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Supplying The World. The Energy Report
By: Phil Flynn | April 25, 2024
While the US oil and gas industry continues to get bashed by the Biden administration, the reality is that the US oil and gas industry is providing supply stability to the global economy. US petroleum exports hit 12,094 million barrels a day which is an all-time record high but gasoline demand in the US is tepid at best. Still, global economic growth continues to suggest that global oil demand will break records next month and if that demand is going to be met, it will be because of the efforts of the US oil and gas industry.
The Energy Information Administration (EIA) reported the first US crude draw in 5 weeks, and it was a whopper, down 6.4 million barrels to 453.6 million barrels, in what may be the first of many. Gasoline demand though continues to be weak in a sign that consumers are feeling the pain of inflation as the demand over the last four weeks averaged 8.7 million barrels a day, down by 3.7% from the same period last year.
Yet gasoline inventories still fell by 600,000 barrels from last week and are about 4% below the five-year average as we exported 778.000 overseas. Distillate fuel inventories did increase by 1.6 million barrels last week and are about 7% below the five-year average for this time of year.
The world is becoming more reliant on the United States energy producer to fill the void in the global market that was partly created by bad energy policy in Europe that led to the war in Ukraine. And there are open worries from our trading partners that Biden’s policies in restricting production and by pausing liquefied natural gas exports terminals, is going to leave our trading partners and the global economy in a precarious state.
This comes as we are seeing warnings that the geopolitical risk factors surrounding oil and gas have not gone away and warnings from trading partners in Europe that the natural gas crisis may reappear next winter. The tightening supply situation comes against high anxiety and geopolitical risk factors that may get worse before it is better. Bloomberg reports that, “European Gas Traders Are Already Worrying About Next Winter and that Gas capacity deals at Russia-Ukraine border set to end and that Next winter gas is trading at a premium to all other contracts. They write that, “While demand remains muted and the region exited the heating season with the highest stocks on record, industry players gathering at the Flame conference in Amsterdam this week see risks mounting. And prices are responding. Worries include uncertainty over remaining Russian flows through Ukraine and rebounding gas demand in Asia. A colder-than-normal winter spurring consumption at home is also seen as more likely after two consecutive mild ones. The concerns are showing up in the futures market. The contracts for next winter are the most expensive on the curve.
A Rigzone report says that, “recent reports indicate that Iran intends to disrupt operations in the Strait of Hormuz, Dryad Global stated in its latest Maritime Security Threat Advisory (MSTA), which was released on April 22. “The most recent incident, the seizure of the MSC Aries, demonstrates that Iran, despite being preoccupied with missile operations against Israel, continues to interdict and control vessel movement in the Strait of Hormuz, Persian Gulf, and Arabian Sea,” Dryad noted in the MSTA.
Of course the Biden administration despite their policies that make oil and gas prices go higher, continue to insist they want to do things to get prices lower and we must admit that maybe they’ve succeeded in one area and that area would be Venezuela. Bloomberg reported that, “Chinese refiners are paying a little less for Venezuelan oil after the US reimposed sanctions on the South American producer. Merey crude, often used to make bitumen to pave roads in China, traded at a discount of $14 a barrel to ICE Brent in recent days on a delivered basis, according to traders. That compares to $11 before sanctions were reinstated last week, and $8 at the start of the year. China’s likely to draw more barrels from Venezuela after the US discontinued its six-month sanctions waiver, as other buyers, including India, shun embargoed oil to avoid run-ins with Washington. An average of 130,000 barrels a day previously bought by Indian refiners and 174,000 barrels a day of US-bound shipments could now be redirected to the world’s biggest crude importer, according to data intelligence firm Kpler.”
Reports of fires at refineries in Russia and Mexico are other reasons to be bullish for oil and products and we are not the only ones that are predicting record demand. Standard Chartered just put out a note that said that they expect that global oil demand will pick up strongly in May and June and will exceed 103 million barrels a day for the first time in May.
Once again, the preponderance of evidence continues to suggest there is significant risk of upside price movements in crude oil, gasoline and diesel over the coming weeks. We do think we’ll see a bounce back in US demand for gasoline when the weather starts to warm up, but the global demand will continue to keep US supplies very tight. Our global partners continue to be astonished how the United States it’s continuing to make politically motivated decisions to appease the environmental base while the global economy hangs in the balance.
Sure, you can contact me to find ways to hedge and trade this coming crisis. The commodity Supercycle is coming into play once again and copper recourse is one of the markets that we have to keep a real close eye on. Bloomberg reported that, “BHP Group Ltd. proposed a takeover of Anglo-American Plc that values the smaller miner at £31.1 billion ($38.9 billion), in a deal that would create the world’s top copper producer while sparking the industry’s biggest shakeup in over a decade. The No. 1 mining company proposed an all-share deal in which Anglo would first spin off controlling stakes in South African platinum and iron ore companies to its shareholders before being acquired by BHP. The total per-share value of the non-binding proposal is about £25.08, BHP said, a 14% premium to Anglo’s closing share price on Wednesday. A tie-up with Anglo would give BHP roughly 10% of global copper mine supply ahead of an expected shortage that many market watchers have predicted will send prices soaring.”
We do have natural gas inventories today and we’re expecting to see an injection of 85 BCF. The industry is going through some significant challenges domestically. The Biden administration needs to start signaling to the world that we are going to continue to be the world’s largest liquefied natural gas exporter. We need to stop playing politics with US energy and get back to reality that natural gas is going to be the best way to reduce greenhouse gas emissions in emerging markets along with increase use of nuclear power.
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Natural Gas Faces Breakdown Risk Amid Symmetrical Triangle Pattern
By: Bruce Powers | April 24, 2024
• Natural gas price faces a critical juncture as it tests support within a symmetrical triangle pattern, with implications for a potential breakdown. The current price action highlights the challenges of relying on patterns within consolidation.
Natural gas turns down and drops to a five-day low as heads towards a test of support at the lower boundary line of a symmetrical triangle. At this time of this writing the low for the day was 1.63, and trading continues near the lows. Today’s bearish reversal is occurring within a symmetrical triangle consolidation pattern, so the implications are less than if today’s bearish action occurred in a different part of the trend. However, that will change if a breakdown triggers a decisive decline below the lower boundary line. The prior swing low of 1.65 from last week has already failed to provide support.
Weekly Support Fails
This puts the weekly bullish reversal of a hammer candlestick pattern that triggered on Wednesday at risk of failure. If the 1.63 price level is the lowest for the day, a drop below it will trigger a breakdown of the triangle pattern. Clearer bearish confirmation is indicated on a decline below the 1.59 swing low from March 25. The next lower target would then be the trend low of 1.52. That is the second lowest support level seen in natural gas in about 29 years. The lowest was 1.44 seen intraday, but the price quickly recovered, and the day ended back above the 1.52 level. In other words, 1.52 is a significant support area.
Support Seen at Bottom of Triangle
Today’s bearish price action is an example of why patterns within consolidation are less reliable to follow through. That is what is happening today following five days of positive performance and a strong close yesterday. It looks like today’s test of support at the lower boundary line may be the lowest price for the day thereby providing a third touch of the line. If it continues to act as support a bullish reversal may yet take natural gas back up towards the top line of the triangle.
Reaction Following Test of Support to Provide Clues
Thursday’s closing price will provide a clue. If natural gas can end the day above last week’s low of 1.65 it will be a slightly stronger close than being below last week’s low. But what happens next should provide further clarity. Either natural gas bounces off today’s low or breaks through it triggering a breakdown of the triangle.
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Not Over. The Energy Report
By: Phil Flynn | April 24, 2024
Oil prices rebounded yesterday from signs that the geopolitical tension may not have eased as much as previously believed. After the close we saw the American Petroleum Institute (API) report that petroleum supplies came in tighter than the market was expecting. The API reported the crude oil inventories fell by 3.23 million barrels where the market expectation was that they were going to increase by 1.8 million barrels. We also saw a 595,000 barrel drop in gasoline inventories and distillate inventories eked out a gain of 724,000. Attacks on Russian oil infrastructure and commitments by Russia to lower oil production and keep exports steady should provide some support for diesel. We did see some weakness in a report that Chinese refinery runs fell by 919 kb/d to a seven-month low but that could be offset by signs that maybe this week US demand is going to look robust, at least compared to recent weeks.
The reduction of the war premium in oil came when it appeared that the global tensions between Israel and Iran had calmed down, yet that war premium is creeping back in on reports as Israel is warning civilians to get out of Rafah as they prepare an invasion. Reports say that Israel is getting ready to find tents for Palestinian civilians they intend to evacuate before the invasion. There’s also some speculation that Israel’s response Iran’s attack isn’t over yet and it’s just biding its time before it sends Iran a real message.
The House and Senate passed new sanctions on Iran. Last week Biden announced sanctions against Iranian steel and drone companies as well as 16 individuals on Thursday in response to last weekend’s aerial attack by Tehran against Israel. Yet the Biden administration is fearful to enforce sanctions on Iran? At first it was an attempt to appease Iran to try to cajole them into a new Iranian nuclear accord that supposedly fixed all the problems with the previous accord that President Trump rightly pulled out of. Now it appears that Iran just used the negotiations to fortify their economic position and their oil production and now it is seeing their exports hit a six-year high. Iran used its Biden oil windfall of course to fund their operations and support groups like Hamas, Hezbollah and the Houthi rebels.
While the Biden administration fails to enforce sanctions on Iran, the truth is that innovation in the oil and gas industry in the US could replace Iranian oil production if there was incentive to do so. Reuters reported that, “Technology advances are making it possible for U.S. shale oil and gas companies to reverse years of productivity declines, but the related requirement to frontload costs by drilling many more wells is deterring some companies from doing so. While overall output is at record levels, the amount of oil recovered per foot drilled in the Permian Basin of Texas, the main U.S. shale formation, fell 15% from 2020 to 2023, putting it on par with a decade ago, according to energy researcher Enverus.
Reuters writes that, “That is because fracking, the extraction method that emerged in the mid-2000s, has become less efficient there. In the technique, water, sand and chemicals are injected at high pressure underground to release the trapped resources. Two decades of drilling wells relatively close together, resulting in hundreds of thousands of wells, have interfered with underground pressure and made getting oil out of the ground more difficult. “Wells are getting worse and that is going to continue,” said Dane Gregoris, managing director at Enverus Intelligence Research firm.
But new oilfield innovations, which began being implemented more widely last year, have made it possible for fracking to be faster, less expensive and higher yielding. The advances in the past few years include the ability to double the length of lateral wells to three miles and equipment that can simultaneously frack two or three wells. Electric pumps can replace high-cost, high maintenance diesel equipment. “Companies now can complete (frack) wells faster and cheaper,” said Betty Jiang, an oil analyst with Barclays.
A drawback to the new simultaneous fracking technology, also called simul-frac, is that companies need to have lots of wells drilled and ready to move to the fracking phase in unison before they can proceed. Pumps inject fluids into and get oil and gas out of two or three wells at the same time, instead of just one. Because these act as an interconnected system, wells cannot be added piecemeal. But companies eager to cut costs have not deployed enough drill rigs to capitalize fully on the potential of the innovations.”
The Biden administration is very anti fossil fuel production in the United States. While they are trying to take credit for record oil and gas production, it’s clear that most of the gains have been made by innovation by the oil and gas industry and most of it has been done on private lands. Private oil and gas companies have been flourishing despite the attempts by the Biden administration to accuse them of war profiteering and price gouging. Matador Resources Co. pumped more oil than expected in the first three months of 2024 at a time when most US producers have pledged flat to moderate output growth this year.
Bloomberg reports that Matador’s 2% production over-performance to start the year was done while spending less money on drilling than projected, the company said. During the first quarter of 2024, Matador’s average oil production of 84,777 barrels per day beat its guidance of 83,500 barrels, the company said. “We now expect full-year production for 2024 at the high end of our previously announced average production guidance for oil of 91,000 to 95,000 barrels of oil per day,” the statement said.
The commodity super cycle comes in waves. Coffee and cocoa are making historic moves and industrial and precious metals are back in vogue. Major players have been taking notice and shifting their investments back to the futures. Bloomberg News is reporting that, “Some of the world’s biggest energy trading companies are returning to metals, years after getting burnt in the notoriously difficult markets. Vitol Group, Gunvor Group and Mercuria Energy Group are among the traders building out their metal’s teams, as they look to deploy capital generated by record profits. The shift comes as forecasters turn increasingly bullish on copper, aluminum and other metals, where long-anticipated production shortfalls are starting to take shape. Many commodities house’s also see strong links between metals usage and power markets — another growth area for traders according to Bloomberg.
What are we going to do with the electric car glut. The Biden administration says that we are in a race with China to control the EV market. The problem is that the Chinese consumers, like the American consumers, just don’t not want them. Oh sure, the International Energy Agency claims that, “over 20% of global car sales this year are projected to be electric, driving a transformative shift in the auto industry and cutting oil use for transport.” Yet these are the same folks that predicted that global oil demand would peak years ago.
Reuters reported that, “By most measures, the last thing China needs is more electric cars crowding a market with more losers than winners, driving down prices at the expense of profit and taking the fight for market share beyond China. And that’s just what it is getting. Automakers are expected to launch 110 EVs and plug-in hybrids in 2024, many at the Beijing auto show that starts Thursday. Those new offerings, dominated by Chinese brands, will join By contrast, there were just over 50 EV models on sale in the United States last year. But while there is a peril in China’s overcapacity, there is also a power in the hyper-competition it has unleashed, analysts, suppliers and executives say. China’s leading EV makers have found ways to slash vehicle development time, combining speed to market with new features and a pricing advantage rivals outside cannot match. the almost 400 “new energy” models already in China’s showrooms, according to industry data.” But the main problem is still sales, which even though they are growing in China, are not growing at the pace to get rid of the oversupply. And there doesn’t appear to be any plan to deal with the batteries once they start to go bad in 10 years.
