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Natural Gas Bearish Momentum Reigns After Brief Bullish Reversal
By: Bruce Powers | March 15, 2024
• Natural gas sees bearish price action after a brief bullish reversal, encountering resistance near the 20-Day MA.
Natural gas got hammered today with bearish price action following yesterday’s one-day bullish reversal. Following an outside day yesterday and strong close that tested resistance at the 20-Day MA, natural gas encountered resistance today near that line following the day’s high of 1.77. That high briefly exceeded yesterday’s high. At the time of this writing, natural gas continues to trade near the lows of the day as it tests support heading towards yesterday’s low of 1.64. If today ends near the lows of the day or below yesterday’s low, the risk of further downside increases.
Next Lower Support Zone Starts at 1.63
Potential support around the 78.6% Fibonacci retracement is close by at 1.63, along with prior support at 1.61. These levels can be looked at as a potential support range from 1.63 to 1.61. Moreover, there is a more significant price level at 1.59 as it is a weekly low. Earlier this week a bearish reversal was triggered on the weekly chart as the price of natural gas dropped below last week’s low of 1.755. A drop below the three-week low at 1.59 would indicate further weakness and increases the chance that the downtrend may continue below the recent trend low of 1.52. Two weekly support levels failing within one week is bearish.
Resistance was seen recently at 2.01, which is the bottom of the blue dashed descending trend channel. It shows prior support levels now acting as resistance since the price levels were busted on the way down. This behavior reflects the remaining weakness from the long-term downtrend.
Negative Reaction to Thursday’s Intraday Advance
Given today’s negative reaction to yesterday’s bullish price action, the indication is that the downtrend still dominates. It seems fair therefore to use this week’s high of 1.84 as an important price level to key off. If natural gas remains below that weekly high downward pressure remains and the downtrend rules. A rally above that high would be needed to improve the chances for a sustainable rally and bottom reversal.
Weekly High for Bullish Signal
If a bullish reversal from this week’s candle does occur natural gas will next be heading up into potential resistance at the bottom of the declining trend channel. Further, the recent swing high of 2.01 marks the next higher possible resistance zone. Nevertheless, a daily close above the lower trend channel line (blue dash) will increase the chance that natural gas can eventually rally above 2.01.
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Oil & Gas Equipment & Services ETF Resumes its Uptrend
By: Arthur Hill | March 15, 2024
The Oil & Gas Equipment & Services ETF (XES) is showing strength here in March as it breaks back above its 40-week SMA. More importantly, the long-term trend is up and this week's breakout argues for a continuation of this uptrend.
The chart below shows XES with a big breakout surge in the fourth quarter of 2020. Even though this move reversed the long-term downtrend, the advance over the last three years is quite choppy. The green dashed lines show a rising channel with the 40-week SMA (red line) in the middle. XES crossed this moving average several times as it slowly zigzagged higher. Despite choppy trading, the long-term trend is clearly up on this chart.
Short-term, I am seeing a breakout after a pullback. The red shadings show prior dips below the 40-week and each dip represented more of an opportunity than a threat. XES dipped below the 40-week SMA in December and remained below from early January to early March. The ETF turned up the last few weeks and surged above its 40-week SMA this week. This move reverses the downswing within the rising channel and argues for a continuation of the bigger uptrend. The upside target is around 110 and a closes below 81 would argue for a re-evaluation.
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Natural Gas Continues to Look For Bottom
By: Christopher Lewis | March 15, 2024
• Natural Gas markets continue to look for a bottom in what has been a horrific market over the last year or so.
Natural Gas Weekly Technical Analysis
The natural gas weekly chart has shown a negative candle for the week as we continue to bounce around the bottom. At this point though, we are so low and at such a significant barrier that I do think longer term buy and hold types are starting to come into the market. I have gotten involved in an ETF again. I don’t want to get over levered in a market that could take months to turn around, but we are clearly in an area that in the past, we have seen a lot of support.
This will be the third time we’ve visited it since 2015. So historically it has worked out quite well for a bounce to about $3, maybe even as much as $4. Now, having said that, the trick of course is that you don’t want to be overly levered because you could get hurt.
On the other hand though, if you have an investment type of frame of mind, then you can really start to see how this could play out in your favor. Again though, time is something that you’re going to have to be able to deal with. This is not likely to be a quick payout, unless of course we get some type of nasty winter storm at the end of the season in the Northern Hemisphere. We could very well just spend most of spring and summer just consolidating.
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A month ago we turned bullish on $USO and $XLE and were looking for $80 and $88 targets, respectively. We remain Bullish on both for as long as they stay above their 200d SMA and Ichimoku Cloud.
By: Intelligent Investing | March 15, 2024
• A month ago we turned bullish on $USO and $XLE and were looking for $80 and $88 targets, respectively.
#XLE surpassed its minimum target elegantly. And has further to run.
#USO is now playing catch up.
We remain Bullish on both for as long as they stay above their 200d SMA and Ichimoku Cloud.
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Ides and Tight Spaces. The Energy Report
By: Phil Flynn | March 15, 2024
I’m the friendly stranger in the black sedan. Won’t you hop inside my car? Beware the Ides of March as the International Energy Agencies’ (IEA) prophecies are questionable and may be a betrayal of their energy security mission.
Global petroleum markets must reassess their outlook after the (IEA) soothsayers had to admit that they once again underestimated demand and overestimated supply. That led to many hedge funds with questionable positions that may have to be liquidated. Now the market must get a handle on just how large the supply deficit is going to get and just how tight supply is going to become. The market must now realize that the possibility of an oil price spike could help derail the Fed rate cut plans. Inflation is still too hot but at the same time, consumers are feeling pain as retail sales start to falter. Faulty data from the IEA led to hedge fund selling in the market and now that they know it’s wrong, must start getting out of bad positions.
US producer prices on a year-over-year basis increased by 1.6%, the biggest move since September 2023 as the cost of goods like gasoline and food surged. Yet the Fed may have a problem not cutting rates as retail sales rose 0.6% last month, less than expected after falling a revised 1.1% in January.
There is talk of a breakout in the Commodity Price Index. Hedge funds that have been betting on lower to sideways markets will have to reassess positions as they have to look at the signs of the times. Bloomberg News reported that, “commodities got sucked into a global short volatility trade. They say that, “Traders are betting against volatility in raw materials prices, countering the commodity sector’s notoriously boom-and-bust history. Whether it’s an oil market that is stuck firmly in a range due to OPEC+ cuts and abundant spare capacity, or copper prices torn between surging renewable demand and strains in more traditional consumption areas, there have been plenty of factors keeping the world’s commodity prices stuck in recent months. Gas volatility is back to where it was before a supply crisis in Europe. It makes for another sector in global markets where one of the most dominant trades has been betting against big swings. Macro volatility has been grinding lower as equities push higher and billions of dollars pour into exchange-traded funds wagering on continued calm.“’
Yet now with the International Energy Agency and OPEC talking about supply deficits and the possibility they could be much larger, the hedge funds may have to cover that could lead to an explosive move not unlike what we saw recently in copper and it could mean sharply higher prices at the pump after the price spike. The Fed will have to reassess their rate cutting schedule. They’re in a tough place because to back off a rate cut going into an election year might be viewed as political so beware the ides of March because the soothsayers have got it wrong.
The Energy Information Administration reported that In 2023, the world produced an estimated 101.8 million barrels per day (b/d) of petroleum and other liquids: mostly crude oil but also lease condensate, natural gas liquids, biofuels, and other liquids from hydrocarbon sources. We expect the global petroleum and other liquids supply to increase by about 0.4 million b/d in 2024 and 2.0 million b/d in 2025. This growth will be driven primarily by rising crude oil production from four countries in the Americas—the United States, Guyana, Canada, and Brazil—which would partially offset near-term voluntary production cuts in 2024 that we expect from countries participating in the OPEC+ agreement.
Collectively, OPEC+ countries accounted for 43% (43.7 million b/d) of global liquids production in 2023. The EIA forecast that OPEC+ petroleum liquids production will fall by 1.0 million b/d this year and then increase by 0.9 million b/d in 2025 after most existing production cuts expire. We assume OPEC+ members will maintain some voluntary production cuts through 2025 to offset slow demand growth. The OPEC+ production targets are based on crude oil volumes rather than all petroleum liquids, and we expect the crude oil portion of production in these countries to decline by 1.1 million b/d in 2024 and then increase by 0.9 million b/d in 2025.
The gasoline crack spread looks like it’s on the verge of breaking out to the upside. Diesel crack is a little bit more subdued. It’s probably time to start putting on those hedges. Natural gas did get a bit of a bounce as more talk of production cutbacks are starting to make the rounds. The huge contango in the natural gas market is giving some hope that there could be some relief down the road. The question is whether that relief comes with increased demand or just lower production. As we recommended before, to be short the front end of the curve along the back has really paid off.
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Crude Oil Continues to Look Bullish
By: Christopher Lewis | March 15, 2024
• Crude oil markets continue to look bullish, despite the fact that we did pullbacks slightly during the day on Friday. Crude oil markets continue to look bullish, despite the fact that we did pullbacks slightly during the day on Friday. Ultimately, we are hanging around previous resistance, so I do think there is a certain amount of support that’s waiting to come into the market.
WTI Crude Oil Technical Analysis
You can see that we have stalled somewhat during the Friday session as it looks like we are trying to do everything we can to take a bit of a break. Ultimately, I think this is a situation where even if we do pull back from here, there should be plenty of buyers and therefore I think the overall trend continues. The question is whether or not we can have enough momentum to continue to push this higher.
I think we do eventually, but this is a grinding type of market and therefore it’s going to be very, very difficult to get overly aggressive and of course you will have to be patient. I still like buying the dips, I still think that the WTI grade goes to the $85 level.
Brent Crude Oil Technical Analysis
Brent is very much in the same situation, it looks like we are doing everything we can to tread water right around the crucial $84.50 level, and that will continue to be a scenario that I think a lot of people look towards. I do think that this is more likely than not going to be a market that follows right along. And I would expect to see Brent go to the $90 level sometime over the next several months. So in the meantime, my job as a trader is just to simply buy the pullback and take advantage of value if and when it occurs.
Ultimately, I do think that that value will show up and those pullbacks will be looked at as such. It’s worth noting that both grades of oil are starting to get close to forming the so-called golden cross when the 50-day EMA turns upward and crosses above the 200-day EMA. So keep that in mind as well. Either way, I don’t have any interest in shorting the market. I do recognize these pullbacks come and go, but with the tight supply of the geopolitical concerns, the Middle East and of course just the fact that we are heading into the summer season suggests that we are going higher.
