless evidence shows up to the contrary.
If Today’s Low is Broken, Natural Gas Targets 1.52
Lower price targets start at 1.52 and go down to 1.44. A classic 127.2% extended retracement target is at 1.49. That retracement of the recent 32-week rising trend channel is generally considered to be a minimum extended trend target from Fibonacci ratio analysis. Meaning, it generally has a good chance of being reached once the continuation of the trend is confirmed with a closing price.
Strength Indicated on Rally Above Today’s 1.69 High
At some point a tradable bounce will come. Certainly, if the 1.52 price zone is hit, the chance for a bullish reversal will increase. If instead today’s low holds and leads to at least a temporary bottom, the first sign of strengthening is given on an advance above today’s high of 1.69. Previous support levels should then be tested as resistance, starting with a price range from 1.95 to 1.98.
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$Oil $WTIC #Energy - Update. Tried to pop the Inv Bull Plot but smacked down with timely surge in US crude inventories...
By: Sahara | February 14, 2024
• $Oil $WTIC #Energy - Update.
Tried to pop the Inv Bull Plot but smacked down with timely surge in US crude inventories...
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Crude Inventories Increased By 12.0 Million Barrels
By: Vladimir Zernov | February 14, 2024
• Oil markets pulled back from session highs as traders reacted to the EIA report.
On February 14, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories increased by 12.0 million barrels from the previous week, compared to analyst consensus of +2.56 million.
Total motor gasoline inventories declined by 3.7 million barrels, while analysts expected that they would drop by 1.16 million barrels. Distillate fuel inventories decreased by 1.9 million barrels. Crude oil imports declined by 437,000 bpd, averaging 6.5 million bpd.
Strategic Petroleum Reserve increased from 358 million barrels to 358.8 million barrels as U.S. continued to buy oil for reserves. Domestic oil production remained unchanged at 13.3 million bpd.
WTI oil pulled back below the $78 level as traders reacted to the EIA report. The headline number triggered a wave of profit-taking. While traders stay focused on rising tensions in the Middle East, the significant increase in crude inventories is a material bearish catalyst for oil markets. The decline in gasoline inventories did not provide any support to oil prices.
Brent oil moved towards the $82.00 level after an unsuccessful attempt to settle above $83.50. Brent oil has been moving higher for six consecutive trading sessions, so traders may use today’s report as an excuse to take some profits off the table.
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Today's Futures Heat Map • Weakest: Natural Gas, Wheat, Coffee, Hard Red Wheat
By: Barchart | February 14, 2024
• Today's Futures Heat Map
Strongest: Palladium, Bitcoin, Lean Hogs, Platinum
Weakest: Natural Gas, Wheat, Coffee, Hard Red Wheat
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Inflation Proof. The Energy Report
By: Phil Flynn | February 14, 2024
Somehow oil and petroleum products become Inflation-Proof when the supply side starts to drain. The consumer price index came in hotter than expected at 3.1% in January. The core rate came in at 3.9%, excluding food and energy also came in hotter than expected. That caused a surge in the dollar as traders readjusted their bets on an interest rate cut. That caused many commodities to fall but it seemed like oil for the moment oil was inflation-proof. This market action should be bad news for the Biden administration that is running out of options to subdue prices and that will become a major issue in the presidential election.
While the upward surge in oil may have slowed a bit after the report, it held up better than commodities like gold and silver and the stocks tanked supply-side reality. In the recent past, hot inflation data moved oil lower as the perception was that the Fed would be forced to slow the economy and slow the oil demand. Yet now with oil demand on track to break records and time-spreads suggesting tightening global oil supply, there is a shortage of oil.
Not only did we see product supply plunge in yesterday’s American Petroleum Institute (API) report, we are also seeing signs of tightness in global oil markets based on the pricing structure. The API showed that crude oil supply jumped by 8.52 million barrels as the Whitting Indiana refinery outage and exports impacted that build. Yet the massive 7.23 million barrel drop in gasoline supply is becoming an issue. We also saw distillate fall by 4.016 million barrels.
John Kemp at Reuters pointed out that the WTI oil futures calendar spread for March-April 2024 surged into a backwardation of 31 cents per barrel on February 13, the highest for more than three months. Traders are looking past the temporary shutdown of BP’s Whiting refinery and anticipate inventories around the NYMEX delivery point at Cushing will start depleting again causing a renewed squeeze on deliverable supplies.
Donald Trump can’t stop the energy transition, John Kerry told the International Energy Agency that on Tuesday. He claimed that even when President Trump was there for four years, 75% of our electricity came from renewable new electricity because we had in 37 states that required the deployments of renewables. So whatever happens, that’s not going to change the direction we’re moving in Kerry said adding that the green revolution was happening notwithstanding the hiccup of the farmer strike or the President of the country who wants to pull out of the Paris agreement.
Natural gas continues to plummet. EBW Analytics wrote that, “Deteriorating bullish hopes for late February cold are exposing NYMEX futures to steep fundamental downside. The entirety of recent losses is justified on a medium-to-long term basis-and natural gas may still have further to fall. The NYMEX front-month at $1.689 reached historically cheap levels seen only twice in the past 25 years. On an inflation-adjusted basis, it is possible that prices could even fall below pandemic-era lows before the end of the week. A growing speculator’s short position may represent ammunition for prices to skyrocket if bullish catalysts emerge. The more likely outcome, though, is for prices to grind lower as storage surpluses add 150 Bcf in the next two weeks.
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Heavily Shorted Energy Stock Peabody Energy (BTU) Poised to Surge
By: Schaeffer's Investment Research | February 13, 2024
• This bullish signal has never failed Peabody Energy stock
• A sentiment shift in the options pits could also generate tailwinds
The shares of Peabody Energy Corp (NYSE:BTU) are down 1.4% at $24.78 at last check, but sport a 16.4% nine-month lead, despite struggling with a ceiling at the $27.50 level for much of the past year. The equity is today on track for its third consecutive daily loss, but this pullback may soon have bullish implications, as it has placed BTU near a trendline that has served as a catapult before.
Digging deeper, Peabody Energy stock is within one standard deviation of its 50-day trendline. Per Schaeffer's Senior Quantitative Analyst Rocky White's data, shares saw five similar signals in the past three years, defined for this study as having traded north of this trendline 80% of the time over the last two months, and in eight of the past 10 trading days.
The equity moved higher one month later after each of those instances, with an average 5.4% gain. A comparable move from its current perch would place BTU just below $26.
A short squeeze could power up those gains to set Peabody Energy stock above that aforementioned ceiling. Short interest rose 22.2% in the most recent reporting period, and the 19.55 million shares sold short account for 15% of the equity's available float.
Puts have been more popular than usual, suggesting a sentiment shift in the options pits could bode well for BTU, too. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 2.14 stands higher than 96% of readings from the past year.
Options are affordably priced at the moment, making now an excellent time to weigh in on Peabody Energy stock's next moves. This is per its Schaeffer's Volatility Index (SVI) of 34% that sits higher than 8% of annual readings, indicating traders are now pricing relatively low volatility expectations.