Natural gas is still trying to put in a little bit of a bottom here. It has a tough road ahead. We are looking for an injection of 85 BCF this week.
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Oil CTAs (Commodity Trading Advisors) maintain a positive outlook on oil, increasing their long positions in oil futures
By: Isabelnet | April 24, 2024
• Oil
CTAs (Commodity Trading Advisors) maintain a positive outlook on oil, increasing their long positions in oil futures.
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Natural Gas Potential for Bullish Momentum Builds
By: Bruce Powers | April 23, 2024
• Natural gas remains stuck in a symmetrical triangle consolidation pattern, starting to break out above last week's high.
Natural gas has begun to break out above last week’s high of 1.806 as it again tests that price area as resistance with Tuesday’s high of 1.808. At the time of this writing, it is on track to end the session with a bullish continuation hammer candlestick pattern. Moreover, notice that the blue 8-Day MA was successfully tested today as support with the day’s low of 1.745. It is the first time in nine days that the 8-Day line has represented support, and it shows improving demand for natural gas, although still a minor change.
Watch for Weekly Breakout
A decisive rally above today’s high will trigger a bullish continuation of the advance that began from the most recent swing low at 1.64. That low tested support around the bottom of a symmetrical triangle consolidation pattern. Once support is seen at the bottom of a triangle and it turns up, a continuation towards the top boundary line of the pattern to test resistance is most likely. Also, since the triangle is well formed, with four points creating the boundaries of the pattern, a breakout can happen from the current advance.
Next Target is Top of Triangle
Resistance may not halt the advance at the top boundary line and instead a breakout could occur. However, keep in mind that upward momentum is essentially beginning from the recent swing low. So, even if the top line is broken there may not be enough demand on the sidelines to keep prices rising in the short term. An alternative bullish scenario would be to see signs of resistance around the top line on the initial approach. And that resistance leads to either consolidation or a pullback as natural gas sets up for a new entry that leads to a decisive upside breakout.
The short-term bearish scenario would see resistance around the top boundary line, leading to a retracement that takes natural gas back down to test support around the lower boundary line. That scenario increases the chance for a bearish breakdown from the triangle pattern.
Weekly Pattern is Bullish
As discussed in Monday’s article on natural gas, the weekly chart pattern shows a breakdown of a bearish shooting star candle last week, followed by a bullish breakout of a hammer candlestick this week. In other words, the market on a weekly basis gave a clear bearish signal, and then flipped around the gave a clear bullish signal. This type of flip from bear to bull in a short period of time is what can lead to sharp moves. In this case up. Certainly, there are no signs of it yet, however.
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$WTIC $OIL - Here the Daily Dotted-Grey 150/MA Spprt
By: Sahara | April 23, 2024
• ... $WTIC $OIL - Here the Daily Dotted-Grey 150/MA Spprt.
Where I said prior if it fails to hold it will target the 2/Day 150/MA (Not shown) for a 'Truncated-(e) in the 'Coil' (Shaded Bands). If that fails then it will want to head to the Lwr-Band of 'Coil for full Wave-(E)...
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Who’s The Leader. The Energy Report
By: Phil Flynn | April 23, 2024
Who’s the leader of the club that was made for me. JOE-BID-eeeen. Joe Biden, Joe Biden forever hold your banner high. High, High. For those of you young folks that missed being a part of the Micky Mouse Club, at least you have a chance to become a member of Joe Biden’s “American Climate Corp”. Joe Biden, in an effort to win back the hearts and minds of young, disgruntled Biden voters or perhaps in an attempt to get them to stop protesting at US college campuses across the land, is offering 20,000 jobs to young environmentally minded young folks so the can save the planet from what he sees as the biggest threat to mankind and to “ensure that poverty, race and ethnic status do not lead to worse exposure to environmental harm”. To try to inspire young people and their hearts and minds and votes that he has lost, Biden is trying to summon his inner Franklin D. Roosevelt by trying to copy a 1936 summer camp for underprivileged youth that Roosevelt called the Civilian Conservation Corp (CCC) to help create jobs during the Great Depression. Now Biden hopes that he can win back some votes by getting them to join this fine club.
While this youthful group cannot wear Mickey Mouse ears, perhaps they could wear caribou antlers because at the same time Biden has decided to block 40% of all oil and gas development in the Alaska National Petroleum reserve in an attempt to protect the so-called native habitat of the caribou and polar bears. Now normally the population of the caribou thrive near warmer oil pipelines but that’s a story for another day.
The Biden team also wants to block a road in Alaska that can bring out the precious metals that we would seemingly be needing if we’re going to electrify our economy. But perhaps he’s a little bit worried about putting some of those slave labor kids out of work in the cobalt mines. Maybe he could send those kids some of some of those cute caribou antler hats to make up for it.
Biden’s energy policies are raising real concerns about the future of energy security in the United States. People in the oil and gas industry and the mining industry are just scratching their heads wondering why the president continues to encourage the production of oil and gas and rare earth minerals in other countries while continuing to try to stymie the US. It’s very disturbing to many in these industries that the Biden administration continues to make short term political decisions regarding energy without any concept of the longer term damage that it’s doing to the US energy space. There are warnings from the American Petroleum Institute and others that are saying that Biden’s policies are creating the next major energy crisis but if you can’t beat them, I guess just join the club.
In the meantime, the market doesn’t seem to be too phased by the sanctions that are being placed in Iran. There’s a growing sense that new sanctions are not needed but also what we must do is enforce the sanctions that are already on the books. Javiar Blass at Bloomberg agrees writing that, “if you believe the Chinese government, the country doesn’t import any oil from Iran. Zero. Not a barrel. Instead, it imports lots of Malaysian crude. So much that, according to official Chinese customs data, it somehow buys more than twice as much Malaysian oil as Malaysia actually produces. Impossible? Well, of course. The reality is that China simply rebrands every barrel of Iranian crude it imports as Malaysian — the easiest and cheapest way to defy US sanctions, according to oil traders. It isn’t a small matter: “Malaysia” was China’s fourth-biggest foreign oil suppler last year, behind Saudi Arabia, Russia and Iraq. He says that, “The truth is, the US doesn’t need new sanctions on Iranian oil — it needs to enforce the ones it already has. For the last several years, either the White House has turned a blind eye to surging Chinese purchases of Iranian oil, with Biden seeming to be more concerned about rising oil prices than increased Iranian oil output, or the web of Chinese and Iranian obfuscation has outwitted US officials. I’m not sure which would be worse, but the result is the same: Iranian oil production last month surged to a six-year high of 3.3 million barrels a day, up 75% from the low point of 1.9 million barrels during the “maximum pressure” sanctions applied by former US President Donald Trump in late 2020.
I would take it a step further. I would argue that the lifting or the failure to enforce sanctions on Iran has made the world a more dangerous place. There’s absolutely no doubt that a lot of the turmoil that we’re seeing in the world today is because Iran has been able to fund terror groups like Hamas, Hezbollah and the Houthi rebels. Don’t believe the talking point that the reason why Iran is lashing out is because of Donald Trump and that he stepped away from the Iran nuclear accord. The reality is that Iran was never in the business of not wanting to get a nuclear weapon and that Iran nuclear accord would have stopped them.
WTI prices hit over $83.00 a barrel today before pulling back in a normal 3:00 AM central time sell off. The market did get a bit of a pullback on signs that manufacturing growth overseas is slowing while inflation continues to be strong. We get the S&P flash US services purchasing managers index today and we also get the flash US manufacturing purchasing managers index. The market is going to look at the rate of growth but also the inflation component and that could be a market mover for oil today. We also will get the American Petroleum Institute supply report, and the expectations are that we will see a pretty good draw across the board.
We’re seeing diesel prices gain on Rbob gasoline prices suggesting that refiners are starting to get caught up with gasoline inventories. If that gets confirmed from today’s report and tomorrow’s Energy Information Administration supply report, it could mean that we could be getting close to a peak on gasoline prices.
Natural gas prices are trying to hold steady. The big picture is there are still concerns about the Biden administration’s pause on liquefied natural gas exports approvals. Insiders continue to believe that this is just a political sideshow to try to win favor from Biden voters. Still, if the United States lives up to its potential as the largest natural gas exporter, then world will be a cleaner place. The best chance for developing nations to reduce their greenhouse gas emissions is to replace coal plants and oil plants with liquefied natural gas. It’s realistic and doable and affordable and ultimately good for the planet.
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Crude Oil Price Forecast – Crude Oil Continues to Be Volatile
By: Christopher Lewis | April 23, 2024
• The Tuesday session has been all over the place in the oil markets, as we continue to see a lot of uncertainty as to where we are going.
WTI Crude Oil Technical Analysis
The West Texas Intermediate Crude Oil Market initially rallied during the trading session on Tuesday but has struggled to show signs of being able to hang on. So, with that being the case, I think we just continue to hang around and look for some type of reason to get involved based on support and a bounce.
The $80 level in the WTI market, I think, continues to be a major floor. And the 50-day EMA, I think, kind of comes into the picture as well. If we can take out the highs of the day, then we could go look into the $85 level. But right now, it seems like everybody is breathing a little bit of a sigh of relief as the war in the Middle East has at least not spread further. So that of course helps. Nonetheless, I do think that this area around $80 continues to be important.
Brent Crude Oil Technical Analysis
Same thing over here in Brent, the $84.50 level is an area that I think a lot of people will pay attention to, as it’s between the 50 day EMA and the 200 day EMA. Again though, we need to take out the highs of the day to be truly impressive to the upside. And at that point, then I think you’ve got a situation where we could go look into the $90 level regardless.
I am a buyer of oil, but maybe not right now. I need to see a little bit more in the way of stability because we have been all over the place in the last three trading days. I think at this point we will start to form some type of supportive action though, and that might be your sign to get long.
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Natural Gas Bullish Weekly Setup on Deck
By: Bruce Powers | April 22, 2024
• Natural gas continues to trade within last Tuesday's range, hinting at a potential breakout of last week’s hammer candlestick pattern on a rally above 1.81.
Natural gas rises on Monday but continues to trade within the price range from last Tuesday with momentum and volatility muted. Tuesday’s high was 1.80 and it was briefly exceeded to the upside on Friday, with a high of 1.81. It looks like natural gas is eventually heading towards the top line of the symmetrical triangle consolidation pattern to test resistance.
If it were hit today the line would represent approximately 1.92. However, given the lack of enthusiasm in the advance so far, further consolidation may come first. The long-term downtrend line is an area to watch for support during short-term pullbacks.
Weekly Bullish Hammer Candle Setup
A key price level for natural gas is last week’s high of 1.81. If exceeded, the upper range of the triangle becomes the next target zone. Also, last week ended with a bullish hammer candlestick pattern. Therefore, a bullish breakout above 1.81 will trigger that candlestick pattern. Interestingly, the prior week ended with a bearish shooting star candlestick pattern, and it was triggered to the downside last Monday.
This provides a potential setup on the long side that could lead to a pickup in momentum. What we have is the potential for a bullish reversal in the weekly time frame, following a bearish reversal that was triggered the previous week. This type of “whipsaw” is what can sometimes begin sharp moves.
Next Opportunity for Breakout is with the Current Advance
Once a breakout of the triangle triggers, the price of natural gas should see a clear increase in momentum. The triangle pattern is well defined with five touches of the boundary lines so far. Given the clear establishment of the pattern a breakout, either up or down, can follow.
However, given that natural gas has been rising following the most recent swing low of 1.65, the next potential breakout would likely be to the upside. Either the current advance breaks through the top line and then rises above the most recent swing high of 1.94, or resistance is seen near the top line that leads to a turn lower. If the turn lower is brief, another attempt at an upside breakout could follow.
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Sanction Hokum. The Energy Report
By: Phil Flynn | April 22, 2024
Oil prices are pulling back as well as silver and gold on the reduction of risk of war and more sanction hokum. Both Israel and Iran seemed to suggest that the tit for tat responses to their escalating tensions had ended but at the same time because of Iran’s attack on Israel, the US has put on mores sanctions. Iran may be shaking in its boots because of the way the Biden administration enforces sanctions instead of their oil exports hitting a 6-year high, they can now go for a 7-year high.
Reuters reported that, “The package, which includes billions of dollars of aid for Ukraine, Israel and the Indo-Pacific, contains several measures on Iran sanctions. Two “could explicitly impact Iranian petroleum exports if implemented and enforced”, according to ClearView Energy Partners, a non-partisan research group. The first, the Stop Harboring Iranian Petroleum Act, or SHIP, would impose sanctions on ports, vessels and refineries that “knowingly engage” in shipping, transfers, transactions and processing of Iranian crude oil and products, ClearView said. Ships that violate the ban would be barred from U.S. ports for two years. However, the bill includes 180-day waivers that Biden could invoke that would avert oil price spikes. Election day USA is 197 days away. That is just a coincidence, I am sure. It was expected to pass the Senate and will be signed by Biden. Yet the Whitehouse is going to have a say on how, when and if the sanctions are going to be enforced. With a looming election and consumers already complaining about inflation and gas prices, it’s unlike the Biden team will enforce sanctions and Iran once again gets away with murder.
Sanctions, of course, may be the best example this week of wishful thinking since the International Monetary Fund last week thought that OPEC and Russia might start lifting gradually their production cuts in July. IMF assumes a full reversal of oil output cuts at the start of 2025 which I guess could be possible and more than likely we will need oil. Yet last week three anonymous OPEC+ sources who spoke to Reuters indicated that OPEC+ was considering an extension of its voluntary production cuts into the second quarter to lend further support to the market. What’s more, the sources suggested that the group could keep the voluntary cuts in place through the end of this year.