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Natural Gas Buyers Likely to Drive Prices Higher
By: Bruce Powers | March 14, 2024
• Despite resistance zones, a breakout above the recent swing high could lead to further gains, with a first higher target around 2.13.
Natural gas may have completed a bottom for the retracement today with a new pullback low of 1.65. Although the 78.6% Fibonacci level at 1.63 was not reached today’s price action indicates a possible switch from the sellers being in charge to the buyers taking control of price action. There is an increased likelihood of a rally off today’s low. Yesterday’s high of 7.72 was exceeded as a high of 1.76 was reached today following a drop to new trend lows. That high is at the time of this writing, and it may be higher by today’s close. A daily close above yesterday’s high will be a slightly more bullish indication than a close below it.
Signs of a Bottom and Bullish Reversal
Today is the first day of the retracement where the price of natural gas exceeded a prior day’s high, which is a sign of strength. It sets up a potential rally that has the potential to breakout above the recent 2.01 swing high. This scenario is supported by the behavior of the 8-Day and 20-Day moving averages.
The 8-Day line crossed back above the 20-Day line on March 4 for the first time since late-January, and it stayed above it during this current retracement. If the scenario plays out the first higher target looks to be around 2.13. That is where a rising ABCD pattern utilizing today’s low would hit its first target (see chart).
Resistance on the Way Up
Nonetheless, there are price areas of concern on the way up. First, is the price zone around the recent swing high. It stopped the ascent and led to a retracement. That zone is derived from previous long-term support zones (now resistance) from 1.95 to 1.97. Further, it is in the area represented by the lower blue dashed trend channel line.
The recent swing high hit resistance very close to the line and it could do so again. Notice that the line represented support on December 12 and then resistance in early-February and most recently. In other words, the market has clearly identified this line. Therefore, it could represent resistance once again. In addition, a decisive breakout above the recent swing high would have the added significance of breaking through the trendline.
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Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | March 14, 2024
• Top Movers
NYMEX RBOB Gasoline Futures 2.93 %
NY Heating Oil Futures 2.84 %
NY Crude Oil Futures 2.78 %
London IPE Brent Crude Futures 2.58 %
London IPE Brent Crude Spot 2.58 %
• Bottom Movers
NY Natural Gas Futures 3.27 %
AU - Queensland Base-Load Electricity Futures 1.51 %
NSW Baseload Electricity Continuous 1.1 %
AU - Victoria Base-Load Electricity Futures 1.09 %
*Close from the last completed Daily
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Dereliction Of Duty. The Energy Report
By: Phil Flynn | March 14, 2024
Some might say that The International Energy Agency (IEA) has been derelict in its duty to secure energy security for Europe because they have been taken over by a green energy agenda.
Not it appears they must acknowledge they were wrong about stopping investments in fossil fuel but today, they have to acknowledge what I have been saying for months and that is that hat the world is headed into a crude oil supply deficit supply deficit.
Oil price broke back above $80 a barrel WTI after the IEA that the global oil market will face a supply deficit having to backtrack on their previous forecast of a supply surplus. As I have written many times in the past, the IEA has constantly underestimated demand and overestimated production in some cases to make their green energy models work and to try to make them look somewhat feasible, when it’s not.
The IEA had to change its global oil demand growth forecast by 270,000 barrels a day and now says that the world will see growth of 1.7 million barrels a day which will be a new record high.
The IEA says that “Global oil demand is forecast to rise by a higher-than-expected 1.7 mb/d in 1Q24 on an improved outlook for the United States and increased bunkering. While 2024 growth has been revised up by 110 kb/d from last month’s Report, the pace of expansion is on track to slow from 2.3 mb/d in 2023 to 1.3 mb/d, as demand growth returns to its historical trend while efficiency gains and EVs reduce use.”
Maybe the International Energy Agency hasn’t been paying attention to what’s been going on in the electronic vehicle market. Pinning your hopes that electronic vehicles are going to reduce demand growth significantly doesn’t match up with the reality that we’re hearing in the real electronic vehicle world. EV sales s are horrible and companies are losing massive amounts of money on the electronic vehicle. Not only did Apple abandon its car yesterday, but it was also reported that Porsche is abandoning its electric vehicles.
The IEA National Energy Agency blamed OPEC, and they say that they expect OPEC will continue their cuts through the end of 2024. The IEA blamed OPEC saying they changed the assumptions and shifted our implied balance into a slight deficit rather than a hefty build in last month’s report.
The IEA put world oil production is projected to fall by 870 kb/d in 1Q24 vs 4Q23 due to heavy weather-related shut-ins and new curbs from the OPEC+ bloc. From the second quarter, non-OPEC+ is set to dominate gains after some OPEC+ members announced they would extend extra voluntary cuts to support market stability. Global supply for 2024 is forecast to increase 800 kb/d to 102.9 mb/d, including a downward adjustment to OPEC+ output.
The IEA also had to acknowledge another thing I have been warning about and that is the tight global oil supply despite the historically warm winter that we had in many places even as they try to spin it to look better.
The IEA said that Global onshore oil stocks fell a further 38 mb last month, taking the drawdown since July to 180 mb, according to preliminary data.
Over the same period, oil on water surged. Trade dislocations from the rerouting of Russian barrels and more recently due to unrest in the Middle East, have boosted oil on water by 115 mb. In February alone, oil on water surged by 85 mb as repeated tanker attacks in the Red Sea diverted more cargoes around the Cape of Good Hope. At nearly 1.9 billion barrels as of the end of February, oil on water hit its second-highest level since the height of the COVID-19 pandemic.
The bottom line is that the International Energy Agency tried to sell us a bill of goods and now they have to admit they were wrong, They weren’t wrong by a little bit by a long shot. For years I have warned about the International Energy Agency and the loss of their mission their fixation on the energy transition had them lose their. Direction sadly Matt blow to their credibility it’s going to take some time to repair. When I first started to point this out I seemed to be in the minority but more and more people in the oil industry are starting to take the International Energy Agency predictions with more skepticism than they have before. It’s a shame when we used to look to the International Energy Agency as a non-biased reporting agency and now have to realize that they have an agenda and the agenda sadly is energy security for Europe.
Today’s breakup of $80.00 is significant especially if we can hold it into the close above $80.00 a barrel should induce short covering his hedge funds continue to favor the short side of the market.
.And after yesterday’s Energy Information Administration (EIA) report showed that US petroleum inventories (crude, SPR, refined products) are at the lowest point since end-2022 the market is starting to face up to a new reality. The reality is that the expected crash in global oil demand is not going to happen. They also have to face up to the reality that EV’s are not going to cut into gasoline demands nearly as badly as many had predicted.
US production had fallen to 13.1 million barrels a day in part because (EIA) may have been over-reporting it in the first place, The EIA said that this week’s domestic crude oil production estimate incorporates a re-benchmarking that decreased estimated volumes by 177,000 barrels per day, which is about 1.3% of this week’s estimated production total.
The EIA that gasoline supplies falling significantly is going to create further challenges for US refiners if they are going to rise to the occasion to meet the demand which is much better than the International Energy Agency has been telling them it would be.
The EIA said that “U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.5 million barrels from the previous week. At 447.0 million barrels, U.S. crude oil inventories are about 3% below the five-year average for this time of year. Total motor gasoline inventories decreased by 5.7 million barrels from last week and are about 3% below the five-year average for this time of year. Both finished gasoline and blending components inventories decreased last week. Distillate fuel inventories increased by 0.9 million barrels last week and are about 7% below the five-year average for this time of year.”
Gasoline demand rose again last week as supply tightened, Gas demand week over week hit 9,044 million barrels a day up 30,000 barrels from the week before.
The EIA said that total oil product demand based on products supplied over the last four-week period averaged 19.9 million barrels a day, up by 1.0% from the same period last year.
Over the past four weeks, motor gasoline product supplied averaged 8.7 million barrels a day, down by 1.3% from the same period last year but up over last week.
Distillate fuel product supplied averaged 3.7 million barrels a day over the past four weeks, up by 0.5% from the same period last year.
Jet fuel product supplied was up 2.0% compared with the same four-week period last year.
Natural gas producers are in bad shape with historically low prices and spot prices that have gone negative. The question is will we be able to cut back production enough to save some of the producers,.
The EIA said that Winter storms have disrupted U.S. natural gas production ›
Over the last four winters, winter storms Uri (February 2021), Elliott (December 2022), and most recently, Heather (January 2024) interrupted weekly U.S. natural gas production by more than 15 billion cubic feet per day (Bcf/d), according to daily estimates from S&P Global Commodity Insights. These declines were the largest interruptions to U.S. natural gas production during the past four years.
Although the impacts of these disruptions appear more muted over a month, winter storms Uri and Elliott still drove declines in monthly average natural gas production of 3 Bcf/d to 7 .
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Natural Gas Retreats from Recent Highs, Eyes Key Support Levels
By: Bruce Powers | March 13, 2024
• Natural gas prices retreat further from recent highs, indicating that sellers remain in chart. Key support levels at 1.63 and 1.58 should hold if it is to have a chance to rally.
Natural gas continued to pull back on Wednesday from the recent 2.01 swing high hit last week. Today’s decline put it below yesterday’s low and at a new retracement low of 1.65. It looks to be on its way to the 78.6% Fibonacci retracement at 1.63, while the previous pullback low is at 1.58.
Long-term Downtrend Dominates
The long-term pattern in natural gas is a downtrend. Last week’s high found resistance at previous support, which is typical price action in a bearish environment. Further weakness is seen this week as both the 20-Day MA and 61.8% Fibonacci level failed to stop the decline. Further, a bearish signal occurred on a drop below last week’s low of 1.755. If support is seen around the 78.6% retracement followed by a bullish reversal, a rally may follow to test last week’s highs and possibly exceed them. The trend low was at 1.52 and it was in a price zone where long-term support was seen in the past.
Sitting at Long-term Support Range from 1.64 to 1.44
Specifically, support was seen in 2016 and then again in 2020. In 2020 the price of natural gas hovered around a price range from 1.64 to 1.44 for about six months. During the recent decline the lower prices of the range were not reached but they may still be. The next indication that the price of natural gas is getting weaker would occur on a drop below the weekly low of 1.59 and then the daily minor swing low at 1.58.
Bullish Reversal off Support Could Lead to Another Rally
If support is seen above the weekly low, followed by a bullish reversal, natural gas may rally again to test resistance levels. Initially, a test of the lower line of the declining blue dashed parallel trend channel is anticipated. That could lead to another lower swing high. That lower line has been recognized by the market several times starting with the December 13 swing low. Although it will likely be resistance again a decisive breakout above the line could lead to an eventual advance above the 2.01 swing high and further up into the channel.