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Today's Futures Heat Map • Weakest: Natural Gas, Palladium, Russell 2000 E-Mini, Bitcoin
By: Barchart | February 13, 2024
• Today's Futures Heat Map
Strongest: Cocoa, Gasoline, Crude Oil, Cotton
Weakest: Natural Gas, Palladium, Russell 2000 E-Mini, Bitcoin
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Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | February 13, 2024
• Top Movers
NSW Baseload Electricity Continuous 2.38 %
NYMEX RBOB Gasoline Futures 1.19 %
AU - Queensland Base-Load Electricity Futures 0.85 %
NY Crude Oil Futures 0.1 %
• Bottom Movers
NY Natural Gas Futures 4.28 %
ICE Newcastle Coal Continuous 1.67 %
NY Heating Oil Futures 1.5 %
London IPE Gas Oil Futures 1.19 %
London IPE Brent Crude Spot 0.23 %
*Close from the last completed Daily
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Not So Comfortable. The Energy Report
By: Phil Flynn | February 13, 2024
As soon as the International Energy Agency (IEA) tells you that they are comfortable with the global oil supply outlook, it is time to worry. Oil prices are rising as the IEA which raised their demand forecast three consecutive times now says that global oil demand will grow by 1.2 to 1.3 million barrels a day which would be another upward revision assuming it comes at the higher end of that range. Yet the IEA director says “This growth is more than enough to meet the global oil demand.. So, in the absence of major geopolitical turmoil or major extreme weather events, we would expect a rather comfortable oil market and moderate oil price evolution throughout 2024” according to to Bloomberg News. Yet as I have written many times before the IEA seems to put a happy face on these predictions, so it does not detract from their green energy agenda. As they tell us to be comfortable and not to worry, we are seeing a surge in global diesel prices and we are seeing a significant drop in the global oil supply.
Kpler Commodity Intelligence showed that global oil inventories have fallen by 81 million barrels, in contrast to a year ago when global oil inventories became bloated by 40 million barrels enhanced with releases from Joe Biden’s Strategic Petroleum Reserve release. Now the IEA may be riding a sense of a false sense of security as global oil inventories according to Kpler at the lowest level since at least 2017 since they have been tracking global inventories. Executive Director Fatih Birolm told Bloomberg that he believes that the pace of demand growth will be significantly weaker than a year ago but that will be easily matched by swelling production from the Americas, predominantly the US, Canada, Brazil and Guyana. But are they going to raise output as much as the loss of the SPER barrels from a year ago.
Birol reiterated the IEA’s forecast that global oil demand will hit a plateau before the end of this decade as the world shifts away from fossil fuels to limit climate change. Saudi Arabia announced last week it won’t proceed with plans to expand oil production capacity over the next few years, and on Monday the kingdom’s energy minister acknowledged the decision was linked to the energy transition. Renewable energy is becoming increasingly prevalent in power generation, and electric vehicles are “booming” around the world, Birol said. “Clean energy is moving fast — faster than people realize” according to Bloomberg.
Yet with the IEA track record so far should I be impressed? For years I have written about the IEA’s loss of mission from being an agency concerned about energy security into a political mouthpiece for the green energy transition madness. I have questioned their prediction as being more politically motivated and now I am not alone…
In Today’s Wall Street Journal op-ed Robert McNally writes “The International Energy Agency once provided solid information. Its reports can no longer be trusted.
He writes “Unfortunately, in recent years, the IEA has succumbed to politicization and strayed from its security mission. In 2020 the IEA bowed to enormous pressure from climate activists and ceased publication of oil and gas demand forecasts that didn’t show demand for those fuels would soon peak because of imaginary future climate policies. Green groups had been angry over IEA baseline forecasts showing what the activists regarded as too much oil and gas demand. This was because these baseline forecasts assumed only the laws currently on the books and didn’t engage in conjecture about future green policies. As a result, IEA’s influential demand forecasts now reflect wishful thinking about the timing and cost of a peak in oil and gas consumption. EIA capitulation to political pressure transcends mere technical debates among energy-forecasting experts. Bullying the world’s respected energy authority to mislead the world into thinking that oil and gas demand will soon peak might align with the preferences of certain governments and activists. But the distortion and politicization of the IEA’s once-respected forecasts pose significant risks.”
I agree with Mr. McNally because of risks of bad data have forced many countries to make bad decisions as far as fossil fuel investments because of the International Energy agency’s political push and their bad forecast it’s going to sleepwalk the globe into another global energy crisis the IEA has admitted that their data has been wrong they have lost millions of barrels of oil and they have consistently under-reported demand and overestimated supply. This is in the name of making the green energy transition look plausible to world leaders who are gullible to this green energy agenda.
This type of misinformation also leads to the belief that we can replace all of our natural gas appliances or ban LNG exports without it leading to a much more unstable energy market in a much more unstable world.
OPEC just came out raised its 2024 world economic growth forecast to 2.7% (previous 2.6%) and its 2025 world economic growth forecast to 2.9% (previous 2.8%) They said that “ Further economic growth upside potential could materialize in all major OECD and non-OECD economies.” OPEC also showed that their crude production fell by 350,000 bpd to 26.34 million bpd in January as a new round of voluntary OPEC+ cuts took effect. The global oil demand growth forecast for 2024 remains unchanged from last month’s assessment at 2.2 mb/d.
A slight upward adjustment to the US forecast has been made given the improving expectation for the US economy, which will have a positive impact on oil demand. This offsets the downward revision made in OECD Europe. The OECD is projected to expand by around 0.3 mb/d and the non-OECD by about 2.0 mb/d this year. In 2025, global oil demand is expected to see a robust growth of 1.8 mb/d, y-o-y, unchanged from the last month’s assessment. The OECD is forecast to grow by 0.1 mb/d, while demand in the non-OECD is forecast to increase by 1.7 million barrels a day.
This week oil supplies may rise due to seasonal factors, but the trend is lower. With crack spreads rising and supplies tightening, that is why we continue to warn about upside price risk.
Natural gas is plummeting to a level where many providers may be put out of business. We think the bloodletting should be coming to an end but a drop in temperatures could help basil some producers out.
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Crude Oil Continues to Look Bullish
By: Christopher Lewis | February 13, 2024
• The crude oil market rallied a bit from the lows of the early part of the Tuesday session, to show how bullish the market is. This should continue to be a situation where value hunters continue to return.
WTI Crude Oil Technical Analysis
The WTI crude oil market has rallied a bit to reach the 200 day EMA. The 200 day EMA of course is an area that traders will be paying close attention to as it is a trend defining technical analysis tool. The thought of course, is that if we were to break above it, then it’s possible that we could continue to go much higher. If we do break above it, I think the next stop will be at the $80 level where we have seen a lot of resistance in the past. And of course, it is a large round figure.
If we can break above there, then it’s likely that the market then goes much higher, perhaps to the $88 level. On the other hand, if we pull back from here, the 50 day EMA should come into the picture to offer support, and I do think that a lot of people would be buyers at that juncture.