These new sanctions and the OPEC production cut extension comes as AAA comes out this morning about gas prices. They pointed out that the average price of gas increased by 27 cents in the first two weeks of April 2024, and AAA anticipates the cost will continue to rise. Yet they did point out that, “Lackluster domestic demand for gasoline paired with decreasing oil prices led to the national average for a gallon of gas climbing just four cents to $3.67 since last week.” Currently their latest data shows that gasoline prices are $3.675 a gallon for regular unlimited. That is slightly higher than yesterday, about four cents a gallon higher than a week ago about $0.14 higher than a month ago. Yet amazingly we’re just slightly higher than we were a year ago.
The wildfire in Canada may impact oil production as well as natural gas. Bloomberg reported that A 74-acre (30—hectare) wildfire in the Canadian oil sands prompted an evacuation alert for a community near Fort McMurray, the biggest city in the region. Residents of Saprae Creek, located about 25 kilometers (16 miles) by car southeast of the oil sands capital, were told to prepare for possible evacuation if wildfire spreads toward the community, the Regional Municipality of Wood Buffalo said in an alert. The fire is one of two out-of-control blazes in Alberta, home to the Canadian oil sands, the world’s third-largest crude oil reserves. The warning was issued after massive forest fires burned down whole swathes of Fort McMurray, forcing tens of thousands of residents to evacuate for more than a month. Those fires also prompted the suspension of more than 1 million barrels a day of oil production.
EBW Analytics reports that the May natural gas contract initially tested as low as $1.649 last week before a brief fire scare in Alberta threatening supply reinforced support. Extended Henry Hub weakness averaging just $1.57/MMBtu April-to-date may be a bearish indicator for the June contract, however. Still, dry gas production scrapes continued to grind lower to offer support while weather also edged higher. If LNG demand can rebound from last week’s lows, initial strength is probable early this week before trader positioning into final settlement biases risks lower.
We definitely have seen the rebound in the stock market and the big sell-off in silver and gold as the risk of World War 3 breaking out over the weekend seems to be reduced pretty substantially. Still the supply and demand situation remains very tight and this false perception that supplies are really ample could be changed dramatically over the next couple of weeks. The 3rd test seems to be more interested in the Brent crude than the WTI. Most of the tightness on that side of the pond, at the same time here in the US, complacency on gasoline demand may be our undoing. Weekly demand numbers are very volatile. Our expectation is that if the weather turns a bit better across the country we could see a real uptick in demand.
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Will Energy stocks bounce back in the second half of April? History says yes
By: TrendSpider | April 21, 2024
• Will Energy stocks bounce back in the second half of April? History says yes.
Over the last two decades:
70% win rate and average return of +4.38%.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 20, 2024
• Following futures positions of non-commercials are as of April 16, 2024.
WTI Crude Oil: Currently net long 300.1k, down 32.9k.
West Texas Intermediate crude had its back-to-back down week. On Friday last week, it ticked $87.67 intraday. This week, it rose as high as $86.18 on Tuesday, before ending the week down 3.8 percent to $82.22. Friday’s session was volatile with a high of $85.64 and a low of $81.13; in the end, traders decided the Israel-Iran conflict is not likely to spiral out of control – not yet anyway.
The crude has come a long way from last December’s bottom at $67.71. Traders will be particularly tempted to lock in profit if breakout retest at $81-$82 fails. WTI went back and forth between $71-$72 and $81-$82 for a year and a half before pushing through the upper end three weeks ago. The breakout is currently being tested.
In the meantime, US crude production in the week to April 12th was unchanged for six consecutive weeks at 13.1 million barrels per day; eight weeks ago, output was at a record 13.3 mb/d. Crude imports increased 27,000 b/d to 6.5 mb/d. As did crude inventory, which rose 2.7 million barrels to 460 million barrels. Stocks of gasoline and distillates, however, dropped 1.2 million barrels and 2.8 million barrels respectively to 227.4 million barrels and 115 million barrels. Refinery utilization dropped two-tenths of a percentage point to 88.1 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | April 20, 2024
NY Crude Oil Futures closed today at 8222 and is trading up about 14% for the year from last year's settlement of 7165. Caution is required for this market is starting to suggest it may now decline on the MONTHLY level. As of now, this market has been rising for 3 months going into April reflecting that this has been only still, a bullish reactionary trend. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 8767 while it has not broken last month's low so far of 7679. Nevertheless, this market is currently trading below last month's close of 8317.
Up to now, we still have only a 3 month reaction rally from the low established during December 2023. We must exceed the 3 month mark in order to imply that a trend is developing.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Looking at the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bearish position at this time with the overhead resistance beginning at 8250 and support forming below at 8056. The market is trading closer to the resistance level at this time.
On the weekly level, the last important high was established the week of April 8th at 8767, which was up 17 weeks from the low made back during the week of December 11th. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed beneath that low which was 8455. This was a very bearish technical indicator warning that we have a shift in the immediate trend. We are still trading neutral on the Weekly Momentum Indicators and this is a warning that initial support has been breached. This strongly implies we should pay close attention now to the Weekly Bearish Reversals. If we begin to elect Weekly Bearish Reversals, then we are dealing with a more sustainable near-term correction. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8767 made 1 week ago. Still, this market is within our trading envelope which spans between 5637 and 10351.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in April, this market has held above last month's low of 7679 reaching 7679.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
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Natural Gas Stuck Inside Consolidation Range
By: Bruce Powers | April 19, 2024
• Historical context suggests that 1.52 support is significant, suggesting that a drop below it could lead to further selling, and if it is retained there is the potential for an eventual upside breakout.
Natural gas shows signs of strength but cannot sustain it. A breakout above the three-day high of 1.80 triggered today before resistance was seen around 1.81. That led to a selloff that took natural gas down to the lower half of the day’s range.
Although the breakout to a four-day high is a sign of strength, the potential close in the lower half of the range is not. Moreover, Thursday also closed in the lower half of the range. Nevertheless, this is the type of uncertainty that can be expected when trading occurs inside a clear consolidation pattern.
Directionless Choppy Outlook Until Breakout
A bear pennant trend continuation consolidation pattern has been forming and the swing low at 1.65 that was reached on Tuesday further confirmed the pattern. That swing low has been followed by a low momentum advance. The logical target is an eventual test of resistance at the top boundary line of the pattern. If resistance is then seen, a possible drop to test the lower line may occur. In other words, until there is a clear breakout of the pennant momentum and volatility will be diminished.
Upside Breakout Would Be Bullish
Although this pennant is considered bearish since it is within a downtrend, a bullish reversal can also occur. On the downside, a decline below this week’s low of 1.65 indicates that a breakdown has started. The first target would then be the trend low at 1.52. However, if the breakdown follows through as it normally might, a decline to new trend lows is likely. Given that, it is important to consider historical context.
Sitting On Strong Support
In June 2020 natural gas reversed from a swing low of 1.44. That low was the lowest traded price in natural gas of the past 28 years. The prior low was 1.52, which is where it found support most recently. Further, the decline below support of 1.52 to the new low of 1.44 occurred in only one day.
A daily close above the 1.52 level occurred the next day and it was followed by a sustained rally. What this seems to indicate is that another drop below 1.52 could be a big deal and lead to further selling and risks seeing natural gas fall below 1.44. Also, there is a good chance that 1.52 is not broken to the downside given its significant, and an upside breakout of the pennant eventually occurs.
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Fear Strike Out. The Energy Report
By: Phil Flynn | April 19, 2024
A wild evening of risk on and risk off as the market fear cages had a significant test and geopolitical events are on the cusp of our worst nightmares. Now the market must decide whether the tensions are closer to the beginning or closer to the end.
Oil popped and dropped after it was reported that Israel responded to Iran’s attack on their country with a missile strike or drone strike or a combination of both. The early indications seem to suggest a limited response by Israel, perhaps in an attempt to not escalate the conflict but is already being criticized by some in Israel as a ‘weak” response” and calls for more significant action. Iran overnight also seems to be downplaying the attack.
The Wall Street Journal reported that, “The strike targeted the area around Isfahan in central Iran, one of the people said. Iranian media and social media reported explosions near the city, where Iran has nuclear facilities and a drone factory, and the activation of air-defense systems in provinces across the country after suspicious flying objects were detected. Much remained unclear about the extent or the impact of the Israeli action. State-run news agency IRNA said Friday morning that its reporters hadn’t seen any large-scale damage or explosions anywhere in the country and that no incidents were reported at Iran’s nuclear facilities. Flight restrictions imposed overnight by Iran were lifted in the morning.” This came after Iran was already seeking to lower tensions.
Bloomberg News reported that Iran is prepared to de-escalate tensions with Israel provided that it agrees to stop further military moves against Tehran’s interests, Foreign Minister Hossein Amirabdollahian said at the United Nations. “Iran’s legitimate defense and countermeasures have been concluded,” Amirabdollahian told the UN Security Council Thursday. Israel “must be compelled to stop any further military adventurism against our interests.” If not, he said, Iran will “give a decisive and proper response” that will make Israel “regret its actions.” So after some pretty dramatic moves and the risk on markets such as bonds, oil and gold, we seem to be pricing in that the worst may be over the rumors that Israel was going to hit Iran hard after the Passover holiday and talk of two other attacks on Iran being canceled seems to suggest that at least for the near term, the worst may be over.
Yet will it be enough to believe that this is over going into the weekend? It’s very possible that they will retaliate again. So, the fears of some of the worst-case scenarios of a major oil disruption seems to be on the back burner at least for now. I guess Iran can go back to celebrating the fact that they just saw their oil exports hit a new six year high yesterday according to the Financial Times giving the country an extra $35 billion dollars that they can spend on more global terror groups like Hamas, Hezbollah and the Houthi rebels.
The Iranian state media reported that the air strike by Israel’s Air Force was targeting their 8th tactical air base of the Iranian Air Force. The attack was near some of their nuclear facilities. According to the reports coming out of Iran, none of them were damaged and its business as usual. So, I guess that means that their secret nuclear weapons program is still on going. Oops I forgot, it’s supposed to be a secret.
No secret that the Biden administration did turn a blind eye to Iranian sanctions in the hope to reinvent the Iranian nuclear deal but at the same time now they need that oil if they’re going to win the election. The Biden administration now is in another desperate attempt to please the environmental base and is now restricting drilling and mining in Alaska. The Biden administration says they took steps to limit both oil and gas drilling on public lands and conserve 30% of US lands and water to combat climate change. The Interior Department finalized a regulation to block oil and gas development and 40% of Alaska’s National Petroleum preserve they say in an attempt to protect habitats for polar bears and Caribou and other wildlife in the way of life for indigenous communities. Biden also said that he was proud that his administration was taking action to conserve more than 13 million acres in the western Arctic.
Many experts believe that Biden’s action is going to jeopardize our future not only for oil and gas production but also for the production for the type of minerals that we would need if Biden is ever going to have a chance to achieve his dream of electrifying the US transportation fleet. By restricting mining but increasing the demand for metals, Biden is going to make the US more dependent on other countries for our economy to survive. This is not a good long-term strategy for U.S. economic growth nor is it a good strategy for the average American family.
For commodity traders, we’re seeing some great volatility and great opportunities to try to pick up some big moves. This means the volatility in commodities isn’t just in your normal risk assets where we’re seeing explosive moves in cocoa, coffee as well as industrial and precious metals. Be prepared to play both sides of the market but hedges should use sharp breaks to lock in hedges. Because after the dust settles and the geopolitical risk goes away, the underlying fundamentals for food and industrial and precious metals is that supplies are just too darn tight.
Natural gas, after what a bearish report, is attempting to rise from the ashes. There is a possibility and the market is hopeful that production cuts and reductions of drillings of wells would stop the bloodletting.
Yesterday Market Watch reported that the Energy Information Administration on Thursday reported a weekly increase of 50 billion cubic feet in domestic supplies for the week that ended April 12. On average, analysts had forecast a climb of 44 billion cubic feet, according to S&P Global Commodity Insights. Still with some base of seeing natural gas prices at historic lows there will still be more pain for the producers.
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$OIL $XLE $BPENER - We had a reaction from the Red-Zone. Now watching the BPENER MA's to see if we get the confirmation or not as we sit on the Spprt-Lines in OIL & XLE...
By: Sahara | April 19, 2024
• $OIL $XLE $BPENER - Latest
We had a reaction from the Red-Zone. Now watching the BPENER MA's to see if we get the confirmation or not as we sit on the Spprt-Lines in OIL & XLE...
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Natural Gas Rebound Faces Resistance at Moving Average Zone
By: Bruce Powers | April 18, 2024
• Trading in natural gas expected to be choppy, as volatility declines in the narrowing pennant.
Natural gas bounces to test a moving average resistance zone with the day’s high of 1.78. Today’s advance (Thursday) broke out above the high of Wednesday, which was an inside day. Natural gas is on track to end the day above yesterday’s high of 1.72. However, it remains inside the wide trading range from Monday, and it is also within a developing bearish pennant consolidation pattern.
Signs of strength seen today may take the price of natural gas up to the top boundary line to test resistance. However, it is not clear whether Tuesday’s swing low will be the low of the swing until there is an advance above Monday’s high of 1.80.
Choppy Moves While in Consolidation
Until natural gas breaks out of the pennant consolidation pattern trading will likely be choppy and difficult to predict, as with any consolidation period. Volatility can be expected to decline as the pennant narrows the trading range as the apex of the triangle is approached.
Further, the three moving averages representing different time frames of 8-Day, 20-Day, and 50-Day have converged. This is another indication of low volatility. How natural gas behaves when testing the upper or lower boundary lines will provide clues as you whether a breakout to the upside or downside may occur.
Consolidation Could Continue for Weeks
The pattern is bearish since natural gas remains in a downtrend and there was a sharp decline prior to the formation of the pennant. Nevertheless, it is not determined until a breakout occurs. A breakout either up or down should occur before the apex is reached. This means that trading within the pennant could go on for as long as more seven weeks. Regardless, a breakout could occur at any time as the pennant is already well defined.