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Naive. The Energy Report
By: Phil Flynn | March 13, 2024
I guess if you believed some of the energy narratives over the last couple of years you must be naïve, I guess. Claire Coutinho, the UK’s Secretary of State for energy security and net zero, stated as much today when she said: “Anyone who tells you that we can just stop oil and gas is not just wrong but naive”. Well, that’s a little harsh. It is kind of like when the Biden administration tells you that gasoline prices are coming down, even though they are not, unless you adjust for inflation, that they tell you are going down, even though it isn’t.
Not only did we see the Consumer Price Index (CPI) come in higher than expected we also saw that the Energy Information Administration (EIA) sharply raised its gasoline price forecast on a day when the American Petroleum Institute reported a rather large 3.75 million barrel drop in weekly supply as refinery issues and better than expected demand significant are tightening supply. This is against a bullish backdrop of a bigger than expected 5.521 million barrels drop in crude oil supply a 1.162 million barrel drop in distillate and a 998.00 barrel drop in supply at the Cushing, Oklahoma delivery point. The CPI came up 0.4% for the month and 3.2% from a year ago. The core CPI rose 0.4% on the month and was up 3.8% on the year.
This came out before that EIA predicted that the U.S. average retail gasoline price will be about $3.50 per gallon this year, almost 20 cents/gal higher on an annual average basis in 2024.
It is also like telling the International Energy Agency that it was flat out ridiculous to tell the world to stop investing in fossil fuels immediately in a nod to the green energy lobby. A call that was widely panned as either extremely stupid or at the very best, naïve. Yet The IEA seemed to remember that their mission is energy security and not green energy lobbying.
It seems that the International Energy Agency (IEA) had a moment of clarity that OPEC was very keen to point out. In a report, OPEC put out a note called, “Oil Security: vital for All” OPEC called out the IEA by saying “We took note of the International Energy Agency (IEA) reaffirming the significance of oil security to energy transitions in its most recent commentary: “A strong focus on oil security will be critical throughout the clean energy transition”. In other words, OPEC was taking a victory lap because the International Energy Agency (IEA) had to backtrack from some of the ridiculous naive projections about supply and demand in the need for fossil fuels.
OPEC wrote, “At OPEC, we are encouraged by this message and the reference to the continuing importance of oil to the world. The IEA says in its commentary: “An enduring focus on oil security is a consequence of the continued need for oil to fuel cars, trucks, ships, and aircraft, as well as to produce the petrochemicals necessary to manufacture countless everyday items”. OPEC has strongly voiced these messages for many years, and we will continue to reiterate that energy security, energy affordability, and reducing emissions need to go hand-in-hand, as we look to an all-energies, all-technologies and all-peoples approach to energy transitions. OPEC also said that, “it is important to stress that the IEA’s talk of the need for no new oil and natural gas fields in its net zero pathway has contributed significantly to this uncertainty, which has the potential to lead to major energy chaos, not the desired energy security.”
Oil also found support because of more Ukrainian drone attacks on Russian oil facilities. Yesterday a report that a Russian refinery was on fire raised concerns about the ability of Russia to produce more oil. At the same time a report that Amos Hochstein of the Biden administration’s Special Presidential Coordinator for Global Infrastructure and Energy Security. He is working with India to allow them to buy more oil from Russia. So let me get this straight. We are trying to put sanctions on Russia but at the same time helping India buy more Russian oil. Mr. Hochstein said it isn’t about not allowing the oil to get out it’s only to make sure that India buys it at a low price. I wish that they would put in policies in the United States that would allow us to buy oil at a low price. Sort of like getting off the back of the US oil and gas industry. But maybe I am naïve.
This comes as the EIA had other bullish things to say about the state of the oil markets. The EIA raised its s 2024 WTI crude spot price to $82.15/bbl from $77.68/bbl. They also raised their forecast for 2024 World oil demand growth by 10,000 bpd, now seeing 1.43 mln bpd year-on-year increase. They also raised the forecast for 2025 world oil demand growth by 90,000 bpd, now seeing a 1.38 mln bpd year-on-year increase. They also raised its US EIA lifted 2024 spot Brent oil forecast to $87/bbl from $82.42/bbl.
While the prospects for oil look great, the prospects for natural gas and US gas producers look bleak. The EIA reported that, “Natural gas prices are expected at the Henry Hub spot price to remain below $2.00 per million British thermal units (MMBtu) in 2Q24 as the winter heating season ends with natural gas inventories 37% above the five-year average. The Henry Hub spot price averaged $1.72/MMBtu in February (30% lower than in our February STEO), a record low adjusted for inflation. Low prices were partially driven by reduced natural gas consumption in the residential and commercial sectors this winter. Natural gas production they say remained unchanged in March from February at just under 104 billion cubic feet per day (Bcf/d).
We expect lower natural gas prices to cause slight declines in natural gas production for the remainder of the year, and we do not expect that natural gas production will return to its December 2023 record of 106 Bcf/d during the forecast period. Forecast U.S. dry natural gas production averages 103 Bcf/d in 2024, down slightly from 2023. Production increases to 104 Bcf/d in 2025, driven by expected growth in associated natural gas production in the Permian Basin and growth in LNG export demand.
Yet we expect there will be a drop in production bigger than the EIA believes. CNX, which is an Appalachian gas producer, is reducing its natural gas production in 2024 and announced delays for well completions on at least three sale pads. Other natural gas producers have to fight off the potential of bankruptcy as they are losing money. Not only do they have to pay the royalty rates and leases, they also have to pay for their drilling and their employees and their loans to the bank and they can’t do that when gas prices are almost negative.
HFIR says that, “While we believe that the bottom ($1.50/MMBtu) will hold, low gas prices are needed to tighten balances going forward. At ~102 Bcf/d, injection gas balances point to a deficit of 1.5 Bcf/d. This would push storage to ~4 Tcf by November.
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Natural Gas Bearish Momentum Targets Lower Fibonacci Levels
By: Bruce Powers | March 12, 2024
• Natural gas price action shows bears in control as it retraces further, with potential to test recent lows around 1.58 to 1.52, unless a bullish reversal occurs.
Natural gas further retraces its recent advance, falling to the 61.8% Fibonacci retracement with the day’s low of 1.69. Downward pressure remains as continues to trade near the lows of the day at the time of this writing. If it keeps falling the next Fibonacci level at 1.63 becomes the likely next lower target. That price is the 78.6% Fibonacci retracement level. Today’s price action shows the bears in charge and aligned with the larger bearish trend.
Bears Remain in Control
A bearish continuation of the long-term downtrend, begun from the August 2023 peak at 10.03, triggered initially on December 4 with a breakdown from a rising parallel trend channel. Further confirmation for the continuation of the bear trend to a new trend low triggered on February 8. Subsequently, support was eventually found at the 1.52 trend low seen several weeks ago. That low led to a rally to test resistance where support was seen earlier in February and April 2023. It was in a range from 1.95 to 1.97. The high of the recent counter-trend rally was 2.01.
Counter-Trend Rally Confirms Bearish Price Structure
The critical resistance zone around 1.95 to 1.97 was clearly tested and price was rejected to the downside from the 2.01 high. Note that the highest daily close during the advance was at 1.95. That seems to indicate that the market recognized the price range. Last week’s high not only successfully tested resistance near prior trend lows. The lower boundary of a falling parallel channel was also successfully tested as resistance. That channel is marked with dashed blue lines. Similarly, the bottom of the channel was clearly resistance following the gap down on January 29.
78.6% Retracement Looks More Likely
To summarize, during the recent countertrend rally natural gas hit resistance at key prior support zones. This is common bearish behavior within the progression of a downtrend. Therefore, since the pullback from the 2.01 high is retracing further, the potential to test recent lows around 1.58 to 1.52 increases. The possibility of natural gas falling below 1.52 remains a possibility. Nevertheless, a clear bullish reversal from the 61.8% or 78.6% retracement zones will put the countertrend rally back in play. As noted yesterday, it may just be that the rally is expanding its swings so that the pattern creates a C point on a rising ABCD pattern.
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Crude Continues to Look For Momentum
By: Christopher Lewis | March 12, 2024
• Crude continues to see a lot of noisy behavior, and it should more likely than not continue. The markets are watching important resistance levels, and with this, you have to be cognizant of the overall momentum, and of course cyclical trade as well.
WTI Crude Oil Technical Analysis
Taking a look at the crude oil markets you can see that we have been dancing around the 200 day EMA for the last several sessions and of course, Tuesday wasn’t any different. That being said, the market is likely to continue to see buyers on dips, which does make a certain amount of sense considering that WTI has found so much support at the 50 day EMA and has of course been trying to reach towards the $80 level and break above it for several weeks now.
I think this time of year is a major influence as cyclical trade is most certainly in effect where we get more travel via car and plane. And, of course, we have supply concerns, which is an even bigger issue. So, on this, I like buying dips.
Brent Crude Oil Technical Analysis
Brent is very much in the same situation as the 50 day EMA offered support during the previous session. We do see a lot of resistance above, especially near the $84.50 level, but we are trying to do everything we can to pressure the market to the upside. If we do break down from here, I think the $80 level offers support, but if we can take off to the upside, then it becomes more or less an intermediate buy and hold situation.
I do think that both of these markets eventually hit $90 this summer, especially considering that the Federal Reserve and other major central banks around the world are going to be cutting rates and that should increase economic activity so it all ties together for high oil prices. I don’t have any interest in shorting and I look at every pullback as a potential value play to take advantage of. However, always make sure to be cautious with your position sizing, and that of course will continue to be a major concern with traders looking to get involved in this market, as the volatility will certainly pick up going forward.
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Cracked Up. The Energy Report
By: Phil Flynn | March 12, 2024
Oil prices rebounded yesterday as it appears that gasoline supply is not all it’s cracked up to be. There are lingering concerns about the tightness of supply in the Midwest in the aftermath of the Whiting BP refinery outage as well as another refinery outage.
Reuters reported that the coker and small crude distillation unit (CDU) were shut by a leak on the gasoline-producing fluidic catalytic cracker (FCC) at Total Energies’ 238,000 barrel per day Port Arthur, Texas refinery, causing the gasoline crack spread to rise and causing tightness and many of the physical gasoline delivery points. Yet underneath it, the fact that the supplies of gasoline crude oil and diesel fuel are below average here and around the world against a backdrop where OPEC is cutting production, is setting the stage for yet another rally as the market heads into the summer driving season.
The rising gasoline prices along with today’s consumer price index could be a key determining factor into how many times the Federal Reserve will cut interest rates this year. We know that at least one rate cut is on the table because the Federal Reserve, going into an election year, could not possibly cut rates after making that promise. At the same time, if it’s a one cut and done it’s possible that we could see a rebound in the dollar. In recent days the dollar has been lower.