Brent Crude Oil Technical Analysis
Over here in the Brent market, we have broken above the 200 day EMA, and Brent looks as if it is going to go looking to the $85 level. On the other hand, if we pull back from here, the $80 level is an area that I think a lot of people will be paying attention to not only due to the fact that it is a large round figure, but it is also where the 50-day EMA currently resides. Either way, I think crude oil markets will continue to see a bit of bullish pressure due to the fact that the central banks around the world are almost certainly going to be loosening monetary policy, and therefore demand for energy as the economy starts to heat back up will be the case.
Furthermore, supplies have been dwindling, so everything is coming together for bullish oil markets going forward. With this being the case, I just don’t see much in the idea of shorting this market, as there are so many different reasons for this market going higher overall.
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Today's Futures Heat Map • Weakest: Natural Gas, Orange Juice, Sugar, Cotton
By: Barchart | February 12, 2024
• Today's Futures Heat Map
Strongest: Bitcoin, Palladium, Platinum, Russell 2000 E-Mini
Weakest: Natural Gas, Orange Juice, Sugar, Cotton
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Natural Gas Price Forecast: Key Support Levels in Focus
By: Bruce Powers | February 12, 2024
• Natural gas hits new trend low, falling below potential support at 1.80, with eyes on further downside implications to 1.61.
Natural gas falls to a new trend low of 1.76 on Monday at the time of this writing, and it remains near a potential support zone around 1.80, although below it. That puts natural gas 52% below the October swing high at 3.64 (A). The 1.80 price zone was a significant swing low in September 2020.
Daily Close Below 1.80 Points to a Deeper Decline
If natural gas closes decisively below 1.80, then that price zone is showing signs of failure, which would put natural gas on track to head to the next lower price zone of significance around 1.61. At the time of this writing, it continues to trade near the lows of the day. It was March 2016 when the 1.61 price zone saw a strong bullish reversal off a swing low. And it was recognized as monthly support a couple times after the 2016 low was complete.
Weekly Bearish Continuation Signaled
Today’s decline triggered a weekly bearish trend continuation signal and natural gas is set to close weak, below last week’s low of 1.82. A weekly chart is also included today as reference along with a daily chart. Despite the lower 1.61 price level noted above, as the price of natural gas falls below 1.80 it heads into a prior consolidation range. Support could be seen anywhere within the range going down to the bottom of the range at 1.44. The 1.61 price zone includes a previous swing low and the completion of a falling ABCD pattern that is extended by the 127.2% Fibonacci ratio.
Below 1.60, Targets 1.52
Below the 1.60 price area is a zone from 1.52 to 1.49, consisting of a prior swing low from March 2020, along with an extended retracement of the rally begun in April 2023. The 1.44 low mentioned above was hit in June 2020 and it was quickly followed by a sharp rally. In other words, natural gas didn’t trade that low for long. It was the lowest price for natural gas since 1995. Therefore, it is not currently anticipated to be reached and the more likely scenario is a bullish reversal occurs at or above 1.49. Of course, future price action around potential support levels will be telling as to rising strength or weakness.
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Back Peddling and Mis-Selling. The Energy Report
By: Phil Flynn | February 12, 2024
OPEC says that other agencies are backpedaling on predicting future oil demand while the Financial Times (FT) reports that, “Total Energies Patrick Pouyanné has warned that governments are” mis-selling” the energy transition if they fail to acknowledge the shift to a less-polluting system will lead to higher energy costs.
The green energy movement has been pushed with large inaccuracies about the real costs of the transition and predictions about supply and demand that fit a narrative but do not fit reality. Patrick Pouyanné, as reported by the FT said that, “Policymakers and campaigners were naive, he argued, to think it would be possible to shrink oil and gas production before sufficient renewable energy is available to take its place, given continued growth in global energy demand. “The pace of transition will not be the same everywhere,” he said. “We cannot ask African countries just to avoid developing the resources because we have developed their resources for our own comfort for 20 years.”
OPEC also has been warning about the energy transition that is being built on false assumptions that seem to justify green energy pointing out that politicians and agencies like the International Energy Agency have been selling us a fake green energy bill of goods. Amena Bakr pointed out that the Saudi energy minister Abdulaziz bin Salman Al Saud says, “he’s not a fortune teller when it comes to predicting future demand, but noted that OPEC’s numbers have been consistently accurate while others keep “back peddling”. Bakr said that the OPEC demand growth number this year is 2.2 million bpd and it’s expected to pick up during the 2nd half of the year. “We at the ministry look at all the numbers,” said Prince Abdulaziz and said that they are ready to tweak supply up or down as required by the market.
Crude oil prices this morning are down a bit but the trend for oil has turned decisively higher. Product tightness is going to keep the diesel market and the crack spread strong. Gasoline demand is expected to pick up in the coming weeks. The market is heading into refinery maintenance season and that’s going to create some strange movement and spreads but ultimately the demand globally for oil will continue to be strong.
The investment in the value of many energy stocks is creating movement on the merger and acquisition front. The Wall Street Journal reports, “Two Permian rivals, Diamondback Energy and Endeavor
Energy Resources, are finalizing a merger that would create an oil-and-gas behemoth worth more than $50 billion. Diamondback could announce a deal with the closely held Endeavor as soon as Monday, according to people familiar with the matter, assuming the talks don’t hit a last-minute snag. Endeavor, founded by wildcatter Autry Stephens, has long been one of the most prized businesses in the consolidating Permian Basin, the largest U.S. oil patch that straddles West Texas and New Mexico. In striking a deal for Endeavor, Diamondback fended off competition from other parties including ConocoPhillips, some said. The stock-and-cash deal would value Endeavor at around $25 billion, and Diamondback shareholders would own the majority of the combined company after it closes, they said. Diamondback, based in Midland, Texas, has a market value of around $27 billion.
Natural gas futures hit a 3 1/2-year low, the market is seeking signs of winter. EBW Analytics wrote that the forward curve continued to erode lower as the market increasingly internalized the extent of extremely mild near-term weather. Another pair of sub-100 Bcf injections are on the way. On a longer-term basis, the market remains oversupplied by 1.0 Bcf/d. Further, bullish hopes for a cold end to February and early March appear largely dashed in recent days. Although a spurt of chillier temperatures may occur in the 6-10 day window, any cooling appears to be fleeting—suggesting another leg lower for natural gas.
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$WTI - Crude oil is headed higher into the next 22-24 week cycle high that is due in late February to mid March. The minimal upside target is the 50% retracement of the September to December decline at 81.66. A breakout above 81.66 will take it to the 62% retracement at 84.93.
By: CyclesFan | February 10, 2024
• $WTI - Crude oil is headed higher into the next 22-24 week cycle high that is due in late February to mid March. The minimal upside target is the 50% retracement of the September to December decline at 81.66. A breakout above 81.66 will take it to the 62% retracement at 84.93.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | February 10, 2024
• Following futures positions of non-commercials are as of February 6, 2024.
WTI crude oil: Currently net long 191.8k, down 48.2k.
In Monday’s long-legged doji session, West Texas Intermediate crude tagged $71.41 intraday to reverse to end at $72.78, up slightly. This was a successful test of the lower bound of a 14-month range between $71-$72 and $81-$82. By Friday, the 200-day moving average ($77.34) was tested with the crude rising to $77.29 intraday and closing at $76.84, up 6.4 percent for the week.