8-Week Moving Average Recaptured
It is interesting to note that there was a breakdown from last week’s bearish shooting star candlestick pattern (not shown) before this week’s low of 1.65 was reached, leading to a bounce. Also, the 8-Week MA, which had marked support for the last two weeks was broken to the downside. Today’s advance has recaptured the 8-Week MA, a sign of strength. Confirmation of strength will be provided on a daily close above the current price for the 8-Week MA at 1.75. Natural gas exceeded that level today.
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EIA Natural Gas Storage Build Of +50 Bcf Misses Estimates
By: Vladimir Zernov | April 18, 2024
Key Points:
• EIA reports a build of +50 Bcf vs +54 Bcf estimate.
• Stocks remain well above the five-year average for this time of the year due to warm winter.
• Natural gas prices are trying to settle above the $1.75 level.
On April 18, 2024, EIA released its Weekly Natural Gas Storage Report. The report indicated that working gas in storage increased by 50 Bcf from the previous week.
Analysts expected that working gas in storage would increase by 54 Bcf, so the report was somewhat bullish.
At current levels, stocks are 424 Bcf higher than last year at this time and 622 Bcf above the five-year average of 1,711 Bcf.
The current demand for natural gas is moderate. Production has declined by about 10% in 2024, but production trends did not provide sufficient support to natural gas prices due to warm winter.
Natural gas continued its attempts to settle above the $1.75 level as traders reacted to the EIA report. From the technical point of view, natural gas received strong support near the key $1.60 – $1.65 level and is trying to gain upside momentum, supported by the better-than-expected data from the EIA.
It remains to be seen whether natural gas will be able to gain sustainable momentum as traders are worried about weak demand. At this point, it looks that natural gas will need strong positive catalysts to get out of the current trading range between the support at $1.60 – $1.65 and the resistance at $1.95 – $2.00.
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$WTIC $OIL - Latest...
By: Sahara | April 18, 2024
• $WTIC $OIL - Latest
Slipping as presumed by my blue-Script. The 'Bowl edge is a target along with the 2/Day Dotted-Grey 150/MA. (If it cannot hold the Daily 150/MA here now not shown)
Therefore if it fails a Wave-(e) truncation it will aim for the Lwr 'Coil' Line (Shaded)...
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You Can’t Hurry Cuts. The Energy Report
By: Phil Flynn | April 18, 2024
Jerome Powell hints: You can’t hurry cuts. No, you’ll just have to wait. Inflations not easing, But It’s a game of give and take. You can’t hurry cuts, no, you just got to wait, just trust in the Fed’s time, it’s a game of interest rates. How many heartaches must we stand before inflation’s so tame to let us live again. Rate cuts were the only thing that kept us hanging on. When I feel my paycheck, you know it’s almost gone. No, you can’t hurry cuts….
Well after trying to hold support for days, the market had the rug pulled out from underneath it as the market seemed to lose the Fed and the Strategic Petroleum Reserve (SPR) put in quick succession. Backing off rate cuts and the Biden administration switching to a potential seller from a buyer for the SPR took away the invisible floor that oil had. We also saw an easing of war premium in part because of an Axios report that said that Israel considered a retaliatory strike against Iran on Monday but decided to wait.
The market also was less than inspired by the weekly Energy Information Administration (EIA) status report that seemed to suggest the gasoline demand in the United States is struggling but at the same time so are the inventories of oil products. Yet the tightness of diesel supply and gasoline, especially in certain parts of the country, seem to be overshadowed as the market tries to reprice oil and gas in an environment where we might not get any rate cuts this year after all and perhaps a measured response to Iran’s unprecedented attack on Israel.
Federal Reserve Bank of Cleveland President Loretta Mester seemed to echo the sentiment from Fed Chair Jerome Powell by saying monetary policy is in a good place, adding that the central bank shouldn’t be in a hurry to cut interest rates. Yet by backing off the suggestion that rate cuts would be coming, it took away what some might say was the Fed oil put that would keep a floor under oil just a day after the Biden administration took away the Strategic Petroleum Reserve put by saying that instead of buying back for the reserve they might be selling.
Add to that its seems that the market believes that the Biden administration will not impose sanctions on Iranian oil because they fear a shortage. Even so called reimposition of oil sanctions on Venezuela will not impact their exports to the US ahead of the election. Bloomberg News reports they intend to reimpose oil sanctions on Venezuela, ending a six-month reprieve, if Nicolas Maduro’s regime does not take steps in the next two days to honor an agreement to allow a fairer vote in elections scheduled for July.
The US plans to allow a Treasury Department license permitting oil and gas production to expire without renewal on Thursday, according to people familiar with the plan, who asked not to be identified without permission to speak publicly if Venezuela fails to act. Sounds ominous but as oil analyst Anas Alhajji points out, the reimposition of sanctions will not cover Venezuela’s oil exports nor U.S. oil imports from Venezuela. So, while the Biden administration is trying to act tough protecting free and fair elections, they are more worried about the price of oil and diesel hurting their reelection chances.
In fact, John Kemp at Reuters pointed out that Brent crude oil calendar spreads have continued to soften as traders downgrade the probability the conflict between Iran and Israel will escalate to the point where it disrupts oil production and exports. The spread from June to December 2024 has fallen to its lowest for more than five weeks. Most of the softening has come in the nearest-to-deliver June-July and July-August spreads where most of the speculative money is concentrated and where the supply-demand balance would be impacted most immediately by any escalation that threatened oil production and exports from the Persian Gulf. Traders have concluded Iran will not risk any disruption of its exports; the United States will not risk higher oil prices in an election year; and the United States will restrain the next round of responses by Israel. Then again, if it does happen, well, stay tuned.
How about gasoline futures which in recent days has been surging also saw the bottom drop out after the Energy Information Agency {EIA) report. The market became concerned about the strength of the consumer after another week of subpar 8.862 million barrels a day demand. Even though it was stronger than the week before, the market is concerned that this summer driving season might not be getting off to a bang up start.
We did see a big rebound in U.S. oil exports that surged to a whooping 4.726 million barrels a day, that probably included some post Easter Holiday work. Then I would have to say that the report really wasn’t bearish. In fact, I would suggest you could even see green shoots in this report that would suggest more bullishness in the weeks to come. Yet when we lost the Fed put and with the market taking off some more premium, we started the see people’s online positions after they took out support.
According to the EIA, demand in the four-week moving average, which is really what you must keep an eye on, showed that based on total products supplied over the last four-week period averaged 19.8 million barrels a day, down by 0.2% from the same period last year. Over the past four weeks, motor gasoline products supplied averaged 8.8 million barrels a day, down by 1.9% from the same period last year. Distillate fuel product supplied averaged 3.5 million barrels a day over the past four weeks, down by 8.4% from the same period last year. Jet fuel product supplied was up 0.8% compared with the same four-week period last year.
EIA said supplies of U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.7 million barrels from the previous week. At 460.0 million barrels, putting U.S. crude oil inventories are about 1% below the five year average for this time of year. Total motor gasoline inventories decreased by 1.2 million barrels from last week and are about 4% below the five-year average for this time of year. Finished gasoline inventories increased, while blending components inventories decreased last week. Distillate fuel inventories decreased by 2.8 million barrels last week and are about 7% below the five-year average for this time of year.
After taking off support both oil and products are vulnerable from a price standpoint. There is still geopolitical risk in the marketplace even though it’s been downplayed in the short term. If the demand side of the equation bounces back just a little bit, we can see by the inventories that supplies will tighten significantly. And while right now we are vulnerable to see oil retest near $80.00 a barrel, we believe it would be prudent to put on some call positions on breaks.
Gas producers are praying that today’s natural gas inventory report will throw them a lifeline so they can survive another week. The U.S. likely saw a below-average build in natural gas inventories last week, lowering slightly the storage surplus as the injection season gets under way, according to a survey by The Wall Street Journal. Natural gas in underground storage is expected to have increased by 45 billion cubic feet to 2,328 Bcf as of April 12, according to the average estimate of nine traders, brokers and analysts. Estimates range from a storage increase of 39 Bcf to one of 51 Bcf.t Journal writes that “the EIA is scheduled to report last week’s storage levels on Thursday at 10:30 a.m. EDT. The projected rise is smaller than the five-year average injection for the week of 61 Bcf and would reduce the surplus from 633 Bcf the week before. The large surplus over the five-year average follows an unusually mild winter that limited inventory drawdowns. The U.S. Energy Information Administration estimates that natural gas in storage will end the injection season at a record 4,120 Bcf, or 10% above the five-year average.
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Natural Gas Volatility Decline Setting Stage for Pennant Breakout
By: Bruce Powers | April 17, 2024
• Natural gas is consolidating within a bear pennant pattern, with volatility declining as it trades inside a narrowing price range.
Natural gas further consolidates on Wednesday within a bear pennant pattern. It is on track to end the day as a relatively narrow inside day. Yesterday’s low of 1.65 approached a test of support at the lower trendline of a developing bear pennant consolidation pattern. This week’s decline has clarified that pattern as an attempt to hold support above the 50-Day MA and long-term trendline failed earlier this week.
Declining Volatility Likely to Continue
Volatility has been declining and it will likely continue to fall as natural gas further trades inside the small triangle pattern with a narrowing price range. The decline in volatility is also indicated by the three moving averages that have converged. The 8-Day, 20-Day, and 50-Day have come together.
What follows a period of low volatility is a clear increase in volatility. That will likely happen upon a breakout of the pennant. Natural gas remains in a clear downtrend and there was a relatively sharp decline prior to the pennant consolidation pattern. However, the downside may be limited.
29-Year Low is 1.44
In June 2020 a low of 1.44 was reached and price was quickly rejected to the upside. Natural gas traded below the prior support level of 1.52 for only one day before buyers took back control and the early stages of an advance began. That is the lowest price that natural gas has traded at in approximately 29 years. This means that 1.52 is a key low price to watch if a breakdown from the pennant occurs. Given the quick rebound off the 1.44 price level it seems unlikely that that price area will be tested again as support. Nevertheless, it is always a possibility.
Breakdown Signal
Until it is clear that Tuesday’s low of 1.65 is going to be a swing low, a breakdown is triggered on a drop below the earlier swing low at 1.59. It is confirmed on a daily close below that price level. Otherwise, support is likely to continue to be seen near the lower boundary line with trading contained within the pattern. Such a low volatility environment is likely to keep some traders on the sidelines until price breaks out.
Upside Trigger
Although the bear pennant is considered a trend continuation pattern, it is not valid until a breakout is triggered. Therefore, an eventual upside breakout remains a possibility. An upside breakout is triggered on a move above the recent swing high of 1.94. The next time that a bullish breakout could occur would be on the next rally towards the top of the pattern if it does occur.
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Crude Oil Continues to Bounce Around
By: Christopher Lewis | April 17, 2024
• Crude oil markets continue to bounce around in a consolidation area, as the market has a lot of external factors pressuring it.
WTI Crude Oil Technical Analysis
The West Texas Intermediate market fell significantly during the early hours on Wednesday, as it looks like we are going to give up quite a bit of momentum. The question, of course is this, has anything changed? Well, no, it hasn’t.
Ultimately, we are in the midst of consolidation and even if we do get some type of pullback, there are plenty of buyers underneath. The geopolitical situation alone dictates that we should probably have higher oil pricing. And at this point, I think each dip offers a short term buying opportunity.
That doesn’t necessarily mean that you get a huge position going, but I do think that we continue to go higher, not only due to geopolitics, but also the fact that the driving season is among us. There are threats of the Americans digging into the Strategic Petroleum Reserve, but quite frankly, President Biden emptied that last year, so it can only do so much.
Brent Crude Oil Technical Analysis
Brent markets also have fallen toward support but at this point I suspect that there’s probably some buying pressure just waiting to happen. $90 above continues to be an area of contention, and overall, this again is a buy on the dip market.
If you are cautious about your position size, you can get away with doing that because in the longer term the trend is more likely than not higher. That being said, keep in mind that crude oil is moving with the latest headlines coming out of Israel, Gaza, Iran, etc. So, with that being the case, you have to be cognizant of what’s going on in the news, and as things have calmed down a little bit, some of the risk premium might be taken out of the market. Nonetheless, this is still a very strong market and supply is going to be an issue.
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Crude Inventories Rise By 2.7 Million Barrels, Exceeding Analyst Expectations
By: Vladimir Zernov | April 17, 2024
Key Points:
• Strategic Petroleum Reserve increased from 364.2 million barrels to 364.9 million barrels.
• Domestic oil production remained unchanged at 13.1 million bpd.
• Oil prices are moving lower despite rising tensions in the Middle East.
On April 17, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories increased by 2.7 million barrels from the previous week, compared to analyst consensus of +1.6 million barrels. At current levels, crude inventories are about 1% below the five-year average for this time of the year.
Total motor gasoline inventories declined by 1.2 million barrels, while distillate fuel inventories decreased by 2.8 million barrels.
Crude oil imports averaged 6.5 million bpd, mostly unchanged from the previous week. Over the past four weeks, crude oil imports averaged 6.6 million bpd.
Strategic Petroleum Reserve increased from 364.2 million barrels to 364.9 million barrels as U.S. continued to buy oil for reserves despite rising oil prices.
Domestic oil production remained unchaged at 13.1 million bpd. Interestingly, U.S. oil producers are unable to raise production despite favorable market environment.
WTI oil pulled back towards the $84.00 level as traders focused on rising crude inventories. Today, traders will also stay focused on the situation in the Middle East. Israeli Prime Minister Benjamin Netanyahu has recently said that the country would make its own decisions on how to defend itself, raising worries about additional escalation. However, oil markets are moving lower, and traders bet that oil supplies would not be disrupted despite rising tensions between Israel and Iran.
Brent oil settled below the $89.50 level amid a broad pullback in the oil markets.