The gasoline price situation will not win voters’ favor with the Biden administration that they realize has had an impact on rising gasoline prices. The Keystone Pipeline that Biden killed would have been up and running by now. It would have moved oil from Canada in a much more efficiently manner to US refineries and out to the rest of the world. That pipeline would have moved oil more safely and more efficiently and because the oil is heavy it would have also played a big role in that helping the world rely more on Canadian oil. Instead, the world has turned to Russia to fill that heavy oil void.
Biden of course did not think these things through when he killed the Keystone Pipeline purely for political reasons. The Keystone Pipeline was not about the environment, it was not about jobs for the United States. It was all about making a political statement that there was a new sheriff in town and this new sheriff was going to crack down on fossil fuels.
The killing of the Keystone Pipeline was also to restrain investment in the United States. The ESG movement along with regulatory uncertainty has set the stage for US oil production peak. Instead of increasing refining capacity to take advantage of the US shale production, Biden discouraged that by saying they wanted to replace fossil fuels. Those people who believe that Biden’s policies were OK for the US oil and gas industry really haven’t talked to people in the US oil and gas industry. Those who point to record US production is evidence that Biden’s policies had no impact on US production, must realize that it takes years and massive investment to make that production happen. Now with new taxes on oil and gas producers proposed by this administration and even more taxes on the wealthy, the boom that we have seen that has been built up over decades will start to reverse.
Still it’s worth noting that, “The United States produced more crude oil than any nation at any time, according to The Energy Information Administration International Energy Statistics, for the past six years in a row. Crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023, breaking the previous U.S. and global record of 12.3 million b/d, set in 2019. Average monthly U.S. crude oil production established a monthly record high in December 2023 at more than 13.3 million b/d. The crude oil production record in the United States in 2023 is unlikely to be broken in any other country in the near term because no other country has reached production capacity of 13.0 million b/d. Saudi Arabia’s state-owned Saudi Aramco recently scrapped plans to increase production capacity to 13.0 million b/d by 2027.
Together, the United States, Russia, and Saudi Arabia accounted for 40% (32.8 million b/d) of global oil production in 2023. These three countries have produced more oil than any others since 1971 (counting production in the Russian Federation of the Soviet Union prior to 1991), although the top spot has shifted among them over the past five decades. By comparison, the next three largest producing countries—Canada, Iraq, and China—combined produced 13.1 million b/d in 2023, only slightly more than what was produced in the United States alone.”
Yet those in the Biden administration should not try to take credit for what has happened because of years of hard work, ingenuity, investment that happened long before Biden came into office. Most people in the energy industry will tell you that Biden and his policy is creating an energy crisis that is going to happen in the future mainly because of the short-sighted policies by this administration.
Of course one the key thing in the short term that will move the price of oil will be today’s consumer price index but we really have to focus on U.S. oil inventories as well. We expect to see a drawdown in crude supplies by 2,000,000 barrels and product supply by 2,000,000 barrels as well. We’re starting to see gasoline inventories tighten significantly especially in the Midwest and we’re starting to see diesel supplies be squeezed. We’re lucky we had a warm winter because once again diesel supplies could have been much tighter than they already are. But the thing you must really keep an eye on is where we go from this point forward. As this summer driving season is coming around and even if we get a soft consumer price index in this report, the possibility of a price jump forecast is very high.
Geopolitical risks are still high. Reports that we’re seeing more bombing in Gaza has caused Iranian backed Houthi rebels to vow to continue their acts of terror in the Red Sea. Hot inflation and fiscal uncertainty is driving investment in cryptocurrencies, gold, silver and platinum. Palladium also has had an incredible ride along with a very tight supply of iron ore. Physical commodities are tight and that could drive commodities that are undervalued in many ways compared to the rest of the market.
Natural gas producers are going to feel more pain as natural gas spot prices fell to the lowest level since October of 2020. According to natural gas collector, the previous 2024 low was $1.37 on February 26. Obviously, they’re pointing to warm weather and that still presents a challenge to the physical price premium as prices flipped into the negative for the second time this month. Free gas, no place to go.
There are reports that China’s liquefied natural gas imports are going to rise next year after they already increased by 12.6% last year. With growing global demand for liquefied natural gas and the fact that the United States could supply gas to the world thereby replacing dirty coal, it makes no sense that Biden has paused reviews of new LNG export facilities. China stock market is also 20% from its lows and the according to Bloomberg News that is fueling predictions that China’s stock market has bottomed out.
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Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | March 12, 2024
• Top Movers
NYMEX RBOB Gasoline Futures 2.11 %
NY Heating Oil Futures 0.69 %
London IPE Gas Oil Futures 0.56 %
London IPE Brent Crude Futures 0.16 %
London IPE Brent Crude Spot 0.16 %
• Bottom Movers
NY Natural Gas Futures 2.55 %
ICE Newcastle Coal Continuous 2.31 %
AU - Queensland Base-Load Electricity Futures 0.14 %
NY Crude Oil Futures 0.1 %
*Close from the last completed Daily
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Natural Gas Further Testing Support Levels
By: Bruce Powers | March 11, 2024
• Natural gas tests key support levels, with potential for a bullish reversal once complete.
Natural gas further tests support around the 20-Day MA (purple) on Monday with a slightly new retracement low of 1.75. It is on track to complete an outside day today as earlier in the session last Friday’s high was exceeded briefly to the upside. The 50% retracement is also near the retracement lows at 1.765. So, there is the 20-Day line and 50% retracement marking potential support along with last week’s low. Since a bullish breakout above Friday has failed, today’s low is also at risk of failure to the downside. This doesn’t mean it will fail, just that the chance it could do so has increased.
Next Lower Support at 61.8% Fibonacci Retracement of 1.71
If natural gas does break below the current support area it likely heads towards the 61.8% Fibonacci retracement at 1.71. Certainly, that would indicate a failure of the 20-Day MA to maintain support. Also, the 78.6% Fibonacci retracement is at 1.63. Notice that the short-term 8-Day MA line has turned down since Friday, thereby providing an indication of weakness. An initial rising ABCD pattern completed last week at the 161.8% Fibonacci expansion target of 2.02. Last week’s high was 2.01. The subsequent reaction of price tells us it is done. Therefore, the market needs to set up for the next potential advance. A retracement low may still be established near today’s low, or a drop to lower price levels comes first.
Bullish Reversal Anticipated Once Retracement is Complete
Nonetheless, the recent swing low from February 20 is a solid low and there remains the possibility that the rally off that low will continue once the developing up trending pattern expands with a new swing low. In other words, the price swings within the developing uptrend becomes larger. Today’s low may be that bottom or the lower levels noted above may be hit first. In general, staying above the 20-Day line shows greater underlying strength than trading and closing below the line.
Breakout Above 1.84 is Bullish
Regardless of the above analysis, a decisive breakout above today’s high of 1.84 provides a bullish signal. If it holds natural gas should rally into last week’s high zone to test it as resistance. An upside breakout above last week’s high of 2.01 confirms strength and thereafter a higher potential target comes into view. The next higher key target has been identified around 2.23. That is where the December swing low was and the 38.2% Fibonacci retracement of an internal downswing. The 50-MA was also at that price earlier but it has come down some to 2.22.
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Today's Futures Heat Map • Weakest: Natural Gas, Orange Juice, Lean Hogs, Soybean Meal
By: Barchart | March 11, 2024
• Today's Futures Heat Map
Strongest: Cocoa, Bitcoin, Sugar, Platinum
Weakest: Natural Gas, Orange Juice, Lean Hogs, Soybean Meal
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$WTIC $OIL - Holding that Bear Channel B/Out. Has yet to recover that Mthly 20/MA tho, when it does (if) my hghr targets will come into view...
By: Sahara | March 11, 2024
• $WTIC $OIL - Holding that Bear Channel B/Out.
Has yet to recover that Mthly 20/MA tho, when it does (if) my hghr targets will come into view...
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The Edge. The Energy Report
By: Phil Flynn | March 11, 2024
The crude oil market has been edging lower reluctantly as banking worries and China’s economy and US regional bank concerns are raising demand fears even as global supplies tighten. WTI rejection of $80 a barrel has some wondering whether the move is over. Hedge funds are back, ramping up on the short side of the market trying to keep prices under control. Yet seasonal factors and geopolitical risk factors will keep the market from falling too hard.
Cease-fire hopes were dashed Biden issued a ‘red line’, warning Israel not to attack Rafah. Biden is trying to balance support for Israel against the screaming support for the Palestinians in his party. This is the latest attempt by Biden to appease the lefties in his base.
A pull-back in oil rigs and a cut in US oil investment will start to be felt as we head into the summer driving season and that normally will add 10 to 15 cents a gallon to the prices at the retail levels. This week we are looking for draws in gasoline and distillate as well as crude in a bullish trifecta and another weekly drop in US crude oil production.
China continues to be a source of speculation for the bears. Forget the fact that Chinese refinery reruns are at all-time highs, the state of the Chinese economy is a worry. China’s crude imports were viewed as mixed.
Yet Reuters reported that, “Saudi Aramco Chief Executive Amin Nasser said on Sunday the oil giant was looking at further opportunities to invest in China, where he said oil demand was robust and growing. State-owned Aramco has been ramping up its China presence in a string of deals in refining and petrochemicals, some of them with crude offtake agreements attached. “So far we are in the early part of 2024, demand is healthy and growing in China,” Nasser said on a media call following the release of results that showed net profit falling 24.7% to $121.3 billion on lower oil prices.
China imported 10.74 million barrels a day of crude oil during January-February of 2024 against 10.4 million barrels a day in the corresponding period of 2023, registering a growth of 3.3 percent. The Chinese Lunar New Year holiday and the travel associated with it helped crude oil consumption during these two months according to Hindu Times.
Reuters reported that U.S. energy firms this week cut the number of oil and natural gas rigs operating for the first time in three weeks, energy services firm Baker Hughes (BKR.O), said in its closely followed report on Friday. The oil and gas rig count, an early indicator of future output, fell by seven to 622 in the week to March 8, the lowest since Feb. 16. Baker Hughes said that puts the total rig count down 124 rigs, or 16.6%, below this time last year.
Natural gas is trying to bottom. The market is expected to see more production cutbacks. The announcement by EQT, the largest US natural gas producer, that said it would cut its production by 30–40 billion cubic feet (Bcf) through March 2024 seems to have given the markets a potential bottom and expectations of more production shut-ins.
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$WTI - Crude oil probably made a weekly cycle high last week when it topped at 81 on week 22 of this weekly cycle. The top isn't confirmed yet as it has to close below the 10 week MA to confirm it. Theoretically a higher high next week is still possible.