There is room for the crude to continue higher on the daily. If the 200-day gets taken out and oil bulls manage to also reclaim 80, where the crude has struggled the past three months, the door opens up to at least the upper bound of the range.
In the meantime, as per the EIA, US crude production in the week to February 2nd increased 300,000 barrels per day week-over-week to 13.3 million b/d. This level was first hit in the week to December 15th, then a couple of more times after that in that month and in January. Crude imports increased 1.3 mb/d to 6.9 mb/d. Crude stocks also rose, up 5.5 million barrels to 427.4 million barrels. Gasoline and distillate inventory, on the other hand, declined 3.1 million barrels and 3.2 million barrels respectively to 251 million barrels and 127.6 million barrels. Refinery utilization dropped five-tenths of a percentage point to 82.4 percent.
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Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | February 10, 2024
• Top Movers
NSW Baseload Electricity Continuous 3.12 %
NY Heating Oil Futures 2.54 %
London IPE Gas Oil Futures 2.47 %
NY Crude Oil Futures 0.81 %
London IPE Brent Crude Futures 0.69 %
• Bottom Movers
NY Natural Gas Futures 3.65 %
NYMEX RBOB Gasoline Futures 0.11 %
*Close from the last completed Daily
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | February 10, 2024
NY Crude Oil Futures closed today at 7684 and is trading up about 7.24% for the year from last year's settlement of 7165. At the moment, this market has been rising for this month going into February reflecting that this has been only still, a bullish reactionary trend.
Up to now, we still have only a 1 month reaction rally from the low established during December 2023. We must exceed the 3 month mark in order to imply that a trend is developing.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Looking at the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 7583 and overhead resistance forming above at 7695. The market is trading closer to the resistance level at this time.
On the weekly level, the last important low was established the week of December 11th at 6771, which was down 2 weeks from the high made back during the week of November 27th. We have seen the market drop sharply for the past week penetrating the previous week's low and yet it recovered to close above the previous week's close of 7228. We are still trading above the Weekly Momentum Indicators so we have not undermined critical support as of yet. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 7929 made 1 week ago. Still, this market is within our trading envelope which spans between 6126 and 8654.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in February, this market has held above last month's low of 6928 reaching 6928.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
Natural Gas Price Forecast: What’s Next for Investors?
By: Bruce Powers | February 9, 2024
• Natural gas trends lower, eyes support at 1.80, with potential for further decline below long-term levels.
Natural gas continued its descent on Friday as it triggered a new trend low on a decline below 1.87. It looks to be on its way to the first potential support zone around 1.80. Today’s low at the time of this writing was 1.82. As of today’s low, the price of natural gas was down 1.83 or 50.0% from the October peak of 3.64. This week’s close is likely to end with the price of natural gas in a weak position, near the lows of the week’s range. Although the 1.80 area is the next lower target zone, given the breakdown below long-term support of 1.95 and weakness into the close, it would not be surprising to see natural gas fall below 1.80.
If 1.80 Support Fails, Next Lower Level is 1.61
If 1.80 is exceeded to the downside the next lower level is over 10% lower at 1.61. The March 2016 swing low found support there and it was followed by a sharp rally. Further identifying the 1.61 price area is the falling ABCD pattern. An initial target of 1.94 was exceeded on Wednesday. A second lower target extends the CD leg of the decline by the 127.2% Fibonacci ratio to arrive at 1.60. Since two indicators are identifying the same price area, it deserves to be watched if natural gas does continue to sell off.
Rallies Likely to See Resistance Around Prior Lows Starting at 1.95
If there are signs of support around 1.80 and it leads to a bullish reversal, a rise to test resistance around the prior trend lows of 1.95 and 1.97 is likely at a minimum. An advance above this week’s high of 2.13 would be needed before turning the short-term outlook bullish. Therefore, a bounce from the 1.80 region would be expected to encounter resistance somewhere within the price structure of the down trend.
Natural gas is accelerating its decline and there are no signs of it slowing down yet. It fell below the prior long-term trend low of 2.13 this week with little hesitation. The current decline follows a failed attempt to confirm a bullish reversal and sustain an uptrend above the 200-Day MA (blue) and the long-term downtrend line. Fast moves often come from failed patterns. We are starting to see the results of that in natural gas.
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Losing Control. The Energy Report
By: Phil Flynn | February 9, 2024
Not only does it appear that the Biden administration is losing control of the oil market, sort of how they lost control of our border and world events, but they are also losing control of the narrative as they try to defend the indefensible. The LNG pause has angered our allies and has brought accusations that was nothing but a political stunt. The Department of Energy tried to refute the things that critics said about this administration’s decision to pause exports for an unprecedented ‘climate review’ but maybe they might better serve the American people by addressing growing concerns about a tightening diesel and gasoline market and the longer-term risk to the American People of the growing risk of a supply gap because of climate extremism and underinvestment in fossil fuels.
Before we get into the DOE’s defense of the export ban, we had better focus on the markets. They are starting to price in the possibility of a diesel supply squeeze and to a lesser extent gasoline. Global distillate prices are soaring in the US and Asia. It is soaring as we have refinery outages that are planned and unplanned. The Whiting Refinery in the US as well as the fact that Ukraine is pounding Russian refineries. We saw that on February 3, 2024, two Ukrainian attack drones hit the Lukoil company’s primary oil processing facility at the Volgograd oil refinery in southern Russia. John Kemp, senior market analyst at Reuters warns that, “Global stocks of diesel and other middle distillates are below normal and prices could start to rise quickly if the industrial economies of North America and Western Europe emerge from their lingering recession in 2024. Quantum Commodity Intelligence points out that US gasoline stocks sank to a near one-month low, while demand jumped to its highest level so far this year.
OPEC controls all of the spare capacity as the US discourages production with a record amount of executive orders, drilling moratoriums, and further review. S&P Global is reporting that OPEC members pumped 26.49 million b/d of crude collectively, down from 26.80 million b/d in December when Angolan production was removed. The West African country quit the group in January following a row over quota cuts. OPEC’s 12 countries contributed the lion’s share of the month-on-month production decline, with core group output slipping to 310,000 b/d.
As we saw in the US with inventories and global inventory, we’re seeing a significant tightening of supplies. All of a sudden the market is taking this seriously as before they seemed to ignore the warning signs of this coming squeeze on the market and was ignoring it on the assumption that the Federal Reserve was going to cause a recession. Yet with the economic data being strong and the possibility that inflation might not be as bad as people thought, this should allow the economy to flourish. It also increases the possibility that the Fed will have to cut rates.
This comes as the oil industry warns of what we have been talking about for years, a coming energy shortage. Just this week Occidental CEO Vicki Hollub warned that the global, “Oil market will face supply shortage by end of 2025 as the world fails to replace current crude reserves fast enough. She told CNBC that, “About 97% of the oil produced today was discovered in the 20th century, she said. The world has replaced less than 50% of the crude produced over the last decade. “We’re in a situation now where in a couple of years’ time we’re going to be very short on supply.”