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Biden’s Oil World. The Energy Report
By: Phil Flynn | April 17, 2024
Wars, rumors of war, record deficits, raging inflation and threating more taxes and regulations on US energy as Iran’s Oil production is allowed to hit a 5 and a half year high and they secretly meet with the Maduro regime while having to decide this week as to whther or not to impose sanctions. And now with the supplies of aluminum platinum tightening ask the CME Group and the London metals exchange decides to not deal with the Russian supply the Biden administration is now suggesting tariffs on Chinese metals.
Oil prices are pulling back as Israel has yet to respond to Iran’s unprecedented attack and stubborn inflation has Jerome Powell said that “If price pressures persist, the Fed can keep rates steady for “as long as needed” and the Biden administration and White House senior adviser John Podesta hinted at another release from the Strategic Petroleum Reserve to try to ease rising gas prices and try to improve his boss’s political fortunes.
The Biden Administration has made no bones about it that the mission of the SPR not just to be used in an emergency but as a political piggy bank where he can use taxpayer paid for oil to improve his political fortunes. Kind of like defying the Constitution and the Supreme court to use your money to pay off some college loans. Yes, President Biden has done this before releasing oil from the SPR before he welcomed a ‘minor incursion” by Russia into Ukraine and before his failed policy of deterrence with sanctions on Russia.
This comes as the American Petroleum Institute released a report that shows that gasoline inventories are tightening as well as diesel but did see an increase in crude oil supply. API reported that gasoline supplies fell by 2.51 million barrels in the current week. AAA pots gas prices at $3.660 A gallon up from $3.644 yesterday and up from $3.461 a month ago, Year over year they are about a penny lower, and that was when the market was getting regular released from the SPR that could be exported to China and India and Europe. Yes, oil exports in the US did hit record highs as we drained our SPR.
So, it’s probably good news that the API reported that we saw crude inventories rise by 4.09 million barrels, but it is more than likely that that’s going to change as refiners have to ramp up production. Gasoline supplies are below normal and so we’re distilling inventories and they fell to 427,000 barrels. The smaller than expected 169,000 drawdown and Cushing OK may be a sign that the crude oil supply increases could be coming to an end and that may pressure the Biden team to use SPR oil once again in an attempt to keep down gasoline prices.
First behind the backdrop is the market waiting to see how Israel is going to respond to that unprecedented attack by Iran on its own soil it seems like Iran is taking steps because I think they are starting to realize that after their failed assault maybe they bit off a little bit more than they can chew. Today Iran is talking about letting in nuclear weapons inspectors from the International Atomic Energy agency which would be the first time this year.
Bloomberg reported that Rafael Mariano Grossi, director-general of the UN’s nuclear watchdog, will visit Iran “soon,” the head of the Atomic Energy Organization of Iran said on Wednesday, according to the state-run Hamshahri newspaper. Mohammad Eslami said the date of Grossi’s visit had not yet been decided, Hamshahri reported. He also said that International Atomic Energy Agency cameras were installed and “constantly monitoring” Iran’s nuclear facilities. Remember the AP reported that the head of the International Atomic Energy Agency said Wednesday that Iran’s decision in September to bar several experienced U.N. inspectors from monitoring the country’s nuclear program constituted “a very serious blow” to the agency’s ability to do its job “to the best possible level” last November.
And while traders may be selling futures at the same time, we’re seeing a record amount of call buying for just in case scenarios some of the calls amazingly enough our way out of the money $250 Brent crude calls. If you buy enough of those options and you’ll get a spike in the price of crude oil you don’t have to get anywhere near $200 a barrel to do very well on a very cheap investment still it’s a long shot but it’s interesting that some serious money is making that bet.
of course geopolitical events sometimes really put a different perspective on good old fashioned supply and demand fundamentals. Once we see a significant change in the economic outlook the global oil market is going to continue to be undersupplied for the rest of the year. Misuse of strategic petroleum reserves around the world have discourage investment along with ESG responsible for taking away much needed funds from fossil fuel investment and putting them into other types of things that will not be able to help the global economy in the short run so it’s no wonder that these losing ESG investments s that were based more in false virtue instead of common sense Have some investors fleeing the sector and droves.
The American Petroleum Institute also is warning that Bidens lessee ban on Federal land is going to be bad for US economy and taxpayers. The API says “As energy demand continues to grow, oil and natural gas development on federal lands will be foundational for maintaining energy security, powering our economy and supporting state and local conservation efforts. Overly burdensome land management regulations will put this critical energy supply at risk. We are reviewing the rule to ensure the Biden administration is upholding its responsibilities to the American taxpayers and promoting fair and consistent access to federal resources.”
They point out some of the benefits that we will forgo such as the fact that “In FY 2022, onshore federal oil and natural gas development supported nearly 250,000 jobs, generated $19.4 billion in labor income, and contributed $36.7 billion to GDP.
In FY 2022, oil production on federal lands averaged 1.2 million barrels per day and marketed natural gas production averaged over 9 billion cubic feet per day. Between FY 2013 and FY 2022, oil and natural gas production on federal lands generated a total of $35 billion in disbursement revenue from bonuses, rents, and royalties, averaging approximately $3.6 billion per year. 53% of this disbursement revenue, totaling more than $19 billion, went to the federal government or programs, while state and local governments received the remaining 47%, totaling $16 billion.
In FY 2022, federal oil and gas development in the five highest producing states supported more than 170,000 jobs and more than 75,500 jobs in other U.S. states mainly through the supply chain and other purchasing. New Mexico: 105,300 jobs/ Wyoming: 24,400 jobs/Colorado: 21,000 jobs/Utah: 11,200 jobs/North Dakota: 10,000 jobs.
I guess we all wonder why that the Biden Administration is not as tough in enforcing Iranian sanctions and sanctions on Venezuela.
Who winters over winter is not over until we say it is. OK maybe that’s a little bit strong but we did get a little bit of a rebound in the beleaguered natural gas market after a report that we could get a may freeze. This is why here in Wisconsin you better not plant those flowers until Mother’s Day. Yet the overall outlook for natural gas continues to be bleak. EBW Analytics says that The mini rally in the May contract crashed lower last week as daily heating demand collapsed and acute weakness in LNG exports emerged alongside a bearish EIA storage surprise. Henry Hub prices in the $1.30s/MMBtu remain an alarming bearish warning sign of downside risks ahead of May expiration.
Acute weakness in LNG feedgas demand collapsing sub-10 Bcf/d represents near-term risks, although a probable rebound higher could help stabilize prices.
Natural gas production scrapes continue to descend more rapidly than projected, offering bullish upside into summer. Still, weak EIA storage figures pose a risk that imprecise pipeline scrapes may overstate supply losses. Near-term difficulties in sustainably lowering the storage surplus indicate likely continued weakness for near-term NYMEX futures. As weather headwinds ebb and storage surpluses decline into summer, however, natural gas may rise.
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$Oil $WTIC #Energy -Revisiting this 'Bowl' we see it has kept to the script, albeit with slight adjustment
By: Sahara | April 16, 2024
• $Oil $WTIC #Energy -Revisiting this 'Bowl' we see it has kept to the script, albeit with slight adjustment.
We can also see the reason for the hesitation (Shaded Res-Band)...
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Buying Rumors. The Energy Report
By: Phil Flynn | April 16, 2024
Global oil prices went through the ‘buy the rumor sell the fact’ on the Iranian attack on Israel and now are still waiting to see what Israel’s response will be. Reports by the Israeli Defense Minister Yoav Gallant said that Israel would have no choice but to retaliate and reports that the ground invasion in Rafah southern Gaza will be put off until the Iranian response happens. This raises more questions than answers. Iran’s attack on Israel seems to have given Israel surges in international support even by Arab nations that are tired of Iran’s goal to disrupt peace in the region.
Iran is the driving the force between Hezbollah, Hamas and the Houthi rebels that have basically destabilized the region and caused war and turmoil for almost every country in the world. It also clear that the failure to enforce sanctions on Iran has allowed Iran to raise oil output to a 5 and a half year high and the billions of dollars they are reaping for this has gone to fund terror and bloodshed. Now after the attack, many countries are urging Israeli restraint on its response to Iran but secretly behind the scenes, they would love nothing better than to see the Iranian regime fall because of all the havoc that they’ve been causing. Oil prices have sold off because of the expectation that Israel will be measured in the response and is putting pressure on prices, but it may not be long before we start buying the rumor of an attack once again.
Zero Hedge reports that new statements from the Pentagon issued Monday have said the Houthis fired over 90 ballistic missiles and drones – most of which were intercepted by US and allied forces over the past 48 hours, once the Iranian attack kicked off in the overnight hours of Saturday. US Central Command described that at one point during the attack the Houthis fired an anti-ship ballistic missile directly against US Navy and commercial ships in the Gulf of Aden. “There were no injuries or damage reported by US, coalition, or commercial ships,” CENTCOM said.
Oil prices seem to be getting mixed emotions from Chinese economic data. The gross domestic product seems to be better than expected but the report on consumer demand seemed to be disappointing especially because of past reports that over the Chinese holiday domestic demand was at pre COVID levels.
Domestic oil production also increased but make no mistake about it, they’re still going to need a lot of oil from other places. The Wall Street Journal wrote, “With familiar signs of weakness in consumption and real estate in the first three months of the year, many economists say Beijing still isn’t doing enough to support Chinese households and nurture a more balanced recovery. And the loss of some momentum in March compared with the preceding two months reinforced expectations that further stimulus will be needed to ensure that the government meets its growth target of around 5% for the year. China said its economy grew 5.3% in the first quarter compared with the same three months a year earlier, a faster pace than the 5.2% year-over-year growth rate that the country notched in the final quarter of 2023, China’s National Bureau of Statistics said Tuesday. The pickup was propelled by a rise in industrial production and swelling investment in factories. After a challenging few year, Chinese officials are steering activity and investment toward manufacturing and exports to compensate for domestic consumers’ reluctance to spend and a continuing crunch in the property market.”
It is very powerful that yesterday sell off oil price low set the low for the week. We expect modest drawdowns in crude oil and products and today’s American Petroleum Institute report and we expect to see an uptick in demand after the drop in demand that we saw over the Easter holiday weekend. I expect that the exports for oil and gasoline will rebound, and we should see an uptick in gasoline demand as well and with the ongoing risk to supplies, it’s unlikely that the market is at a point where it will collapse.
Reuter reports that – Russia has been able to swiftly repair some of key oil refineries hit by Ukrainian drones, reducing capacity idled by the attacks to about 10% from almost 14% at the end of March, Reuters calculations showed. Ukraine stepped up drone attacks on Russian energy infrastructure since the start of the year, hitting some major oil refineries across the world’s second largest oil exporter in attacks that sent up oil prices.
Natural gas cash prices are falling once again and even with the drop in US natural gas, rigs production may not be falling quite fast enough. Yahoo finance writes, “the bearish sentiment surrounding the commodity even prompted shale producers Chesapeake Energy CHK and EQT Corporation EQT to hit the brakes on new drilling. Chesapeake announced a reduction in its drilling rigs so as to lower volume. The company has decided to cut this year’s gas production expectations by around 20%. Chesapeake’s plans rippled through the market, with Appalachian Basin-focused EQT following on. The explorer and producer of natural gas said that it will lower its daily output by 1 Bcf to combat the supply glut in the U.S. market. According to EQT, the revised plan will likely reduce net production by 30-40 Bcf. While these production cut announcements temporarily drove natural gas prices higher, they have failed to galvanize the market.”
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Natural Gas Price Forecast: Breaks Support, Eyes Lower Price Levels
By: Bruce Powers | April 15, 2024
• Recent attempts to strengthen natural gas prices have failed, confirming the presence of downward pressure.
The bearish correction in natural gas continued Monday with a drop below support of both the downtrend line and 20-Day MA. Selling accelerated following the breakdown, with natural gas still trading near the lows of the day and creeping lower at the time of this writing.
Today’s price action sets the stage for a test of the bottom boundary line (purple) of a small symmetrical triangle consolidation pattern or bear pennant. The line would be around 1.63 if reached today. Given the rising slope, the line will represent a higher price level going forward.
Recent Signs of Strength Hit with Resistance
Recent attempts to strengthen the price of natural gas have been met with failures. Last week’s swing high of 1.94 completed a lower swing high, relative to the higher March 1 swing high. Further, recent strength was met resistance below lower blue dashed parallel channel line. In other words, the dashed line represents potential resistance, and evidence for resistance was seen. Such behavior reflects continued downward pressure on the price of natural gas, which was confirmed with today’s breakdown.
Moving Average Support Zone Fails
Notice that the downtrend line, orange 50-Day MA, and purple 20-Day MA had all converged around the same potential support zone. There was a clear chance for the zone to reject price to the upside and it has failed to materialize. Instead, a bearish breakdown has been triggered, putting short-term price action in alignment with the larger bearish trend. A breakdown from consolidation is first indicated on a drop below the lower boundary line, but more so on a decline below the most recent swing low at 1.59.
Range Bound Until Pennant Breakout
Regardless of the bearish nature of the pennant pattern, it won’t matter much until there is a breakout of the pattern. Choppy range bound trading is likely for the time being if the pennant continues to evolve. Certainly, the pattern could evolve for a while longer with trading contained within its boundaries. Therefore, a bounce off the lower boundary line could eventually lead to a test of resistance at the top line of the pattern. At that point, a bullish reversal may also be a possibility. Given recent history, an upside breakout would be triggered on a rally above the most recent seeing high at 1.94.
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Natural Gas Traders Seek Support Base Amidst High Storage Levels
By: James Hyerczyk | April 15, 2024
U.S. Natural Gas Market Analysis
U.S. natural gas futures are slightly down as traders seek to establish a support base. Despite an attempted breakout above the 50-day moving average last week, factors such as favorable weather, low LNG demand, and significant storage builds have stalled upward trends.
At 12:27 GMT, Natural Gas Futures are trading $1.735, down $0.035 or -1.98%.