By: CyclesFan | March 9, 2024
• $WTI - Crude oil probably made a weekly cycle high last week when it topped at 81 on week 22 of this weekly cycle. The top isn't confirmed yet as it has to close below the 10 week MA to confirm it. Theoretically a higher high next week is still possible.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | March 9, 2024
• Following futures positions of non-commercials are as of March 5, 2024.
WTI crude oil: Currently net long 292.9k, up 18.3k.
The $81-$82 resistance proved too strong for oil bulls to win over. Last week, West Texas Intermediate crude tagged $80.85, closing at $79.97. This week, it ticked $80.67 on Wednesday to end the week down 2.5 percent to $78.01/barrel.
The crude remains bound within an 18-month range between $71-$72 and $81-$82. Last week’s was the first time in over three months the top of the range was tested, and it held firm.
With this, odds have grown of continued unwinding of the overbought conditions on the daily.
In the meantime, as per the EIA, US crude production in the week to March 1st fell 100,000 barrels per day week-over-week from record 13.3 million b/d. Crude imports increased 837,000 b/d to 7.2 mb/d. As did crude inventory, which grew 1.4 million barrels to 448.5 million barrels. Stocks of gasoline and distillates, however, declined 4.5 million barrels and 4.1 million barrels respectively to 239.7 million barrels and 117 million barrels. Refinery utilization increased 3.4 percentage points to 84.9 percent.
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Natural Gas Finds Support, Eyeing Upside Targets
By: Bruce Powers | March 8, 2024
• Natural gas found support at the 50% retracement and 20-Day MA. Bullish signal will occur on rise above today’s high of 1.84.
It looks like natural gas found support today around the 50% retracement and 20-Day MA. Today’s low was 1.755 and you can see how it bounced right off the price zone. That may be the bottom of the retracement given that the 20-Day line was tested as resistance on Tuesday, February 27. If successful, today’s low would be the first successful test of the 20-Day MA as support then. A further bullish signal could lead to a test of the recent 2.01 swing high and higher targets.
Successful Test of Support at the 20-Day Moving Average?
Prior to February 38 natural gas had been below the 20-Day MA since the drop on January 18. Traditionally, once prior resistance is successfully tested as support in a developing uptrend, the uptrend, in this case a counter-trend rally, may be ready to proceed. If that is the case with natural gas a bullish signal will be generated heading into next week on a rally above today’s high of 1.84.
Highlighting 2.24 Price Target
If the rally from the 1.52 swing low continues into new trend highs, there are interim price levels to watch on the way up. However, the market seems to be highlighting the 2.24 price area as a potential target. There are three pieces of analysis pointing to that price area. The 50-Day MA has recently converged with the 38.2% Fibonacci retracement of the full decline starting from the January 9 peak and they converge at the support area seen at that 2.235 swing low from mid-December.
Nonetheless, to reach 2.24 natural gas will first have to rise above the recent high of 2.01 and then exceed potential resistance up to a second 38.2% Fibonacci retracement level at 2.04. Beyond the 50-Day MA is the 200-Day MA at 2.61. It can be combined with the 61.8% Fibonacci retracement at 2.68, generating a price zone from 2.61 to 2.68.
Weakness on Drop Below 1.755
Regardless of the above bullish scenario, a decline below today’s low of 1.755 could lead to a deeper retracement. The 61.8% Fibonacci retracement is at 1.71. It provides a price level to watch for signs of support on the way down if that scenario does unfold.
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Natural Gas Price Forecast: Potential Retracement to 1.76/1.70 Support Zone
By: Bruce Powers | March 7, 2024
• Natural gas faced resistance at 1.95 - 1.97, likely heading towards support at 1.76/1.70. Short-term patterns hint at a potential reversal soon.
Following an inside day breakdown natural gas enters a deeper pullback from the recent 2.01 trend high. That high stuck resistance around the long-term downtrend line and previous trend lows, now resistance at 1.95 – 1.97. The 8-Day MA did not show signs of support as natural gas fell right through it and looks to be on its way to the prior swing high at 1.79 and possibly lower.
Maximum Retracement Possible to 1.76
The next lower likely price support area looks to be around 1.76/1.77. The 50% retracement is at 1.755 and the 20-Day MA is at 1.70. That zone could be the maximum for this retracement. Certainly, that would be a spot for it to happen.
Short-term Pattern Stands Out
There is one short-term price pattern that stands out and may or may not mean anything. We’ll know soon. The first pullback from the 1.79 swing high begins with the open to close range of the day occurring within the body of the previous day. Let’s call it a partial inside day. Then there was one wide range accelerated decline seen as a full-bodied red candle. The low of that day turned out to be the completion of the retracement. Similarly, the recent 2.01 swing high was followed by an inside day. Now today, Thursday, there is a sharp retracement likely to end with a large red candle. Might we see something similar next?
Weekly Chart Analysis
One more piece of that analysis to add can be seen on the weekly chart (not shown). Given today’s decline, it is currently on track to end with a weekly bearish shooting star candlestick pattern. However, if today’s low turns out to be the low or close to the low of the retracement, and it is followed by bullish price action, the weekly candlestick pattern may not end as bearishly.
Watching Price Action Relative to 20-Day MA Closely
The reaction of price around the 20-Day MA should provide a clue about underlying strength that could support a advance higher. Or help determine if the recent high completed an ABCD counter-trend rally in a downtrend and the bearish sentiment remains dominant.
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Natural Gas Continues to Pull Back
By: Christopher Lewis | March 8, 2024
• The natural gas markets have pulled back a bit over the last couple of days, but during the early hours on Friday we have seen the market stabilized just a bit.
Natural Gas Technical Analysis
You can see that we are somewhat stagnant at this point as the market really ended up being pretty quiet overnight. That being said, I think we are still in the midst of some type of huge consolidation pattern, so it is a bit difficult to get overly aggressive one way or the other right now.
Regardless, this is a market that will continue to pay close attention to the $2 level, which I think will be a bit of a barrier. Breaking above that will attract a certain amount of attention, just as breaking below the $1.50 level would be very attention-worthy as well. Both of these areas have been important in the past, and now that we have sold off so viciously, I think we are in a pattern where we are just simply trying to sort out whether or not the market can turn things around from a longer term swing trade standpoint. Short term trading in the natural gas markets will continue to be very difficult, so therefore, I’m not overly excited about doing that. I look for dips and then add to an ETF position.
The reason I use an ETF is it takes a lot of leverage out of the picture and therefore I don’t have to worry about the day to day swing. If you’re looking to trade natural gas from a day to day standpoint, you are looking to wreck your account to begin with because it’s not really a retail type of short-term setup. But furthermore, you also have to be abreast of what’s going on with weather patterns in the Northeast in the United States. What most retail traders don’t know is that the natural gas contracts they are trading are the Henry Hub natural gas contracts, which are based on US domestic supply more than anything else.
Yes, exterior markets can have an influence, but right now the United States is starting to head into spring, which means demand drops, so I suspect we probably bounce around for quite some time. We may get the last ditch winter storm or we may get a heat wave in the middle of summer to drive up the price, that’s essentially what you’re banking on.
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Crude Oil Continues to See Buyers
By: Christopher Lewis | March 8, 2024
• Crude oil markets have pulled back a bit during the beginning of the week, only to turn around and show signs of life again. With this being the case, I think you continue to be a bit of a “buy on the dip” trader given enough time.
WTI Crude Oil Weekly Technical Analysis
The WTI crude oil market has initially fell during the week, but it did turn around to show signs of life again, suggesting that perhaps we have a shot at breaking much higher. The $80 level continues to be an area that a lot of people will be closely monitoring and if we can break the above, then I think we have a real shot at going much higher, perhaps as high as $95 over the longer term.
Obviously, there will be several stops along the way, but that is a possibility. Short term pullbacks continue to be buying opportunities and I do not see an opportunity to sell this market any time soon.
Brent Crude Oil Weekly Technical Analysis
Brent markets look very much the same as you would expect with the $84.50 level offering a bit of a barrier. If we can break above that barrier, then we could go much higher. I think at that point in time we’re probably going to be looking at a move towards 95 as well. Now, granted, this is probably a move that will take the better part of spring and summer to complete.
But as far as the technical analysis is concerned, that seems to be where we are heading. Furthermore, we also have to keep in mind that the market participants will look at this through geopolitical tensions, the supply issue, the fact that the Middle East is essentially having a lot of struggles right now, and therefore all of that geopolitical tension could threaten supply.
Beyond that, the cyclical time of year is typically very bullish as people start to drive more, fly more, etc. So, all of this comes together for higher oil prices in the next couple of months and I think both of these charts reflect that.
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OPEC Commitment. The Energy Report
By: Phil Flynn | March 8, 2024
We are getting a first look at OPEC’s commitment to its voluntary production cuts as US diesel crack spreads rise in response to tight supply. Cease-fire talks between Israel and Hamas failed when HAMAS rejected the terms. A disruption in the Keystone Pipeline gave oil a pop on supply concerns but its larger concerns about global oil supply tightness continue to raise concerns. Then oil dipped on a Reuters report that the head of the International Energy Agency’s (IEA) said the global oil market is relatively well supplied.
Record-breaking refinery runs in China suggest even with a big year-over-year drop in Chinese car sales, the IEA predictions about global demand were low and reports that China’s demand growth will slow due to a switch over to green energy might be less likely after a major Chinese oil discovery. China’s CNOOC discovered an s 100-million-ton oilfield in the South China Sea. While the Biden administration continues to put more burden and taxes on US oil and gas producers, I highly doubt China will stand in the way of the CNOOC development of these wells.
So committed is OPEC. The latest Platts OPEC+ survey by S&P Global Commodity Insights said that, “the 22-country alliance held its crude production exactly flat month-on-month in February. They said that OPEC pumped 26.58 million barrels a day (mil b/d) allies added 14.63 mil b/d. The said that Countries with quotas produced 175,000 b/d above their caps with Iraq, Kazakhstan being the biggest cheaters.
This came after Saudi Arabia, Russia, and several OPEC+ producers extended voluntary crude supply cuts until the end of June. And they are warning of a supply deficit if they extend cuts until the end of the year.
The Energy Information Administration confirmed what we already knew and that is that China broke refining records. The EIA wrote, “Crude oil processing, or refinery runs, in China averaged 14.8 million barrels per day (b/d) in 2023, an all-time high. The record processing came as the economy and refinery capacity grew in China following the country’s COVID-19 pandemic responses in 2022.