This comes as OPEC is forecasting that global oil demand will grow by 1.8 million barrels per day in 2025 on a solid economy in China, outstripping crude production growth of 1.3 million barrels per day outside the cartel. The forecast implies a supply deficit unless OPEC ditches current production cuts and boosts its output.”
US natural gas prices are getting buried, hitting 42-month lows and the Biden drilling pause may cause a death knell open to many small producers. Natural gas tanked after the EIA reported that, “Working gas in storage was 2,584 Bcf as of Friday, February 2, 2024, according to EIA estimates. This represents a net decrease of 75 Bcf from the previous week. Stocks were 187 Bcf higher than last year at this time and 248 Bcf above the five-year average of 2,336 Bcf. At 2,584 Bcf, total working gas is within the five-year historical range.
The Biden administration all sudden is taking offense at the criticism leveled at them in what many believe is a politically motivated and short-sighted natural gas pause. The DOE decided to respond. They Wrote that, “The Department of Energy (DOE) is responsible for assessing if domestic natural gas can be authorized for export as liquefied natural gas (LNG) to non-Free Trade Agreement (FTA) countries. To make that determination, the DOE evaluates and analyzes a range of factors related to economics, national security, market and environmental data to determine whether that LNG export request is in the “public interest.”
Recently, the DOE announced it would be pausing the review of pending export applications while it updated its economic and environmental analysis that underpins this review. The last time these were formally updated were in 2018 and 2019, respectively. At that time, U.S. LNG export capacity was less than 4 billion cubic feet per day (Bcf/d). Today, that capacity has more than tripled, and the U.S. is the world’s largest LNG exporter with capacity set to nearly double by 2030 because of additional projects currently under construction. Cumulative approved exports are at 48 Bcf/d, over three times our current export capacity.
A lot has changed since 2018. Americans should have the latest understanding of what higher exports mean for our economy, our security, and our health before U.S. energy leaves our shores. Since the announcement, there has been a lot of noise about what this decision means. To correct the record, DOE is shedding light on the facts and dispelling common misconceptions.
❌ Myth: The Biden Administration is banning LNG exports in its war against fossil fuels
✅ Reality: The temporary pause in reviewing new non-FTA export applications. It will not affect operating LNG facilities or additional already authorized LNG exports. It will not disrupt projects under construction.
The industry reality though is that this comes at a time when natural gas producers are under pressure this temporary pause could discourage investment. In this hostile environment that this administration is creating it’s not helpful as we try to expand are energy security.
The DOE Says that Before issuing any new LNG export decisions, DOE is embarking on a transparent process to ensure we are using the most up-to-date economic and environmental analyses to determine whether additional approvals of LNG exports to non-FTA countries are in the “public interest.”
The Biden-Harris administration has repeatedly stated that the future is in clean energy and our transition to clean energy will be a managed transition, one that will help ensure American families and businesses can reliably and affordably keep the lights on, but no reason to do business as usual. We’re updating our analysis to adapt to market dynamics. Supply and demand are shifting rapidly at home and around the world. The U.S. should know how its resources are and will be utilized, and what the need will be as countries around the world commit to reducing emissions and their use of fossil fuels.
My take is that the future is in in everything in above energy policy not just green energy. The Biden Harris administration is short sighted and wants to believe in a world that doesn’t exist they want to ban the use of natural gas buildings and natural gas stoves but not with any viable replacement that’s gonna mean higher prices for consumers the reality is is that natural gas is going to be burned around the globe and whether it comes from the United states or from Russia or Qatar is going to be the only remaining question.
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Natural Gas Price Forecast: Plummets to 42-Month Low, Eyes Next Target
By: Bruce Powers | February 8, 2024
• Natural gas reaches 42-month low, signaling potential for further decline amidst bearish sentiment and moving average confirmation.
New long-term trend lows were reached today in the price of natural gas as it dropped below the prior trend low of 1.95, to a low of 1.87. And trading continues at the lows of the day, at the time of this writing. That is a 42-month low, and it puts natural gas on track to reaching its next lower target of 1.80. That is a prior swing low from September 2020. Once the breakdown is confirmed with a daily close below that level, and then again on a weekly close below, there is a chance for an acceleration of the decline.
Possible Acceleration of Decline
Certainly, a rapid drop in the price of natural gas has been seen before. The 75% drop from the November 2022 swing high in only 13 weeks is a good example. Regardless, a bearish long-term trend continuation signal triggered today. That should be followed by further declines unless there is a sharp upside reversal quickly.
Below the first target of 1.80 there is a potentially more significant support zone from around 1.61 to 1.44. However, there is a concentration of price levels within that zone that starts with 1.60/1.61. It was a weekly interim swing low in the past and an extended downside target for the ABCD pattern completes there. Further down is 1.52. That price level was a significant swing low in the past. It is followed by 1.44. Support was seen there at a swing low from June 2020.
Downside Follow-Through from Large Bear Flag
It seems fair to say that the rising parallel trend channel that developed from the April 2023 low, was a large bear flag. The 75% decline noted above was the pole. Today’s bearish follow-through clears up any confusion for now. Further confirming the bearish sentiment is the crossovers seen in the moving averages. Both the 20-Day and 50-Day MAs have crossed below the 200-Day MA, they are decreasing the angle of decline.
Although the measuring objectives for targets from the bear flag would be extreme, the indication is that that price of natural gas is increasing likely to lower prices. Of course, downside follow-through is still warranted.
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$Oil $WTIC #Energy - Update...
By: Sahara | February 9, 2024
• $Oil $WTIC #Energy - Update...
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Natural Gas Markets Still on The Floor
By: Christopher Lewis | February 6, 2024
• Natural gas markets have struggled over the last several sessions to pick themselves up from the $2.00 level, and Tuesday was no different.
Natural Gas Technical Analysis
Natural gas has initially tried to rally during the Tuesday session, but just cannot seem to get up off of the floor. We are sitting just above the crucial $2 level, which I think a lot of people will be looking at as a major support level. Ultimately, I think this is a market that you will have to be very cautious with, but I do think that there’s probably the opportunity to buy a little bit of value in this area. I wouldn’t get too big with any type of position though, because obviously we have a lot of issues when it comes to the demand for natural gas. After all, the winter time has been a bit of a disappointment. And if that’s going to be the case, that obviously doesn’t help with the supply and demand.
There will be a ton of supply when it comes to natural gas, which is probably truth be told, going to be an issue for the foreseeable future. So with that being the case, I think any rally that you see something that you want to take advantage of, but get out of pretty quickly, you don’t want to get too cute with this, recognizing that the $2 level underneath should offer a certain amount of support. If we were to break down below there, then things could get kind of ugly, perhaps breaking down to the $1.80 level.
I do think that eventually we try to get back to the $2.50 level, which I see as fair value for this market, but right now we just do not have momentum. This is a great market to scalp if you are looking to trade short-term trades, but beyond that, there’s probably not a lot going on. And now that futures traders are focusing on spring, things really start to look dire. And although we may get some rallies from time to time where people collect profit, I don’t think they’re sustainable.