Market Trends and Influences
The market reacted sharply to last Thursday’s EIA report, which recorded a storage build exceeding expectations by more than 10 Bcf, causing a drop in prices. The weather forecast predicts mild conditions with temperatures ranging from 50s to 80s Fahrenheit across the U.S., suggesting continued light demand for the next week.
Storage and Production Trends
End-of-season reports show U.S. natural gas inventories 39% above the five-year average, with a surplus driven by a mild winter and reduced residential and commercial consumption. This surplus has pressured prices, with Henry Hub averaging less than $2.00 per MMBtu recently. Projected natural gas production for the upcoming months shows a slight decline from the previous year.
Global LNG Exports
Globally, U.S. LNG exports are expected to rise modestly in 2024, with significant project completions poised to boost supply by year-end. Meanwhile, Asian LNG prices have climbed, supported by steady demand and supply disruptions, potentially redirecting U.S. LNG from Europe to Asia due to favorable price arbitrage.
Short-Term Market Forecast
The market’s short-term outlook remains cautiously bearish due to high storage levels and anticipated mild demand. However, potential reductions in production or increased demand for electricity generation during a hotter summer could tighten the market and support a price rebound. Traders should closely monitor updates on production and consumption trends, which will be key in shaping the market’s near-term direction.
Technical Analysis
Daily Natural Gas
U.S. natural gas futures are under pressure on Monday, while hovering just above a multi-year low. Meanwhile, the 50-day moving average continues to trend lower.
This intermediate trend indicator at $1.936 is controlling the near-term direction of the market. A sustained move under this indicator is expected to keep the pressure on prices. However, some also view it as a potential trigger point for an upside breakout.
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Its Not Over Yet - Iran v Israel & Crude Oil
By: Marty Armstrong | April 13, 2024
Although the week of 04/08 produced the intraday high, it closed lower than the previous week. Support lies at the 8320 area, and if that is breached, we could see a decline into the week of May 6th, when we also have a Directional Change. A low then would appear to be setting the stage for a rally after that into July...
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 13, 2024
• Following futures positions of non-commercials are as of April 9, 2024.
After 4 consecutive up weeks, West Texas Intermediate crude dropped 1.4 percent this week, forming a weekly spinning top. Friday was a huge reversal session, with the intraday high of $87.67 drawing sellers near prior Friday’s spinning top high of $87.63 and reversing to end the session at $85.66/ barrel.
There is horizontal resistance at $88. The crude has come a long way from last December’s bottom at $67.71.
On its way to the recent highs, WTI went back and forth between $71-$72 and $81-$82 for a year and a half before pushing through the upper end two weeks ago. At this stage, a successful breakout retest will be a welcome development for the bulls.
In the meantime, as per the EIA, US crude production in the week to April 5th was unchanged for five consecutive weeks at 13.1 million barrels per day; seven weeks ago, output was at a record 13.3 mb/d. Crude imports decreased 184,000 b/d to 6.4 mb/d. Stocks of crude, gasoline, and distillates all rose – respectively up 5.8 million barrels, 715,000 barrels and 1.7 million barrels to 457.3 million barrels, 228.5 million barrels and 117.7 million barrels. Refinery utilization dropped three-tenths of a percentage point to 88.3 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | April 13, 2024
NY Crude Oil Futures closed today at 8566 and is trading up about 19% for the year from last year's settlement of 7165. Caution is required for this market is starting to suggest it may now decline on the MONTHLY level. Up to this moment in time, this market has been rising for 3 months going into April reflecting that this has been only still, a bullish reactionary trend. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 8767 while it has not broken last month's low so far of 7679. Nevertheless, this market is still trading above last month's high of 8321.
Up to now, we still have only a 3 month reaction rally from the low established during December 2023. We must exceed the 3 month mark in order to imply that a trend is developing.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
From a perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 8509 and overhead resistance forming above at 8698. The market is trading closer to the support level at this time.
On the weekly level, the last important high was established the week of April 8th at 8767, which was up 17 weeks from the low made back during the week of December 11th. So far, this week is trading within last week's range of 8767 to 8455. Nevertheless, the market is still trading downward more toward support than resistance. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8767 made 0 week ago. Still, this market is within our trading envelope which spans between 6533 and 9317. The broader perspective, this current rally into the week of April 8th reaching 8767 has exceeded the previous high of 7960 made back during the week of November 27th.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend. Looking at this from a wider perspective, this market has been trading up for the past 17 weeks which from a timing perspective warrants concern.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in April, this market has held above last month's low of 7679 reaching 7679.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
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Natural Gas Testing Support Amidst Low Volatility
By: Bruce Powers | April 12, 2024
• Natural gas is testing support around the downtrend line and 20-Day MA. Signs of strength are crucial if the rally off trend lows has a chance to continue.
Natural gas dipped briefly below the minor 1.75 swing low from Monday before finding support at 1.73 and stalling the descent. Volatility diminished as it is on track to complete a narrow range day while further testing support around the long-term downtrend line and 20-Day MA, now at 1.76. If natural gas can advance above today’s high of 1.785 heading into next it has a chance to progress the near-term uptrend that starts from the higher swing low and potential second bottom (C).
Drop Below Today’s Low Points to Lower Triangle Line
However, a drop below today’s low without a quick recovery increases the chance that natural gas will further trace out a developing symmetrical triangle (purple). A drop below today’s low increases the chance of a test of support at the lower boundary line of the triangle. Recent minor signs of strength seen recently as natural gas recaptured both the 20-Day and 50-Day MAs would then be negated.
Rally Above 1.785 Would Be First Sign of Strengthening
Nevertheless, if natural gas can continue to find support around the downtrend line and 20-Day MA, followed by signs of strength, it will likely have completed a minor pullback. The chance for an eventual bull trend continuation will then become more likely. A rally above today’s high of 1.785 will provide an initial signal, but upside follow through will be key as to whether it can keep rising from there.
Weekly Chart Analysis
On a weekly basis, natural gas is on track to close weak, in the lower third of the week’s range and possibly with a doji. The weekly candle will be bearish unless natural gas can rise before today’s close. Last week also ended relatively weak. This week will be the second in a row where natural gas is closing in the lower area of the week’s range. In both cases support for the week was seen in the 8-Week MA.
Natural gas has been mostly below the 8-Week line since early-January. So, a successful test of support at the 8-Week line is one sign of strength. Regardless, the weekly performance did not confirm strength since this week and last week ended (likely) in the lower part of the range. Therefore, a drop below today’s low would also give a weekly bearish signal relative to this week’s low and the 8-Week MA.
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$WTIC $OIL - Held its Daily 11/EMA (Ivory). And now pushing up from a Bull 'Pennant'...
By: Sahara | April 12, 2024
• $WTIC $OIL - Held its Daily 11/EMA (Ivory).
And now pushing up from a Bull 'Pennant'...
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Natural Gas Testing Support Amidst Consolidation
By: Bruce Powers | April 11, 2024
• Natural gas prices test support at 20-day MA, poised for bullish reversal or failure to lower prices.
Natural gas retreats further from Wednesday’s 1.94 high on Thursday as it tests support around the 20-day MA with the day’s low of 1.77. The 20-Day line is at 1.76 and it is strengthened by the long-term downtrend line, which marks the same price area. Notice that the 20-Day line and trendline have joined together. This should lead to a rejection of price to the upside, but there are no signs of it yet.
Moving Averages Show Improving Strength
Natural gas rallied back above the 20-Day line on April 1, and there was one subsequent successful test of support at the 20-Day MA. Today provides the second such test. A bounce and bullish reversal off the 1.76 price zone should complete the test and clear the way for natural gas to continue to advance. Over the past week the 8-Day MA has risen back above both the 20-Day and 50-Day MAs. And there was recently a higher swing low (C), reflecting improving demand.
Further Consolidation Possible Until Clear Breakout
Nevertheless, there is also a possibility that natural gas traces out a consolidation pattern. A bearish pennant or symmetrical triangle is the form now taking shape. It remains valid until there is an upside breakout above Wednesday’s high of 1.87. A drop below Monday’s low of 1.75 will increase the likelihood that consolidation may continue.
Rise Above 1.89 Shows Strength
Near-term resistance is now at today’s high of 1.89. A breakout above that high will provide the next sign of strength that could lead to a breakout above Wednesday’s high of 1.94. Once there is a daily close above that level natural gas should be ready to progress higher. The neckline for a potential double bottom bullish pattern is at 2.01 (B), with the first higher target zone around 2.06 to 2.08. Other target areas of interest are marked on the chart.
Weekly Chart, Bullish Signs
The weekly chart (not shown) is not a screaming buy, but it does show bullish progression. Last week’s close was relatively weak as it was in the lower half of the week’s trading range. Further, this week’s performance is also at risk of closing in the lower half of the week’s range. At the same time, this week’s low and last week’s both found support around the 8-Week MA, now at 1.73.
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Weighty Decisions. The Energy Report
By: Phil Flynn | April 11, 2024
Global oil markets must decide whether they are more worried about inflation or global conflict. Oil prices fluctuated on the prospect of a widening war with new potential battlefronts in the Middle East, the ongoing war between Russia and Ukraine and surging inflation that could delay or indefinitely postpone interest rate cuts. monitoring amid ongoing uncertainties to ensure a sound and sustainable oil market balance they also are keeping their demand growth forecast for 2024 at a very impressive 2.25 million barrels a day, The stakes are getting higher every day with lives, and sacred fortunes on the line.
The Consumer Price Index was a blow to those sacred fortunes and those trying to live paycheck to paycheck or those migrant debit cards. The consumer-price index, a measure of goods and services prices across the economy, rose 3.5% in March from a year earlier, the Labor Department said Wednesday. That was a touch higher than economists had forecasted and a pickup from February’s 3.2%. The so-called core prices, which exclude volatile food and energy categories, also rose more than expected on a monthly and annual basis according to the Wall Street Journal.
That hot inflation report took the odds of a June rate cut from better than 50% down to the low 20s. The reason for this hot inflation number is very simply corporate greed. How do I know that? Very Simply, Joe Biden said so. Biden urged, “corporations including grocery retailers to use record profits to reduce prices.” As corporations should know that they should be beholden to the Biden administration and not their shareholders. That is why he wants to tax them more so he can use that money to win favor with a student who can’t or refuse to pay back their loans or others that he thinks might vote democrat. So, don’t you listen to all the economists who try to tell you that inflation is caused by the government printing too much money or running up massive historic debt levels because Biden knows better? It seems that based on when Biden got elected it brought in a new era of greed! When President Trump was in office, corporations were not greedy because inflation was at historically low levels.
Of course, you can whine about not having enough money to buy groceries or fill your gas tank or weighty decisions about what you have to put back on the shelf that was in your grocery cart but that is because you don’t understand how good you have it under Biden. Remember he called out those companies that makes your potato chip bag smaller. Maybe that’ll make your waistline shrink a little too! So, to think you’re not better off just because your monthly bills are well above your wage increases, it is just because you have been psychologically damaged. Most likely due to climate change fears. And we all know that was President Donald Trump’s fault.
Even after the hot inflation number, oil tried to hold its ground even with an Energy Information Administration (EIA) report that was bearish on the surface. Yet thoughts about inflation or the volatility of the Weekly EIA were put aside on reports that an attack on Israel by Iranian proxies was imminent according to the United States. Reuters wrote that, “Oil prices settled up $1 on Wednesday after three sons of a Hamas leader were killed in an Israeli airstrike in the Gaza Strip, feeding worries that ceasefire talks might stall.”
The market had other concerns as to whether or not the United States would back Israel in a confrontation with Iran. Some people are suggesting that the Biden administration is emboldening Iran because there is this perception that the United States will not stand with Israel if Iran attacks. The flip side of that is the Biden administration seems to be walking a fine line between saying that they will defend Israel but at the same time trying to appease their base suggesting that they might not if they don’t approve a ceasefire in the Gaza Strip.
Israeli Prime Minister Netanyahu is saying that, “we are preparing for scenarios and challenges from other fields in other words getting ready to fight a war on many fronts. This comes as the Iranian Revolutionary Guard is bragging that they could shut down the Strait of Hormuz, the world’s most important oil chokepoint. This comes as Iranian-backed Houthi rebels are already causing havoc in the Red Sea transit routes. The attempt to shut these oil flows down could lead to an incredible price spike.
While the global oil price spreads are pricing in a very undersupplied market, the EIA is giving us a little reprieve in a weekly report that may be exaggerated due to the Easter Holiday. The EIA reported that oil supplies increased by a surprising 6.4 million barrels as U.S. oil exports plummeted to 2,708 million barrels a day from 4,022 million barrels a day in the holiday-shortened week. Week-over-week drops and demand was likely impacted by the holiday. Total Petroleum demand fell from 9,236 million barrels a day to 21,292 million barrels a day a drop of 2,056 Million barrels a day
Now overnight oil prices are pulling back as well as products as the imminent talk of a threat of an attack haven’t happened just yet. Traders may also be booking profits ahead of the producer price index which if it comes in hotter like the CPI did, it could cause the dollar to rally and put downward pressure on prices. I guess we have to wait to see how greedy corporate America is gonna be this week.
Today we get the natural gas inventories we’re looking for a small injection in the supply of about 11 to 14 BCF. The market does look like it’s trying to bottom here and it still is facing some incredible headwinds but production is starting to taper off.
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Natural Gas Hits New Trend High and Pulls Back
By: Bruce Powers | April 10, 2024
• Natural gas triggered a new trend high today but could got turned around after encountering resistance at 1.94.
Natural gas continued its advance on Wednesday with a new minor trend high of 1.94. Although Tuesday’s closing price relative to the day’s range was not particularly strong, it did manage to close at its highest daily closing price in 23 trading days. Today’s advance was hit with selling pressure once the 1.94 high was reached. At the time of this writing natural gas is trading near the lows of the day and set to close relatively weak, in the lower quarter of the day’s range.