Weakness in the oil market today could be some preemployment report profit taking and geopolitical risk factors for oil continue to be very high. Reports that the United states is warning people there could be attacks on the US embassy and for all American citizens to leave Russia is also raising concerns in the marketplace today. US gasoline demand and diesel demand are going to rise and that’s raising concerns about the supplies being below average for this time of year. Industry insiders believe that if the Biden administration has the courage to follow through on Venezuelan oil sanctions, then the supplies of diesel are going be very tight.
Natural gas producers have major issues after winter failed to happen. Producers must cut back and those that will survive most likely will be hedged and based on data from the CME Group, many did. The CME Group wrote that, “In February 2024, warmer weather engulfed much of the US. The consistent record production levels coupled with reduced demand led to a decline in price throughout the month. Gas prices this month fell to an inflation-adjusted 30-year low to $1.50/MMBtu with inventory levels 20% above 5-year averages. Natural gas prices were at their 10-year lows, prices surged after the production cut announcement from Chesapeake in the Permian on February 21st. Before this announcement, the most actively traded strikes were between 1.5 and 1.75, during the rally, the most popular strike was 2.000. Traders continue to use the most liquid Henry Hub futures and options CME markets to manage risks. CME Henry Hub Natural Gas futures Avg. Daily Volume in February 2024 was 581K, up 17% YoY. Avg. Open Interest is 1.53M up 25% YoY. Henry Hub Options broke records in February with a new monthly average. Daily Volume record of 273K. Henry Hub Option’s single-day Open Interest is 4.7M, the highest it’s been since 2014.
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Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | March 7, 2024
• Top Movers
AU - Victoria Base-Load Electricity Futures 2.6 %
London IPE Gas Oil Futures 1.9 %
NY Heating Oil Futures 1.73 %
NSW Baseload Electricity Continuous 1.37 %
NY Crude Oil Futures 1.25 %
• Bottom Movers
NY Natural Gas Futures 1.43 %
*Close from the last completed Daily
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Crude Oil Continues to See Volatility
By: Christopher Lewis | March 7, 2024
• Crude oil markets continue to be very noisy, and I think that is a sign that we are building up momentum in a market that is running out of time before we start to eventually breakout to the upside.
WTI Crude Oil Technical Analysis
You can see we continue to bounce around a bit as we try to sort out where we are going longer term. Either way, I do think this is a market that more likely than not will continue to see buyers on dips. And that’s how I treat it. The WTI market has a major barrier above the $80 level, which of course, is a large, round figure and an area that we’ve seen action at previously. So, it would obviously attract a lot of attention if we broke above there.
Underneath, we own the 200 day EMA and try everything you can to offer support. And if we were to break down below there, then the 50 day EMA comes into the picture as well for support. I have no interest in shorting WTI because I think we are about to see a big breakout.
Brent Crude Oil Technical Analysis
Brent is very much in the same situation as we hang around the 200 day EMA. The $84.50 level above is a significant barrier that if we can break above there then we can go much higher.
If we break down below here, then the 50 day EMA comes into the picture where we could see a lot of support as well. Again, this is a buy on the dip type of scenario. And I do think that you have to look at this through the prism of trying to find value. Supplies are somewhat tight and that, of course, will continue to drive oil higher if central banks start to loosen monetary policies that could drive up demand through economic expansion.
And then, of course, we have the cyclical time of year when more crude oil is demanded anyway. So all of this comes together quite nicely for a buy on the dip market, which I continue to buy on the dip. Again, I have no interest in shorting crude oil, and I do think that if we can break above the barrier just above in both of these grades, these markets could really start to take off.
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Cross Currents. The Energy Report
By: Phil Flynn | March 7, 2024
The possibility of a Fed rate cut along with tightening US crude oil supply and rising demand was enough to give WTI oil another run above $80 a barrel before banking concerns caused a retreat in a global oil market where geopolitical risk is red hot. Israel-Hamas ceasefire talks have gone nowhere and the Iranian-backed Houthi rebels who sunk their first ship now have their first murder as they killed at least three crew members on a commercial ship in the Gulf of Aden. Also there are reports of a refinery explosion in Iran. New York Community Bancorp, in the city that doesn’t sleep and where Gov. Kathy Hochul must call in the National Guard to keep the subways safe, received $1 billion from a group of investors including former Treasury Secretary Steven Mnuchin, in a bid to shore up confidence in the troubled regional lender according to the Wall Street Journal. That seemed to shake the stock market just a bit and oil even as gold, silver platinum, and palladium soared. Big drops in US distillate and gasoline supply on a pick weekly uptick in gas and diesel demand should start to concern consumers.
The Energy Information Administration warned that reduced U.S. refining activity has put upward pressure on prices as U.S. refinery utilization has decreased by 11%, falling as low as 81% during the last two weeks dropping briefly below the five-year. Even as the U.S. retail average prices for gasoline and diesel are below 2023 prices. That is because oil prices have been low due to rising US oil and gas production, which was caused by US oil company innovation and not by any help from the US government. US oil production dipped back last week, and many US oil producers are fearing that Biden’s methane taxes force many US oil producers out of business leading to a sharp decline in US oil production.
The Methane Tax was created in 2021 and tucked into the so-called Inflation Reduction Act (IRA) that failed to reduce inflation and actually had the opposite effect. Now it’s doing the same thing with methane emissions as the EPA expects it will just make products cleaner but in reality, will force producers out of business and give more market share to foreign producers who will no doubt pollute more. The tax started in 2024 at $900 per metric ton of methane released above the regulatory threshold of 25,000 metric tons of carbon dioxide equivalents per year. The fee increases to $1,200 in 2025 and $1,500 in 2026 and beyond. The drillers are warning that as the taxes rise the US production will fall. That will help OPEC and Russia.
This comes as the Biden administration looks to try to tighten sanctions on Russia but may turn a blind eye to Venezuela which failed to live up to its agreement to run a free and fair election. I know you are shocked. I mean if you can’t trust a guy like Venezuelan President Nicolás Maduro, who can you trust? Reuters is reporting that Chevron is back to drilling in key Venezuelan oil fields as the company plans to drill as many as 30 wells in production boost production even as Biden threatens more sanctions. Apparently, like the rest of the world, Chevron must not take threats from the Biden administration too seriously. Just Don’t.
The Energy Information Administration has warned that reduced U.S. refining activity has put upward pressure on prices as U.S. refinery utilization has decreased 11%, falling as low as 81% during the two weeks ending February 9 and February 16, and briefly dropped below the five-year (2019–23) low. Although U.S. retail average prices for gasoline and diesel are below 2023 prices for this time of year, decreasing regional inventories for the major U.S. refining regions increased retail prices for both fuels last month, according to our Gasoline and Diesel Fuel Update.
The sharp decline in refinery utilization is the result of reduced plant operations in both the Midwest and Gulf Coast regions and more intense seasonal patterns. The decline is also affecting inventories. Reuters reported that, “One of Turkey’s mid-sized Mediterranean oil terminals – the Dortyol terminal – will no longer accept Russian imports after receiving record volumes last year, amid an increase in sanctions pressure by the United States. Turkey has become one of the biggest importers of Russian crude and fuel since 2022, after the West imposed sanctions on Moscow for the invasion of Ukraine. Russia responded by re-routing oil away from Europe and the U.S. to Asia, Turkey and Africa.”
China’s oil demand remains strong. Argus Media reported that China’s Jan-Feb crude imports rose by 3pc from a year earlier on the back of firm demand before the Lunar New Year holiday. Crude imports during the first 2 months averaged 10.74 million barrels a day.
Reuters is reporting that, “At least two people were injured in an incident during a maintenance operation at the Aftab oil refinery in Iran’s Bandar Abbas, Iranian state media outlets reported on Thursday, citing the operating company. Earlier, the Iranian state news agency IRNA said several people had been killed and injured due to an accident there, but cautioned there had been no official statement. Several state media outlets later described it as a “partial incident that happened during a maintenance operation”, without giving details of what that entailed, and said there were at least two injured, with no mention of any dead.
The EIA put U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.4 million barrels from the previous week. At 448.5 million barrels, U.S. crude oil inventories are about 1% below the five-year average for this time of year. Total motor gasoline inventories decreased by 4.5 million barrels from last week and are about 2% below the five-year average for this time of year. Both finished gasoline and blending components inventories increased last week. Distillate fuel inventories decreased by 4.1 million barrels last week and are about 10% below the five-year average for this time of year.
The natural gas drama can continue as the market tries to balance the potential for more US production declines versus the possibility of more of a glut if demand doesn’t materialize. The long-term impact of LNG pauses on projects will be a problem for the market as it needs investors to keep the US viable is upping their LNG exports facilities.
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Natural Gas Faces Resistance from Where it May Breakout or Retrace
By: Bruce Powers | March 6, 2024
• Natural gas consolidates near highs, testing key resistance zones. A breakout above 2.01 encounters the next potential resistance zone from 2.02 to 2.04.
Natural gas consolidates near highs with an inside day today, Wednesday. It continues to show strength as it has been testing a key near-term resistance zone for the past several days. The price zone ranges from around 1.95 to 2.01. It includes the long-term downtrend line and prior trend lows from February and April 2023. Two Fibonacci levels mark the next higher potential resistance zone from 2.02 to 2.04. What this indicates is that a breakout above 2.01 may quickly hit another zone of resistance. Moreover, natural gas may break right through the Fibonacci price zone and continue higher.
Watching for Further Signs of Strength
A sign of weakness is shown in the recent daily closing prices as there has yet been a decisive close above the low of the first zone at 1.95 or the downtrend line. If that happens, it will further confirm the strength indicated by the rally so far. What happens next though will be important. A daily close above 1.95 by itself is not a reliable signal. But once there is a decisive daily close above 2.01 the chance for a continuation higher improves slightly, and then more so on a move above 2.04.
8-Day Moving Average Provides Dynamic Support
The 8-Day MA crossed above the 20-Day MA reflecting strength in the current advance. It will also mark key dynamic support level for the rally. It is currently at 1.85. A drop to test support of the 8-Day line becomes more likely if there is a drop below today’s low of 1.92. However, a drop below the two-day low at 1.89 is going to provide a clearer sign of short-term weakness. Other price levels to watch for possible support if a pullback from this week’s high occurs is the prior swing high at 1.92 (B) and the 20-Day MA at 1.78.
Remains in Long-term Downtrend
Although we have seen short-term strength recently in natural gas it remains in a long-term downtrend. Rallies can be expected to encounter resistance around prior key price levels. The dominant downtrend may again exert its control over price action leading to either an eventual continuation of the downtrend or at least further tests of support levels.