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Crude Continues to See Basing Pattern
By: Christopher Lewis | February 6, 2024
• Crude oil markets where little bit choppy during the trading session on Tuesday in the early hours but it still looks as if we are trying to find some type of basing pattern.
WTI Crude Oil Technical Analysis
You can see that the West Texas Intermediate crude oil market has initially fallen just a bit during the trading session on Tuesday, only to turn around and show signs of life. Again, the market looks as if it is trying to defend the $72.50 basing pattern that we have been in for a while. I do think that oil was oversold at this point, so I have absolutely no qualms about buying it. I think at this point in time you have to look at this as a buy the dip type of market and recognize that although it can be volatile, the reality is that we have sold off so drastically that a little bit of value hunting comes into the picture.
Furthermore, you also have to keep in mind that central banks around the world might be cutting back on interest rates and that spurs economic development. A spurring of economic development, then, in turn, will drive up demand for crude oil. OPEC is starting to lose its sense of humor and will almost certainly do something to cut production and, of course, we have to pay close attention to whether or not the U S will ever go into recession.
It certainly looks as if the economy is still running hot and that of course makes a big difference in the demand for crude oil, especially the WTI grade. The 50-day EMA sits near the $75 level, and that’s my short-term target. But if we can take that out to the upside, the 200-day EMA could be targeted after that, which was right at the last swing high near the $78 level. Underneath, we have massive support at $70, and then again, it’s $68, which is a long-term support level going back several years. So with all that being said, I believe crude oil remains a buy on the dip market.
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Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | February 6, 2024
• Top Movers
ICE Newcastle Coal Continuous 3.13 %
NYMEX RBOB Gasoline Futures 2.87 %
NY Heating Oil Futures 2.44 %
London IPE Brent Crude Futures 0.85 %
London IPE Brent Crude Spot 0.85 %
• Bottom Movers
NSW Baseload Electricity Continuous 5.68 %
AU - Victoria Base-Load Electricity Futures 4.38 %
AU - Queensland Base-Load Electricity Futures 4.3 %
*Close from the last completed Daily
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Oil Launderers. The Energy Report
By: Phil Flynn | February 6, 2024
Global oil supplies are tightening and the fact that Saudi Aramco decided to keep their selling price for their crude unchanged for March, suggests demand is improving. Still, while global oil markets are trying to balance the tight supply of diesel because of the war in Ukraine and the possibility of the Biden administration enforcing sanctions on Venezuela, American taxpayers are paying for the folly of not enforcing sanctions on Iran. Iran’s surging oil revenue has led to the funding of terror groups like Hamas and Hezbollah, leading to the attack on Israeli citizens and what Joe Biden called “radical Iran-backed militant groups” attacks on US bases that killed three Americans in service to our country. Yet as the Biden administration must be blamed for its short-sighted attempts to engage the Iranian regime, there also must be some who are held responsible for getting rich by laundering Iranian oil money and profiting from all the global turmoil the world is facing.
So-called ‘Ghost tankers’ that launder and sell Iranian crude that the Majlis Research Center estimates that the regime’s export revenues for the Iranian year 2024/25 will reach somewhere between $28 billion and $40 billion depending on price and volume and somehow must be bought and paid for using cryptocurrency or maybe, heaven forbid, so-called ‘reputable banks’. Zero Hedge wrote, “But the story of the secret cooperation of reputable European banks, and sophisticated efforts to hide large Iranian transactions has been a more interesting development, and this week Lloyds and Santander UK (based in Spain) have been in the spotlight, causing their shares to take significant hits on Monday. One Europe-based broker has observed, “The market must be realizing that they may be fined. They said that, “A new Financial Times report has raised uncomfortable questions based on smoking gun internal documents which show two of Europe’s biggest banks covertly moving Iranian funds around the world on behalf of an Iranian petrochemicals company based in London. What’s more, Iran’s state-controlled Petrochemical Commercial Company even has offices physically located close to Buckingham Palace. FT writes that the company is “part of a network that the US accuses of raising hundreds of millions of dollars for the Iranian Revolutionary Guards Quds Force and of working with Russian intelligence agencies to raise money for Iranian proxy militias.”
The oil laundering goes beyond Iranian oil and is rampant in Russian oil as well. Today the BBC reports that, “Millions of barrels of fuel made from Russian oil are still being imported to the UK despite sanctions imposed over the war in Ukraine, research claims. A so-called “loophole” means Russian crude is refined in countries such as India and the products sold to the UK. The BBC went on to say, “this is not illegal and does not breach the UK’s Russian oil ban, but critics say it undermines sanctions aimed at restricting Russia’s war funds. The UK government denied there had been any imports of Russian oil since 2022. But a spokesman said internationally recognized “rules of origin” define that crude, once refined in another country, is classed for the purposes of trade as originating from the refining country.”
This illicit supply of oil from both Russia and Iran has kept a lid on global oil prices but there are growing signs that the lid is going to eventually be blown off of this market. While oil prices have experienced weakness even in the face of the US retaliation against Iranian-backed groups, the fact that the Biden administration signaled where the attacks would be led to less in the hopes they could avoid a direct conflict with Iran. I wonder if they called Iran to find out where it might be ok for them to bomb.
Because of that, the oil market is not as worried as it probably should be. John Kemp of Reuters said the global diesel market is roaring and cracks are cracking. Kemp writes that, “Northwest Europe gasoil cracks are climbing as the region’s long industrial recession shows signs of ending and attacks on shipping disrupt east-west diesel trade through the southern Red Sea. The premium for gasoil over Brent with both delivered in April 2024 has averaged $214 per ton so far in February up from an average of $180 in January and $174 in December.
Supply is also tightening because of a Ukrainian attack on a Russian refinery. Reuters is reporting that the Russian company will not resume gas condensate processing at its damaged complex in the Baltic Sea’s port of Ust-Luga this month, at the very least, sources familiar with the maintenance schedule told Reuters on Tuesday. The complex and other energy facilities across Russia have suffered outages due to drone attacks or technical glitches in recent months, adding to uncertainty on global oil markets already rattled by attacks on shipping in the Red Sea. Kemp reported last week that Brent and European gas oil saw buying after attacks on shipping effectively closed the southern Red Sea and Gulf of Aden to tanker traffic associated with Western Europe and North America.
The oil inventories from the American Petroleum Institute might be a bit of a yawner. Refinery issues may mean that runs will be down a bit so crude supplies may be up a bit and products down just a bit.
Yet based on the trend supplies, they should continue to tighten as the days go on.
I still stand by the expectation that we’ll see big drawdowns as we continue through the year. Underinvestment in oil production is leading to a potential generational shortage a few years out. The complacency in the market seems to be based on the assumption that US production is going to continue to rise and that alternative energy sources will fill the void of the underinvestment in fossil fuels. Yet if Biden decides that for the good of the climate, the US will stop exporting liquefied natural gas to the rest of the world, we could see a significant price spike in energy and food prices across the globe.
There are signs too that the Energy Information Administration has overestimated U.S. oil production. HFIR dug down in the data and they are reporting that US crude production is about 300,000 barrels a day below what the EIA says.