New Bullish Indications
Nonetheless, there are recent bullish indications showing underlying strength in the price of natural gas. The blue 8-Day MA has crossed up above the orange 50-Day and prior peak of the current short-term uptrend was exceeded yesterday. In addition, natural gas is holding above the 50-Day MA and above the long-term downtrend line. Support around the 50-Day line, currently at 1.80, should maintain support during weakness for recent bullish indications to remain valid.
Support Levels
The downtrend line can be priced currently because it has converged with the purple 20-Day moving average, now at 1.76. That is a more critical price area where support should be seen for the near-term bullish outlook to be retained. Given the potential for a weak close today, there is a possibility a pullback towards support may have already begone. However, it seems likely that it should be short lived if the growing bullish sentiment is to remain in charge.
Buyers Back in Charge Above 1.94
Further strength is signaled on a breakout above today’s high of 1.94. There is an initial target zone highlighted on the chart from 2.06 to 2.08. That price zone marks the completion of two rising ABCD patterns. The larger pattern is shown in green and labeled, while the smaller pattern is not labeled and starts from the most recent swing low at (C). Having such a fractal relationship between the two pieces of the developing uptrend should increase the chance for the targets to be reached. Also, a breakout above that price zone should also be met with enthusiasm from buyers.
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Crude Inventories Increased By 5.8 Million Barrels, Exceeding Analyst Expectations
By: Vladimir Zernov | April 10, 2024
Key Points:
• Gasoline inventories increased by 0.7 million barrels.
• Distillate fuel inventories grew by 1.7 million barrels.
• Strategic Petroleum Reserve increased from 363.6 million to 364.2 million.
On April 10, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories increased by 5.8 million barrels from the previous week, compared to analyst consensus of +2.37 million barrels. At current levels, crude inventories are about 2% below the five-year average for this time of the year.
Total motor gasoline inventories grew by 0.7 million barrels from the previous week, while analysts expected that they would decline by 1.32 million barrels. Distillate fuel inventories increased by 1.7 million barrels.
Crude oil imports averaged 6.4 million bpd, declining by 183,000 bpd from the previous week. Crude oil imports were slighly lower than the four-week average of 6.5 million bpd.
Strategic Petroleum Reserve increased from 363.8 million to 364.2 million as U.S. continued to buy oil for strategic reserves.
Domestic oil production remained unchanged at 13.1 million bpd despite high oil prices. At this point, it looks that WTI oil must settle above the $90.00 level to boost domestic oil production.
WTI oil settled in the $85.00 – $85.50 range as traders reacted to the EIA report. Crude inventories exceeded analyst expectations, which is bearish for oil markets. However, domestic oil production does not grow despite rising oil prices, which is a bullish factor for oil.
Brent oil moved closer to the $90.00 level as traders focused on rising crude inventories. It should be noted that oil is trading with a geopolitical premium, but serious risks for oil supply routes have not materialized yet.
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$WTIC $OIL - Made an attempt to pop the Dn/Trend Channel but for now just considered a 'Cut' of the Uppr-Parallel. Will need to be more convincing...
By: Sahara | April 10, 2024
• $WTIC $OIL - Made an attempt to pop the Dn/Trend Channel but for now just considered a 'Cut' of the Uppr-Parallel. Will need to be more convincing...
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War Torn Super Cycle. The Energy Report
By: Phil Flynn | April 10, 2024
The Commodity Supercycle that seemed dormant late last year has awakened, incredibly. While many thought that the cycle had passed, it is clear now that price respite was just the eye of the commodity prices super cycle hurricane. The historic record-breaking price surge that we have seen in cocoa may be a preview of what we may see in other commodities where it appears demand will outstrip supply. Commodities like copper, silver, platinum, palladium, and of course the world’s black gold, oil that Texas tea, are headed for supply squeezes unlike anything we have seen since the 1970s and it did not happen overnight. It happened while the world was sleeping.
Underinvestment in fossil fuels as well as a hostile regulatory environment, means global oil supplies are going to be short. Even the Energy Information Administration in their recent short-term energy outlook not only had to raise the oil prices but also had to adjust their downward projections of future demand in an attempt to perhaps justify their previous massive adjustments to their numbers. In other words, the EIA had to raise their demand forecasts before they could lower it. The EIA raised their forecast of WTI crude prices to average $83.78/ barrel(bbl) in 2024, versus an earlier forecast of $82.15/bbl. The EIA also raised its Brent Crude prices to an average of $86.98/bbl in 2025, versus an earlier forecast of $84.80/bbl. Yet it was demand where they had to raise the river instead of lowering the bridge to make their forecast jive.
Or as the EIA put it, “This month we revised the 2022 global liquid fuels consumption data available in our International Energy Statistics, increasing our assessment of global oil consumption that year by nearly 0.8 million barrels per day (b/d) compared to last month’s STEO. The historical data serves as a baseline for our short-term forecasts, affecting our view of energy markets this year and next. This month’s revision to historic data, as well as current market dynamics, led us to increase our forecasts for global oil consumption.” Yet if you want to be confused, then they go on to say that after the adjustment the EIA cuts forecast for 2024 world oil demand growth by 480,000 bpd, now sees 0.95 mln bpd year-on-year increase. And cuts forecast for 2025 world oil demand growth by 30,000 bpd, now sees 1.35 mln bpd year on year increase.” Are they trying to hide their meaning here?
What they won’t be able to hide is rising gasoline prices. The EIA raised its forecast for retail gasoline prices in 2024 to $3.59 a gallon, versus an earlier forecast of $3.48 a gallon.
Yesterday the market was reluctant to move higher as it tried to digest headlines surrounding geopolitical risk that could have major implications for the price of oil and the potential movement for oil. Last week oil put in a lot of risk premium on the expectations that Iran would respond directly against Israel after the attack on its compound in Lebanon. Yesterday there was an unconfirmed report that an Iranian envoy was en route to the United States for some talks to avoid a conflict and made the rounds even though the story wasn’t confirmed.
Another headline that took out some more premium was the report that the US Defense Secretary heard from Israel that there is no set date for its invasion of Rafah, raising hopes that there could be some hope for a ceasefire even if a ceasefire talks broke down. That was after Prime Minister Benjamin Netanyahu said Monday that he has set a date for the IDF to launch its much-anticipated offensive in the southern Gaza city of Rafah. All of this is happening and swaying the market.
Now the American Petroleum Institute (API)report seemed to suggest that supplies from the seasonal viewpoint are very tight but based on weekly numbers are less than inspiring to the bullish side of the market.
The API reported the crude supplies increased by 3.034 million barrels which was more than the market had anticipated but from a seasonal viewpoint smaller than most builds at this time of year. Gasoline inventories fell by 609,000 barrels and distillates rose by 120,000 barrels which wasn’t that inspiring to either the bulls or the bear. The products have been under pressure. This week’s report, if confirmed today by the Energy Information Administration report, could give us the bottom for the products.
Yet what may be important to the oil and product traders today will be the consumer price index. The market fixation on whether or not the Federal Reserve is going to have the ability to cut interest rates as inflation continues to be strong is the question on most traders minds. The key thing here is that even if the Federal Reserve has to backtrack on a rate cutting, the reality is it won’t impact oil demand quickly enough to save the market from a supply squeeze.
What we expect is that oil will react to a hot or cold report in the long run. It’ll be the supply deficit that will keep support under this market. Remember all that talk about peak oil supply and then the switch over to peak oil demand? Well apparently in the big picture neither one of those predictions is correct. There is a new report by Enverus Intelligence Research that expects global oil demand will grow by 108 million barrels a day by 2030 and will not see peak demand at the end of the decade. The quiet little secret known by many people in the oil industry is simply this: the predictions of peak oil demand were greatly exaggerated.
Speaking about being greatly exaggerated, did you know that Treasury Secretary Janet Yellen is trying to tell people that she believes that the Russian price caps worked? I’m not kidding you. My good friend and noted oil analyst Anas Alhajji said, “Yellen’s price caps on Russian oil are a joke and have no impact. Attacks on Russian refineries meant more crude to export. Here is what Argus wrote today: “Russian crude production rose by 30,000 b/d to 9.44mn b/d, just 10,000 b/d shy of its target. Drone attacks have damaged over 800,000 b/d of Russian refining capacity in recent months, freeing up more crude for export — shipments hit an 11-month high in March.” Take that, Vladimir. Now let’s talk about those so-called sanctions on Iran that have given them billions of dollars. Never mind…I am running out of time.
Let’s move on to natural gas quickly. Reports that Freeport is going to get back online a month earlier than expected and more capacity coming online for LNG exports is giving us a ray of hope that maybe the bottom is in for natural gas. What’s interesting to note is the Energy Information Administration pointed out that for the first time in history, the cost of natural gas is lower than coal. This should be incredible news for people who are concerned about greenhouse gas emissions. The United States is the biggest producer of natural gas and we can change the world by providing cheap natural gas to replace coal plants thereby reducing greenhouse gas emissions. Incredibly this comes even as the Biden administration plays politics with projects surrounding LNG exports.
In yesterday’s Short-Term Energy Outlook, the EIA reported that, “The U.S. winter natural gas withdrawal season ended with 39% more natural gas in storage compared with the five-year average. From April through October this year, EIA forecast less natural gas will be injected into storage than is typical, largely because we expect the United States will produce less natural gas on average in 2Q24 and 3Q24 compared with 1Q24. Despite lower production, EIA still expects the United States will have the most natural gas in storage on record when the winter withdrawal season begins in November. As a result of high inventories, we expect the Henry Hub spot price to average less than $2.00 per million British thermal units (MMBtu) in 2Q24 before increasing slightly in 3Q24. EIA forecast for all of 2024 averages about $2.20/MMBtu.
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Natural Gas Moving Average Breakout Improves Bullish Outlook
By: Bruce Powers | April 9, 2024
• Natural gas showed strength by closing above its 50-Day MA, signaling potential demand increase.
Natural gas closed above its 50-Day MA for the first time since mid-January on Monday. That is a sign of strength that should see demand increase in the coming days. A teaser occurred today as natural gas rallied above the recent 1.91 minor swing high before encountering resistance at the day’s high of 1.92. An intraday selloff followed back to the lows of the day. Where it closes relative to the day’s range should provide a clue as to current sentiment.
Advance Continues Following 50-Day MA Breakout
There was minor confirmation of strength since the breakout above the 50-Day MA, as the 8-Day MA crossed above the 50-Day today for the first time since mid-January, today. Also, yesterday the 20-Day MA was successfully tested as support for the first time since the price of natural gas rallied back above the 20-Day line on April 1.
That cleared the way for further strengthening, which we saw yesterday and then again today. What happens next will be key though as a failed breakout is always possible. A second daily close above the 50-Day line today would dampen that possibility. Then, we need to see signs of further strengthening if natural gas is going to have a chance at reaching higher targets.
Potential Double Bottom Setup
A rally above the 2.01 (B) swing high will trigger a breakout of a double bottom bullish reversal pattern and a continuation of the current developing uptrend. At that point there would be a higher swing high that would follow the recent higher swing low (C). The first identified target from current levels is the completion of a small rising ABCD pattern at 2.08.
At that price the CD leg of the advance will match the price appreciation seen in the first leg up, marked A to B. Once there is price symmetry a potential resistance zone has been reached. There are also interim price targets on the way up to the double bottom target of 2.50.
Higher Targets
The consolidation high following the large gap down in late-January is at 2.17. However, the more notable 38.2% Fibonacci retracement level is at 2.24. That price level takes on a somewhat greater significance since it is also match with prior support at the December swing low.
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Control Freak Out. The Energy Report
By: Phil Flynn | April 9, 2024
Oil is on the rise as the headlines blast that the oil market is going to get extremely tight in the second half of the year and that OPEC has regained control of the oil market. These headlines are correct, and it is something we predicted would happen oh so long ago. These are predictions by Citadel and are being echoed by other people in the market who must face up to the fact that global demand is exceeding daily production and could by a wide margin by the end of the year. Vitol is predicting oil averages between $80 and $100 a barrel because of what they call a restrained market. The CEO of Vital, Russell Hardy, says that oil demand growth is expected to be at 1.9 mbpd this year. Also, Reuters is reporting that Mexico is cutting oil exports by at least 330,000 barrels per day in May.
Oil prices are surging after Hamas predictably rejected the terms of the ceasefire and Israeli Prime Minister Benjamin Netanyahu on Monday said Israel will be moving forward with a planned attack on the city of Rafah in the Gaza Strip. This comes as the Iranian foreign minister continues to blame the United States for approving Israel’s attack on its consulate in Syria. The attack that killed 2 Iranian generals may be a reason why Iran may still respond. Yet Iran has failed to do so, so far. Perhaps they are worried about sparking a direct conflict with Iran or the United States.
Global demand is exceeding supply as China’s manufacturing sector surges. Their domestic demand hit the highest level since pre-COVID. S&P Global reported overnight that China’s independent refineries ramped up feedstock imports by 13.3% on the month to a seven-month high of 17.4 million mt (127.54 million barrels) in March, the highest since August when it was at 18.23 million mt, S&P Global Commodity Insights data showed April 9.
The supply squeeze is on and the bearish arguments that we would not consume as much oil because we were heading into a recession or that Chinese demand was near record high would peak were incorrect.
They also said that US energy producers would continue to find ways to increase output to meet global demand would continue to happen even with the most hostile fossil fuel administration in the nation’s history. Sadly, Americans pulling up to the pump are finding out that this was not the case.
JP Morgan is reporting that U.S. oil production is starting to fall to 12.32 million barrels a day over the past week that’s down from 12.71 million barrels the prior week. Industry insiders are now saying that because of increased regulatory burdens and the lack of capital, the US energy production is going to plateau. Sufficient reasons suggested that the cancellation of the Keystone XL pipeline and drilling moratoriums, and threats of more regulations would stymie US output and cede control of the global oil market back to OPEC over the US was bound to happen.