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OPEC’s Long Game. The Energy Report
By: Phil Flynn | March 6, 2024
While the United States has embarked on self-defeating and short-sighted energy policies, it appears that the OPEC long game led by Saudi Arabia is starting to pay off. After the Saudis engineered an extension of the OPEC and Russia production cuts as well as promises of compensation cuts by cheating producers, they now feel confident enough to raise prices sharply as US energy producers are signaling retreat. Saudi Aramco raised the official selling price for their coveted Saudi Aramco Arab Light by $0.20 per barrel over the Oman/Dubai average, putting April deliveries up $1.70 per barrel more than the Oman/Dubai average, up from $1.50 per barrel this month. S&P Global reported that, “Europe was the only slow-demand part of the world.” More and more, OPEC will profit off of that demand while the US oil production growth is expected to go into retreat.
This Saudi price increase comes at the same time the American Petroleum Institute (API) reported that US petroleum supplies were tighter than market expectations. This could signal the start of a trend of tightened supply that could keep prices of gas and diesel high even on reports that the BP working refinery may be back online giving the Midwest some pump price relief.
The API reported crude oil inventories rose by 423,000 barrels much less than the 2.6-million-barrel build expected. The API said gas inventories fell this week by 2.8 million barrels, after a 3.272-million-barrel inventory drop last week and are about 2% below the five-year average for this time of year. Distillate inventories also fell this week, by 1.8 million barrels and are about 8% below the five-year average.
US foreign policy also does not seem to be making oil transit safer. A report from a source called the ‘Iran Observer” claimed that Iranian naval forces seized a US oil tanker in the Gulf of Oman.” If true that would add more risk premium from the axis of risk premium, the country of Iran that has been the main driver of oil risk premium. Iran spent its recent oil fortunes they have received because of lax sanctions enforcement by the Biden administration on supporting Hamas Hezbollah and those pesky Houthi Rebels that finally sunk their first ship last week.
Al Arabiya reports that, “Iran will unload about $50 million worth of crude from a Marshall Islands-flagged tanker seized last year, the semi-official Fars news agency reported on Wednesday, in a tit-for-tat action against the United States. Advantage Sweet is a Suezmax crude tanker that had been chartered by US firm Chevron and was seized in April 2023 by Iran’s army following an alleged collision with an Iranian boat.
While those in the oil industry started to worry about the decline rate from lateral wells, the Energy Information Administration has touted the success of the US oil and gas industry that was made by innovation by private companies and not the government. The Biden administration points to rising US oil production as a sure sign that their anti-fossil fuel agenda is having no impact on prices even as US consumers bear the brunt of these self-defeating policies. This is an administration that was against US oil and gas before they were for it and again against it, depending on who they are talking to. It is never their policies that are to blame, it’s either the oil companies or the food companies but they are first in line to take credit for the work of the US oil and gas industry. You know, the price gougers and war profiteers as Biden calls them. Yet despite the vitriol and indignities, the US oil and gas industry has had to take from this hostile administration, they continue to shine with innovation that gives hope to the world.
The EIA writes about that success by saying that, “U.S. crude oil production averaged 13.3 million barrels per day (b/d) in December 2023, following sustained productivity increases at new wells, according to our latest Petroleum Supply Monthly (PSM). U.S. crude oil production has increased to record highs since 2010 and has risen even more quickly in recent months. These record highs have come despite declining U.S. drilling activity because the new wells are more efficient. Since first surpassing the previous record in August 2023, U.S. crude oil production has increased another 2%, exceeding the pre-pandemic November 2019 peak by 0.3 million b/d.
The number of new wells brought online by drilling activity has historically been the key determinant of whether crude oil production increases or decreases. However, advances in horizontal drilling and hydraulic fracturing technologies have increased well productivity, enabling U.S. producers to extract more crude oil from new wells drilled while maintaining production from legacy wells according to EIA.
Yet last year’s US shale oil production growth rate is expected to slow significantly. If true that would ensure that we head into a supply deficit later in the year. More stimulus in China as well as expected future rate cuts by the Fed should feed a surge in global oil demand as well. Industry insiders say that the uncertain investment environment is making it more risky to continue to invest in shell wells new legislation better by the ministration to round the methane releases and other regulations that are being proposed could sharply curtail investment and drilling in the US oil and gas sector.
That is making Crown Prince and Prime Minister of Saudi Arabia Mohammed bin Salman Al Saud’s supply management campaign a success at the expense of consuming nations’ interests, while the US and Europe have made some ridiculous decisions in the name of green energy and saving the planet. Saudi Arabia and Russia stayed focused on global energy needs and the fossil fuel realities giving them huge advantages as we move into an era of petroleum markets woefully underinvested in for our future.
You know $80.00 for oil in the short term could see some resistance yet the monthly charts are looking very bullish for a potential move to 90 within the next couple of months. Oil products also are under-supplied and it’s going to be very interesting to see if the market is going to be able to keep up with demand at these price levels prices. More than likely the market is going to have to rise fairly significantly to keep up with demand.
Natural gas is balancing cutbacks in production versus warm weather as well as the uncertainty created by the Biden administration as far as LNG exports based upon his study of its impact on the environment.
EBW Analytics reports that rapidly falling production scrapes are down 3.0 Bcf/d over the past four weeks, including EQT’s announcement of its own 1.0 Bcf/d of curtailments for March. Still, exceptionally mild March weather may drive surging storage surpluses to add 175 Bcf vis-à-vis the five-year average. Including Canada, North American surpluses may reach a staggering 900 Bcf above five-year normals. Bullish technical and tremendous outstanding speculator shorts offer further upside price risks in the near term. Fundamentally, however, a sustained period of low prices this spring may be needed to support elevated electricity coal-to-gas switching and keep curtailed producer volumes out of the market.
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Natural Gas Advance Stalls at Key Resistance Zone
By: Bruce Powers | March 5, 2024
• Natural gas continues its uptrend with higher lows and highs, but weak closes signal resistance at 2.00 and potential for further gains if it exceeds 2.01.
Natural gas is set to complete another day with a higher low and higher high as the uptrend progresses. At the same time, the close on Wednesday following a new trend high was weak, in the lower half of the day’s trading range. A similar situation may be developing today, Tuesday, as a new trend high was hit. But the closing price is setting up to be weak, in the lower half of the session’s price range. Resistance was seen off the day’s high of 2.00.
Previous Trend Lows and Downtrend Line Mark Resistance Zone
Today’s price action highlights a key near-term price zone of interest as two lines of some significance are marking the current resistance zone. There are two horizontal lines representing the previous trend lows from a year ago from 1.95 to 1.97. And the long-term downtrend line that begins from the August 2022 peak marks a similar price zone. Notice that on each of the past two days the closing price was below resistance represented by the trend line. So, the next positive sign for the bulls is a close above the trendline.
Rise Above 2.04 Needed for Indication Natural Gas May Keep Rising
The new trend high is 2.01, just shy of the next higher likely resistance zone from 2.02 to 2.04. If the 2.04 high is exceeded and price keeps rising, and then closes above the downtrend line, higher targets become more likely to be reached. Notice the declining blue dotted parallel trend channel on the chart. It currently represents potential resistance, and it is going through the next resistance zone starting from 2.02 and therefore identifying a similar price zone. Two Fibonacci levels identify the zone, starting with the completion of a rising ABCD pattern extended by the 161.8% Fibonacci ratio at 2.02. The 38.2% Fibonacci retracement level is at 2.04.
Keeping the weekly chart in mind. A bullish reversal was triggered last week, and this is the second week where the price of natural gas rose above the prior week’s high. It wouldn’t be surprising to see at least three weeks up before the rally runs out of steam, or an inside week rest before continuing higher.
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Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | March 5, 2024
• Top Movers
NY Natural Gas Futures 4.41 %
ICE Newcastle Coal Continuous 3.01 %
AU - Victoria Base-Load Electricity Futures 0.15 %
• Bottom Movers
London IPE Gas Oil Futures 2.45 %
NY Crude Oil Futures 1.54 %
NY Heating Oil Futures 1.35 %
NYMEX RBOB Gasoline Futures 1.1 %
London IPE Brent Crude Spot 0.9 %
*Close from the last completed Daily
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Tangled Web. The Energy Report
By: Phil Flynn | March 5, 2024
Are inaccurate reports of global oil, supply and demand starting to catch up to the global oil market? Oil prices have been creeping higher as the market structure has priced in supply tightness based on the previous forecast by the International Energy Agency and the Energy Information Administration (EIA) should be happening. Even today the market seems underwhelmed with China’s 5% growth target and its promised stimulus. The reality is that Chinese oil demand has been much better than previously reported as has been US oil demand despite the naysaying by many.
The EIA reported that despite talk of sup-par Chinese demand, we saw Chinese refinery runs hit a record high. The EIA says that China averaged 14.8 million barrels per day (b/d) in 2023, an all-time high.
In the US, the EIA also said that US domestic fuel consumption reached 20.23 million barrels a day last year, the highest level since 2019. Some of that Chinese record refining was done with the US Strategic Petroleum Reserve and Russian oil. The key thing is that these reporting agencies have consistently underestimated demand and overestimated supplies. The problem with these bad predictions is that it caused a false sense of security in the oil market. It also lead to a lack of investment in oil and gas and is starting to become a major issue because on the uncertainty surrounding the data as well as the uncertainty surrounding energy policy from the Biden administration.
While oil seems to be disappointed with the Chinese news as far as their growth targets, the reality is it’s very, very bullish. We expect that the demand in the United States and the rest of the world will exceed expectations and not only will we see record demand for oil we’re going to see a market that’s going to be undersupplied in the second-half of the year. More and more the futures spread seems to be suggesting the same thing.
For many years I have been openly critical of the Energy Information Administration and their lack of focus about energy security and their constant shilling for the green energy lobby. Big green money has done significant damage to the supply side of the market. Once again we see signs that this green energy dream is based on moving money and controlling people rather than it is on saving the environment. As we have stated before and now is getting a lot of press, is the fact that electric cars that the Biden administration has been trying to force down the throats of Americans are not any cleaner and do more damage to the environment than that good old-fashioned internal combustion engine. Of course, we’ve known this for many, many years and we continued to talk about it. But we’ve got to stop the madness and come back to reality. The reason why that is so critical is that the average person gets hurt by these silly anti-energy policies.
Now the other crazy thing that the Biden administration did was release oil from the Strategic Petroleum Reserve. They put no restrictions on who could buy our SPR oil. China of course became one of the biggest buyers of US Strategic Petroleum Reserve oil. Now a classic government attempt to shut the barn door after the horse has escaped, they are now trying to ban China from buying oil from the Strategic Petroleum Reserve. Good luck with that.