Diesel hedgers are in very good shape. Even with the pullback and the volatility we continue to believe that we should be hedging both diesel and gasoline. Seasonally, crack spreads do very well in February. We should also see supplies of gasoline tighten in the weeks ahead. Gasoline demand is robust. We expect it to improve.
As far as natural gas goes it still is going to come down to the weather. From an oversupply viewpoint the market seems poised to move lower but if the weather flips natural gas can flip like we saw just a couple of weeks ago. Winter is coming to an end but the possibility that the storage overhang will be much lower due to another polar vortex is keeping the market intriguing.
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$XLE Energy sector ETF looks close to busting a move soon
By: TrendSpider | February 6, 2024
• $XLE Energy sector ETF looks close to busting a move soon.
Top holdings: $XOM $CVX $COP $EOG $SLB $PSX.
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Today's Futures Heat Map • Strongest: Cocoa, Gasoline, Heating Oil, Soybean Oil
By: Barchart | February 5, 2024
• Today's Futures Heat Map
Strongest: Cocoa, Gasoline, Heating Oil, Soybean Oil
Weakest: Orange Juice, Hard Red Wheat, Silver, Wheat
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Natural Gas Price Forecast: Breaking Down Consolidation, Bearish Pressures Intact
By: Bruce Powers | February 5, 2024
• Chart analysis indicates a critical support breach, reflecting ongoing downward pressure in natural gas markets, with potential downside targets at 1.98, 1.97, and 1.95. Alternatively, upside breakout above 2.17 should lead to higher prices.
No go for natural gas for Monday as it remains within a tight range. It has been consolidating for six days in a relatively tight range at the lows of the current decline. Last week, support was broken at the convergence of three technical levels that are marked by the long-term downtrend line (blue), lower falling trend channel line (purple dots), and the 88.6% Fibonacci retracement. Since then, prior support around the lines was tested on at least five days as resistance, including today. Each time resistance has held with price being rejected to the downside. This reflects continued downward pressure in natural gas.
Formation of Small Expanding Triangle Continues
Over the past week the consolidation pattern has taken the form of a small expanding triangle or broadening formation. Nonetheless, a decisive drop below last week’s low of 2.02 signals a continuation of the bear trend. A decisive move is needed as the broadening formation may further expand. Given the bearish position of natural gas currently, the chance that it could fall to new trend lows is possible. A breakdown should clearly exceed last week’s 2.02 low and the bottom boundary line of the pattern. Lower targets are then at 1.98, 1.97, and 1.95. Otherwise, support may be seen at the lower line, leading to a bounce and the price of natural gas staying within the boundary lines of the triangle.
Next Downside Target is 1.98
The first downside target is the completion of a falling ABCD pattern at 1.98. Symmetry between the AB and CD legs of the decline occurs at that point. The next price levels are from the first trend low in February of last year, followed by the second trend low and lower low that was reached in April 2023. Subsequently, a drop to a new long-term trend low has natural gas first targeting the 1.80 price area. That price was previously a monthly support level.
Bullish Signal on Decisive Rally Above 2.17
Although natural gas is clearly in a bearish position, a bullish reversal may still occur. A decisive rally above last week’s high of 2.17 provides a bullish signal. Filling the gap at 2.31 is then the first order of business and likely. That price level is followed by an interim level of 2.42. Potential resistance from the moving averages begins around 2.60 and rises to 2.67.
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Something In the Air. The Energy Report
By: Phil Flynn | February 5, 2024
Oil prices are falling after a reversal in the odds for rate cuts that overshadowed geopolitical risk factors that seem to be boiling over. The headline job numbers showed 353,000 nonfarm payroll jobs and unemployment falling to 3.7%. Now even though a strong jobs number should bode well for demand, fears remain. The Fed can cut rates and ongoing concerns about a regional bank crisis and a surging dollar are keeping oil prices calm. This came as reports that Hamas is set to reject the Gaza hostage and ceasefire deal proposed in Paris last week, Saudi outlet Al-Arabiya reported.
The market also seems immune to the risk concern as the US retaliates against Iranian-backed terror groups in well-choreographed attacks. Reuters reported that the United States intends to launch further strikes at Iran-backed groups in the Middle East, the White House national security adviser said on Sunday, after hitting Tehran-aligned factions in Iraq, Syria, and Yemen over the last two days.
Reuters reported that two Ukrainian attack drones struck the largest oil refinery in the country’s south on Saturday, a source in Kyiv told Reuters. It’s the latest in a series of long-range attacks on Russian oil facilities which has reduced Russia’s exports of naphtha, a petrochemical feedstock. Lukoil, which owns the 300,000 bpd Volgograd refinery, later said the plant was working as normal.
One country that may be upset that Biden has paused reviews of new LNG export terminals may be Germany. Germany has made some devastatingly bad decisions regarding climate change and becoming more dependent on natural gas to keep the lights on and keep its manufacturing base from fleeing. Javier Blass at Bloomberg wrote that after Germany closed its remaining nuclear power plants it’s now approved plans to subsidize a huge expansion of natural gas powered plants that last says as much as 10 gigawatts but The developers need to know that they can convert them into hydrogen at some point between 2035 and 2040 so they got hydrogen going for them.
The Biden administration has taken a lot of heat for pausing liquefied natural gas export approvals. They are at least concerned about oil and gas production in Guyana. Bloomberg reports that, “Key Biden administration national-security officials traveled to Guyana on Sunday as the US works to prevent the country’s dispute with Venezuela over oil and mineral riches from sliding into armed conflict. Jon Finer, the principal deputy national security adviser, and Juan Gonzalez, the White House National Security Council’s senior director for the Western Hemisphere, are continuing work on regional security and economic stability, the US Embassy in Guyana said. The US Air Force’s southern commander, Major General Evan Pettus, was in Guyana last week to discuss the security cooperation as the US military strategizes how to help the nation protect its oil-heavy Essequibo region. Tension began rising again in 2015 when US giant Exxon Mobil Corp. discovered massive oil reserves off the Guyanese coast. They flared up last year after Venezuelan leader Nicolas Maduro held a referendum that purportedly showed overwhelming support for his nation’s push to take control of the Essequibo.
This comes against a backdrop of US crude supplies tightening. While this week we might get a slight build, the reality is we’re going to continue to see drawdowns in Cushing, OK. The refinery issues at the waiting Indiana plant could lead to a slight drawdown in gasoline and diesel inventories. In the big picture though, we still think that this is a good time to put on some bullish strategies as the downside near 70 should provide tremendous support.
OPEC is going continue to hold the line of production and while the US production has been amazing, there are signs it’s going to top out later this year. The US oil rig count is at a current level of 499.00, unchanged from 499.00 last week and down from 609.00 one year ago. This is a change of 0.00% from last week and -18.06% from one year ago.
Historically warm temperatures could turn into cold temperatures later in the month, but you better enjoy it while you can. HFI research says that the 10-to-15-day weather update shows much colder than normal weather with the signature blocking patterns in place.
One thing you have to keep in mind is that when we talk about the climate, it continues to change, so let’s talk about climate change California style! Weather watcher Ryan Maue has pointed out that California’s climate has changed again! From the worst megadrought in 1200 years — to nearly unprecedented atmospheric rivers and excessive rainfall warnings! Climate scientists might warn that this wet period is a new normal.