Now there is a Washington Post article, you know that paper where their mission is to let Democracy Die In Darkness that says, “The EPA Mulls Tougher Limits On New Gas Plants As 2024 Election Nears. “The Post says, “The reconsideration comes after the Biden administration has backpedaled on other proposed climate regulations.” Yes, the ridiculous proposals were based on data that showed it cost a lot of money but did absolutely nothing to help the environment. He had to back pedal because the truth made them look ridiculous. So now to try to save face with the environmental left they have to make a splash.
The Post reports that, “The Environmental Protection Agency is considering significantly strengthening proposed limits on planet-warming pollution from power plants — a crucial part of President Biden’s climate agenda — according to three people briefed on the matter, who spoke on the condition of anonymity because no final decisions have been made.
The discussions about toughening the standards, which are set to be released this month, have major implications for America’s fleet of power plants, which rank as the country’s second-largest contributor to climate change. They come as the administration weighs the political calculus of weakening or strengthening environmental regulations before the 2024 election. The Post says, “The change could affect most new gas plants built in the United States, and it could have a significant climate impact. According to the EPA’s modeling, it could prevent up to 10.6 million metric tons of carbon emissions per year — equivalent to taking 2.5 million cars off the nation’s roads for a year.” Of course, you better check their math on that.
One of the things that we want to keep an eye on is this weakness in the crack spreads. The weakness in the crack spreads and the moves higher suggests that maybe demand could be challenged by these prices. On the flip side of that though, the other reason why we’re seeing some reluctance to move higher is concerns that the economy is too strong, and the Fed will have to cool things down. Don’t you love it when the market is confused as to whether it should be happy, the economy is strong, or it should be bearish because the economy is strong?
Oil prices are overbought but bounced back after key support test. The risk to oil is still around the upside but we have to be on guard for some corrections and some volatility.
Natural gas is starting to rebound even as we expect to see an injection this week into supply. With more talk of falling production, it is giving the natural gas market a boost.
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Natural Gas Continues to Build Its Base
By: Christopher Lewis | April 8, 2024
• The natural gas markets continue to bounce around near the overall bottom, and therefore I think this market could be an investment, not necessarily a short-term trade.
Natural Gas Technical Analysis
Natural gas markets have rallied a bit during the early hours on Monday, but at this point in time, I think you’ve got a situation where the $1.50 level underneath continues to be a major floor, while the $2 level above continues to be a major ceiling. Now, I think longer term this is a situation where investors are stepping in and buying natural gas, which is what I’ve been doing, but I’ve been doing it through an ETF. I don’t use leverage because I don’t know when we recover. This is something that you have to be very patient with and you have to use low leverage. You can’t get spooked every time the market moves a little bit. So, with that being the case, I like the idea of buying short-term dips, I’ll do something like buy another 20 shares of the UNG ETF.
That’s how I play it, but maybe you can do it with a small CFD position. Just make sure you’re paying attention to any swap you’re paying. If we can break above the $2 level, it opens up a very serious potential for a move to the $2.50 level. I have no interest in selling in this market. We are at a major bottom going back multiple years, and at this point, you have to wonder who’s left to sell to other than people building up a big, longer term position.
Remember, the most important thing is that you can be patient, as the move higher could literally be months down the road, but the potential is there for a rather big move. You need to be able to put a little bit into this market and ignore it for a while from what I can see.
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Crude Continues to See Upward Pressures
By: Christopher Lewis | April 8, 2024
• The crude oil market continues to see a lot of upward pressure, as we have multiple reasons to think that this market is going to rise in value over the longer term.
WTI Crude Oil Technical Analysis
West Texas Intermediate Crude Oil Market broke down below the $85 level. And as you can see, we have seen a lot of buyers and now it looks like we will continue to see a lot of upward pressure. That being said, I think this is a market that continues to ride on momentum. And of course, technical analysis suggests that we have recently cleared up a major barrier. I think at this point in time we are looking at a potential move to the $87.50 level and then after that, the $90 level. Short-term pullbacks continue to get bought into. I don’t see that changing anytime soon and I think the absolute floor in the market is at the $80 level.
Brent Crude Oil Technical Analysis
Brent is a market that has fallen pretty significantly early in the day only to turn around and retake the $90 level. This is a market that may have to consolidate a bit and that might be true with oil in general as we had gotten stretched but ultimately there are plenty of reasons to think that every dip will get bought into. Supply is starting to get stretched around the world.
We have a lot of geopolitical concerns in the Middle East and of course if central banks in fact are going to start cutting interest rates, that could put upward pressure on crude oil anyway due to the fact that demand, at least in theory, should pick up from industrial usage.
There’s also the cyclical trade which states that in the spring we start to see more travel, and that tends to put a lot more pressure on the price of oil as well as people continuing to demand more. With all that being said, I’m not selling in this market at all and I’m looking at every pullback as a potential buying opportunity.
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The Pullback. The Energy Report
By: Phil Flynn | April 8, 2024
Oil is back after Israel pulled back some troops in Gaza and because Iran failed to follow through on threats to respond to Israel’s attack on its consulate in Lebanon. Yet to say the market is on edge is an understatement as supply tightness is clear as we continue to see ongoing threats to supply. Move Israel in oil prices are seeking to regroup it’s the market waits to see if there are any other shoes to drop.
There is also a lot of speculation in the market that the Energy Information Administration has been overestimating US oil production by almost 1 million barrels per day. As we know the Energy Information Administration has consistently had to adjust their production estimates from their weekly reports and now it’s very clear to many in the industry that the numbers that they have been reporting fall short. HFI Research points out that the EIA admitted that they didn’t survey oil production but used a model to come up with their equation the model has had run of overestimating production.
This overestimating production means that the supply situation based on current demand is much tighter than we had originally thought. If you look at the demand numbers from last week in the United States, they say hit an incredibly high 21,292 million barrels a day. So if the pattern of overestimating production continues and underestimating demand we could be in a very interesting situation.
So with the reduction of geopolitical risk, we’re back to focus on supply and demand which still looks exceedingly tight this week we expect to see crude oil supplies fall by 3,000,000 barrels. We also expect to see the same in products with a 3 million barrel drop in both gasoline and distillates refinery run should see an uptick of 0.5.
B technical pullback is happening because crude is overbought and because of the reduction of geopolitical risk in this type of situation is going to be important to see whether or not the market consolidates where we see some further downside are expectation is that we will consolidate at some point because the supply versus demand situation is too tight to ignore and it’s too dangerous to allow prices to fall because we’re going to need to squeeze out as much production as we can to meet demand.
Based on what we’re seeing in industrial metals and gold the markets as expected to see some industrial demand big strength in both aluminum and copper is giving the market some support in this one of the reasons why oil isn’t falling out of bed despite being very overbought.
Javier Blass at Bloomberg pointed out that Vitol, the world’s largest independent oil trading company, has made more money in the last 3 years than during the past 30 years combined.
Gasoline prices are still above year-ago levels. AAA reports that The National Average was $3.598 slightly above yesterday and a year ago and about 5.7 cents a gallon a week ago.
You don’t have to go to Nova Scotia to see the total eclipse of the Sun but it might be a day that is not good for solar panels, sort of like when it hails or snows. The EIA reports that On April 8, 2024, a full solar eclipse will briefly but fully obscure sunlight to utility-scale solar generation facilities from Texas through Maine with a combined 6.5 gigawatts (GW) of capacity. In addition, the eclipse will partially block sunlight to facilities with a combined 84.8 GW of capacity in an even larger swath of the United States around peak solar generating time.
Solar-powered generators centered in the path of totality—where the moon will completely obscure the sun—will be affected the most because the moon will block all direct sunlight for more than four minutes. The partial eclipse could limit the sunlight in the path of totality for more than two hours. Areas around the path of totality will have varying levels of diminished solar generation during the eclipse. Because we know about the eclipse ahead of time, utilities have prepared and planned for the lost solar energy. Several grid authorities have released plans for how they plan to deal with the change in solar generation during the eclipse according to EIA. So, we have that going for us.
Natural gas rigs have fallen to the lowest level since January. Production of natural gas is starting to fall. Power burns for natural gas have been exceedingly high as low prices have encouraged demand we’re expecting to see an increase in supplies of about 15 BCF this week in the weekly report and it feels like the market is trying to put in the bottom. Still, the fundamentals in the glut is real so it’s probably best to be hedged with options.
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Energy sector price trend + seasonality is in perfect bullish alignment. BUT, has price gotten ahead of itself? IMO if you are long in this sector, expect some choppiness. If not, look for a potential buying opportunity if sector pulls back.
By: Jay Kaeppel | April 8, 2024
• Energy sector price trend + seasonality is in perfect bullish alignment. BUT, has price gotten ahead of itself? IMO if you are long in this sector, expect some choppiness. If not, look for a potential buying opportunity if sector pulls back.
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Looking to capitalize on the recent surge in the Energy sector? Here are some of the best performers for April:
By: TrendSpider | April 6, 2024
• Looking to capitalize on the recent surge in the Energy sector?
Here are some of the best performers for April:
$XOM 83% win rate over last 44 years
$CVX 83% win rate over last 44 years $COP 92% win rate over last 44 years
$XLE 81% win rate over last 25 years
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 6, 2024
• Following futures positions of non-commercials are as of April 2, 2024.
WTI crude oil: Currently net long 327.9k, up 5.4k.
After jumping 3.2 percent last week, West Texas Intermediate crude added another 4.5 percent this week to $86.91/barrel. This week’s gains followed last week’s decisive range breakout. The crude went back and forth between $71-$72 and $81-$82 for a year and a half before pushing through the upper end last week.
WTI has come a long way since bottoming at $67.71 last December. Conditions are overbought, but oil bulls have wrested control of momentum for now. As things stand, in the best of circumstances, they have a shot at low-$90s.
In the meantime, as per the EIA, US crude production in the week to March 29th was unchanged for four consecutive weeks at 13.1 million barrels per day; six weeks ago, output was at a record 13.3 mb/d. Crude imports decreased 84,000 b/d to 6.6 mb/d. As did stocks of gasoline and distillates, which respectively declined 4.3 million barrels and 1.3 million barrels to 227.8 million barrels and 116.1 million barrels. Crude inventory, however, grew 3.2 million barrels to 451.4 million barrels. Refinery utilization dropped one-tenth of a percentage point to 88.6 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | April 6, 2024
NY Crude Oil Futures closed today at 8691 and is trading up about 21% for the year from last year's settlement of 7165. Caution is required for this market is starting to suggest it may now decline on the MONTHLY level. Currently, this market has been rising for 3 months going into April reflecting that this has been only still, a bullish reactionary trend. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 8763 while it has not broken last month's low so far of 7679. Nevertheless, this market is still trading above last month's high of 8321.
Up to now, we still have only a 3 month reaction rally from the low established during December 2023. We must exceed the 3 month mark in order to imply that a trend is developing.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
From a perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains in a bullish position at this time with the underlying support beginning at 8550.
On the weekly level, the last important high was established the week of April 1st at 8763, which was up 16 weeks from the low made back during the week of December 11th. So far, this week is trading within last week's range of 8763 to 8260. Nevertheless, the market is still trading upward more toward resistance than support. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8763 made 0 week ago. Still, this market is within our trading envelope which spans between 6451 and 9199. The broader perspective, this current rally into the week of April 1st reaching 8763 has exceeded the previous high of 7960 made back during the week of November 27th.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend. Looking at this from a wider perspective, this market has been trading up for the past 16 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in April, this market has held above last month's low of 7679 reaching 7679.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
DiscoverGold
Crude Oil forms a Golden Cross for the first time since August. The last Golden Cross sent Crude Oil soaring by 20%.
By: Barchart | April 5, 2024
• Crude Oil forms a Golden Cross for the first time since August. The last Golden Cross sent Crude Oil soaring by 20%.
Read Full Story »»»
DiscoverGold
Natural Gas Price Forecast: Bullish Reversal on Rally Above Today’s High
By: Bruce Powers | April 5, 2024
• Natural gas sees further weakness before finding support at 1.755. An intraday bounce suggests potential for a completion to the current pullback, but further confirmation is needed.
Further weakness in natural gas leads to support at 1.755 and an intraday bounce. The decline earlier in Friday’s session completed a 61.8% Fibonacci retracement before buyers took control. Natural gas is on track to close in the green if the close is above the open, as it is at the time of this writing.
The prior pullback triggered a bullish reversal after two days and the same may happen in this current pullback. If today’s low continues to hold as support, it will mark a successful test of support at the purple 20-Day MA and is a sign of improving short-term strength.
Rally Above Today’s High Signals Further Upside
Heading into next week, a bullish signal will be generated on a rally above today’s high of 1.82. That should mark the completion of the current pullback and set the stage for moving higher. Nevertheless, a rally above yesterday’s high of 1.85 provides greater confidence that demand is improving as it would also mark an advance back above the 50-Day MA, now at 1.84.
That should prepare natural gas for a rally above the most recent swing high of 1.91. It will trigger a continuation of the advancing CD leg of a rising ABCD pattern with an initial target at 2.08. A daily close above the 50-Day line would provide a key signal confirming an improving uptrend as the natural gas has traded below the 50-Day line since mid-January.
Weekly Bullish Reversal Intact
A bullish reversal triggered this week on the weekly chart and the week will end with a higher weekly high and higher weekly low, a sign of a developing uptrend. Support on the weekly chart was seen this week at the 8-Week MA. It is a sign of improving strength in the weekly time frame. However, the week is on track to close relatively weak, in the lower half of the week’s range and below last week’s high of 1.83. What it tells us is that the longer-time frame pattern has become more bullish. And the larger time frames impact price behavior in the shorter time frames. A variety of possible upside targets are marked on the chart. The first is at the completion of the ABCD pattern.
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