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Natural Gas Price Forecast: Analyzing Consolidation Pattern and Breakout Signals
By: Bruce Powers | February 2, 2024
• As natural gas hovers at support levels, the market’s bearish tone is balanced by the age-old Wall Street wisdom – exercise caution in shorting a seemingly dull market
Natural gas remains in consolidation as it further traces out a small broadening formation. It hit a new trend low at 2.02, which is at the lower boundary line of the pattern. This pattern was introduced yesterday as it can give breakout signals as the consolidation range expands. It is defined by two trendlines that are pointed away from each other. After finding support at the day’s low, natural gas had a minor rally and it set to close in the green for the day.
Weekly Chart Confirms Weakness
Nevertheless, the week is on track to end in the red and relatively bearish. Natural gas is trading below the halfway point for the week’s range at the time of this writing. The halfway point is at 2.09. Near term support and resistance for the week are at 2.02 and 2.17, respectively. A breakout in either direction may lead to a continuation in the direction of the breakout. However, keep in mind the broadening formation as a sustainable breakout needs to clearly move out of the expanding range of the pattern.
Broadening Formation Continues
The chance of a bearish continuation remains high. However, support around the monthly low of 2.03 has kept a bearish trend continuation from triggering other than in the formation of the broadening pattern. Downward pressure remains and can be seen in the characteristics of this week’s consolidation as there has been a series of lower daily lows and only one day with a higher daily high, on Thursday. In addition, the high Thursday was not much higher than the prior high of the range.
Use Extra Caution if Shorting a Dull Market
Although the situation in natural gas is bearish, there is an old saying on Wall Street, to never short a dull market. Even though the market is bearish, it can go either way as it is sitting at support and has paused the decline this week. A breakdown would be facing several potential lower support levels, starting at 1.98, which is the target for a declining ABCD pattern. That price level is followed by the two previous trend lows at 1.97 and 1.95. If natural gas breaks below the lower level it may be heading to a previous monthly low of 1.80.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | February 3, 2024
• Following futures positions of non-commercials are as of January 30, 2024.
WTI crude oil: Currently net long 240.1k, up 18.8k.
West Texas Intermediate crude tried to begin the week with a decent rally, touching $79.29 intraday, but only to reverse and close Monday’s session at $76.78. The rejection came just before genuinely testing the upper bound of a 14-month range between $71-$72 and $81-$82. The 200-day moving average lies at $77.42. By Friday, the crude was down in four of the five sessions – past the 50-day at $73.51, closing the week down 7.4 percent to $72.28/barrel with a weekly bearish engulfing candle.
WTI peaked last September at $95.03, having rallied from last June’s low of $67.05. On December 13th, it ticked $67.71 intraday before bottoming. This price point – $67 – is crucial.
In the meantime, as per the EIA, US crude production in the week to January 26th jumped 700,000 barrels per day week-over-week to 13 million b/d. Crude imports increased 25,000 b/d to 5.6 mb/d. Stocks of crude and gasoline rose as well – up 1.2 million barrels each to 421.9 million barrels and 254.1 million barrels. Distillate inventory, on the other hand, declined 2.5 million barrels to 130.8 million barrels. Refinery utilization dropped 2.6 percentage points to 82.9 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | February 3, 2024
NY Crude Oil Futures closed today at 7228 and is trading up about 0.87% for the year from last year's settlement of 7165. At the moment, this market has been rising for this month going into February reflecting that this has been only still, a bullish reactionary trend.
Up to now, we still have only a 1 month reaction rally from the low established during December 2023. We must exceed the 3 month mark in order to imply that a trend is developing.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
From a perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bearish position at this time with the overhead resistance beginning at 7286 and support forming below at 7062. The market is trading closer to the resistance level at this time.
On the weekly level, the last important low was established the week of December 11th at 6771, which was down 2 weeks from the high made back during the week of November 27th. We have been generally trading up for the past 7 weeks from the low of the week of December 11th, which has been a move of 17.10%. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 7960 made 9 weeks ago. Still, this market is within our trading envelope which spans between 6095 and 8691.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in February, this market has held above last month's low of 6928 reaching 6928.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
Today's Futures Heat Map • Weakest: Gasoline, Crude Oil, Platinum, Silver
By: Barchart | February 2, 2024
• Today's Futures Heat Map
Strongest: Orange Juice, Natural Gas, Nasdaq 100 E-Mini, Sugar
Weakest: Gasoline, Crude Oil, Platinum, Silver
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Crude Continues to Fall Towards Support Below
By: Christopher Lewis | February 2, 2024
• You can see that we have a lot of downward pressure in the crude market during the day as it looks like inflation is going nowhere in the United States.
WTI Crude Oil Technical Analysis
That being said, this is going to be a bit of a buying opportunity before it is all said and done. After all, we’re approaching the $72 level and I think underneath there, you have even more support at the $70 level.
From a longer term perspective, the $68 level has been like a major floor in the market and you have to look at it through that prism as well. I do believe that it is probably only a matter of time before value hunters come back in and when they do, it should be quite glorious. After all, they do tend to be a little bit exuberant, and with oil also having to worry about geopolitical concerns, there’s also the possibility that tensions in the middle East ranted up pricing.
That being said, I’m looking for some type of bounce so if it bounces about a dollar, I’ll be a buyer but until then I’m going to stand on the sidelines and just let the market stabilize itself. Because of this, I think you have to be very cautious, but at the end of the day you also have to look at this through the prism of a market that from a longer term perspective has guarded the area just below quite aggressively.
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Natural Gas Markets Continue to Scrape The Bottom
By: Christopher Lewis | February 2, 2024
• Natural gas markets were relatively quiet during the trading session on Friday, as they continue to scrape the bottom of what seems to be a larger consolidation region.
Natural Gas Technical Analysis
The natural gas market has rallied lightly during the trading session on Friday as we continue to bounce around just above the $2 level. We are rolling over into the next month and therefore a lot of traders are starting to focus on spring. Because of this, it does make quite a bit of sense that natural gas may have trouble rallying, but I do think that we are far enough to the downside right now that we are close to a major support level. With that being the case, I think it’s probably only a matter of time before we bounce, perhaps towards the $2.50 level breaking above there. Then, it opens up the possibility of $3, while underneath we have the $2 level as a hard floor. Keep in mind that natural gas is currently being thrown around by the idea of a busted winter, as the demand for natural gas has fallen off of a cliff.
Furthermore, there is a huge supply of natural gas out there now that the winter has been yet another bust. And with that being the case, there’s no real reason to think that natural gas takes off. In fact, I suspect that we are starting to carve out some type of range for the year between $2 and $3, with the occasional slip outside of that range.
Again, $2.50, I believe is more or less your fair value area and therefore a lot of traders will pay close attention to it. In general, I think you need to maybe look for a buying opportunity and take profit rather quickly. Also, I think this is a range bound market looking for a range bound system for the next several months. This is typical behavior for the natural gas markets, so I think it does make a lot of sense that we would see a return to normalcy as supply of natural gas is well documented, and of course demand will start slipping.
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