Reuters reported that, “A measure in the U.S. funding legislation unveiled by congressional leaders on Sunday would block China from buying oil from the Strategic Petroleum Reserve. The desire for a hard line on China is one of the few truly bipartisan sentiments in the deeply divided U.S. Congress, and lawmakers have introduced dozens of bills seeking to address competition with China’s government. The issue of SPR sales to China heated up after President Joe Biden, a Democrat, announced in 2022 a sale of 180 million barrels of SPR oil to tame gasoline prices that spiked after Russia invaded Ukraine. Maybe they should ask for the oil back?
The markets are getting a little bit of a pullback too on concerns about what the Federal Reserve speakers will talk about. The speakers could push the market down a little bit but if they sound a bit dovish, oil could soar.
Natural gas is getting new life as producers start to slowly cut back on output with pledges by the biggest natural gas producers. The key thing is whether the market believes that we’re going to cut back supplies enough to avert a major supply glut. Today the market seems to be suggesting the production may be enough but it’s going to be a day-to-day thing. As we said before, we still like the back end of the curve when it comes to natural gas options.
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Natural Gas Price Forecast: Bullish Momentum in Natural Gas Continues
By: Bruce Powers | March 4, 2024
• Natural gas prices surged, exceeding previous highs and aiming for 2.02, driven by underlying strength and demand, with potential for further gains towards 2.23.
Natural gas continued its ascent on Monday, triggering a bullish trend continuation signal on a rally above last week’s high of 1.92. The high of the day was 1.99 at the time of this writing. That put natural gas above the previous trend lows from February 2023 at 1.97 and April 14 at 1.95, which was a potential resistance area. A daily close above 1.97 would confirm strength. However, it is starting to look like natural gas may not be able to close above 1.97 today, as an intraday pullback has taken it below the 50% level of the day’s trading range.
Next ABCD Target at 2.02
The 127.2% Fibonacci extended target for a rising ABCD was reached today at 1.92 and quickly exceeded. Subsequently, the 161.8% Fibonacci extended ABCD target is at 2.02. And that target is a little below the 38.2% Fibonacci extension at 2.04. Together, they represent the next higher potential resistance zone.
Traders Likely to Engage on Weakness
There was a quick one-day pullback on Friday following last week’s high of 1.92. Today, there was a clear bullish follow-through. Such a quick bullish continuation after only a one-day pullback is a sign of underlying strength/demand. It may indicate that this bounce/rally is not yet complete. Therefore, traders are likely to use short-term weakness as an opportunity to add or enter positions.
An advance above today’s high signals a bullish continuation of the trend. As noted above, the next higher target zone would then start at 2.02. If the 2.04 price level is exceeded to the upside natural gas should next head towards the end of a gap around 2.17, followed by 2.23 and 2.31, assuming it can keep rising.
Weekly Bullish Signal
It is important here to keep in mind the weekly time frame chart. Last week a bullish reversal triggered and was confirmed by last week’s close above 1.79. Today’s price action triggered a continuation of that bullish reversal on a rally above last week’s high of 1.92. A daily close above 1.92 will confirm strength and then further still if this week’s ends above that price level.
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Commitment. The Energy Report
By: Phil Flynn | March 4, 2024
One of the biggest challenges in the global oil market in recent years has been the commitment between OPEC and Russia to try to work together to support global oil prices. For OPEC to learn lessons, it usually takes a catastrophic mistake like a major price crash for them to get the message and change their ways. In the United States, a lack of commitment to US oil and gas production could teach us a lesson with a major price spike. Oil and gas industry leaders warn that US policies are planting the seeds of the next energy crisis. Even Warren Buffet is talking about the steep decline rates in US shale production that could see US oil production peak and give even more economic power to Russia and the OPEC cartel. Yet at the same time, he is making oil and gas a forever play in his portfolio as he touts the ability of the US oil and gas industry, mainly Occidental Petroleum, to beat the odds by tapping on rock to get oil and gas.
In the 1970s, no one realized how the Arab oil embargo would backfire on them. That move and threat to the global economy forced the world into energy efficiency that never would have happened if it weren’t for the threat that OPEC would cut off their supply. Because of that, the oil demand peaked, and it took decades for global demand to surpass the glory days before the Arab oil embargo. More recently Russia and OPEC learned that if they decided to go to war together and try to outproduce each other, it could lead to a price crash as it did just a few years ago and that epic price crash saw the price of oil trade below $0 per barrel and WTI in the United States.
While those memories are fresh in mind and with the economic outlook sending mixed signals to the cartel, they have decided to act decisively and definitively to try to stay committed to their current voluntary oil output cuts of 2.2 million barrels per day and committed to reigning in their overproduction. Russia also agreed to cut oil production and exports by an additional 471k bpd for the second quarter of 2024. Iraq and Kazakhstan also vowed to compensate for their previous overproduction. In other words, they could cut production more than their quota to make up for their previous cheating. A move that will leave the globe more undersupplied and create a floor for prices going into the end of the year.
This comes against a backdrop where the head of the US industry trade group the American Petroleum Institute Mike Summers warned that, “Washington is on the cusp of spoiling the American energy advantage, undermining it with short-sighted policies and hostility toward US oil and natural gas.” This hostility, along with the fact that there is uncertainty as far as investment, is causing concerns that we could see U.S. oil and gas production top out. That of course makes it a pretty darn good investment. The Oracle of Omaha Warren Buffett is making major investments in the energy space. Buffett points out that there is extreme value in the space but at the same time, is warning about the decline rate of current wells which could make the US energy production levels scarcer in the years ahead.
Buffet’s famed Berkshire Hathaway owns 27.8% of Occidental Petroleum and says that, “the company is “doing the right things for both its country and its owners” by helping to free the U.S. from reliance on imported oil. He says that Berkshire plans to hold the stock in the company “indefinitely”. He said, “No one knows what oil prices will do over the next month, year, or decade,” But the Occidental CEO Vicki Hollub does know how to separate oil from rock, and that’s an uncommon talent, valuable to her shareholders and her country.”
Buffet said “Not so long ago, the U.S. was woefully dependent on foreign oil, and carbon capture had no meaningful constituency. Indeed, in 1975, U.S. production was eight million barrels of oil equivalent per day (“BOEPD”), a level far short of the country’s needs. From the favorable energy position that facilitated the U.S. mobilization in World War II, the country had retreated to become heavily dependent on foreign – potentially unstable – suppliers. Further declines in oil production were predicted along with future increases in usage.”
Buffet went on “And then – Hallelujah! – shale economics became feasible in 2011, and our energy dependency ended. Now, U.S. production is more than 13 million BOEPD, and OPEC no longer has the upper hand. Occidental itself has annual U.S. oil production that each year comes close to matching the entire inventory of the SPR. Our country would be very –very – nervous today if domestic production had remained at five million BOEPD, and it found itself hugely dependent on non-U.S. sources. At that level, the SPR would have been emptied within months if foreign oil became unavailable.”
Of course, from the larger issue, it makes you wonder why the United States is turning away from such a valuable resource. Warren Buffett realizes that the goal to reduce greenhouse gas emissions is going to be built on the backs of natural gas. There is no other energy source that can replace coal and reduce greenhouse gas emissions better than natural gas and nuclear. Alternative energies, while they are part of the solution, are in no way able to replace the volume of demand that the globe. Sometimes it takes good old-fashioned common sense like Warren Buffett’s approach to realize the best direction forward.
As far as the crude oil market, this morning they got their traditional pop and drop on the OPEC news. Yet make no mistake about it the move by OPEC is going to work prices going forward. Use the opportunity to buy breaks and make sure that you get hedged because this summer it’s going to get very interesting. There are going to be some interesting spread opportunities coming up in the next few weeks. Probably time to start looking at some options in place as well as some of the seasonal spreads.
Natural gas is getting a little bit of a bounce this morning not so much on the weather but on the growing threat to US natural gas production, and low prices. This morning it was announced that EQT Corporation, the world’s largest producer of natural gas, is going to cut production in response to the low price environment. They expect cut gross output by one BCF a day to March in 30 to 40 BCF down the road. EBW Analytics writes that production scrapes are falling faster and—at least so far—more durably than anticipated. If supply continues to turn lower, it could set natural gas up for a notable move to the upside as the weather backdrop transitions in a less bearish direction into late March.
This comes as Qatar announces that they are going to sharply increase its liquefied natural gas production trying to take advantage of the United States’ pullback. Qatar and its desire to gain market share not only from the United States but also from coal producers as they plan to increase their LNG production by 85% in the coming years. Javier Blass at Bloomberg reports that the energy transition will eventually be a 0-sum game for one energy source to win the other one must lose. Blass says the obvious battle is between renewables and fossil fuels. Still, he also believes that there is a bigger battle between natural gas and coal fighting for supremacy. The problem Blass points out is that coal has been dirt cheap. Countries such as Bangladesh, Pakistan and Thailand once preferred LNG. It’s a not-too-difficult and not-too-expensive way to decarbonize or have second thoughts. Qatar wants to try to squeeze out coal to get a better grip on supplying the world with energy. The reality is that natural gas is going to play a major role and Qatar is going to try to control as much of the marketplace as they can.
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Crude Oil Continues to See Bullish Pressure
By: Christopher Lewis | March 4, 2024
• Crude oil markets continue to see a lot of noisy behavior, but at the end of the day both grades that I follow do look very bullish, and at this point I think we will eventually have some type of big breakout to the upside.
WTI Crude Oil Technical Analysis
The crude oil market pulled back slightly during the trading session on Monday, but still looks pretty bullish overall. The WTI crude oil market sees a significant resistance barrier in the form of $80, and it has been probed. At this point, I think it’s probably only a matter of time before we break out above there. When we do, it’s probably going to be very violent.
Short-term pullbacks should see the 200-day EMA underneath as potential support, and breaking down below there opens up the possibility of a move down to the 50-day EMA. But either way, I think both of those are going to be very difficult to break below. So, I think you have a continued buy-on-the-dip circumstance. That’s probably going to be the case for the foreseeable future in this market.
Brent Crude Oil Technical Analysis
The Brent market looks very much the same, its barrier being the $84.50 level. The $84.50 level is an area that we have seen a lot of trouble in, but if we were to break above there, it frees the Brent market to go much higher. The 200-day EMA and the 50-day EMA both are sitting underneath end offer and support as well, but at this point in time, both crude oil grades that we follow look as if they are forming inverted head and shoulders, or maybe a rounded bottom pattern.
Keep in mind we are heading into the time of year when demand picks up and of course supply has been so tight recently. Furthermore, we have to keep in mind that there’s a lot of trouble in the Middle East that could continue to keep prices somewhat higher. With that being said and central banks around the world looking to cut rates, demand should pick up in the next few months and therefore I think you’re seeing the market start to price that in.
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$WTIC $OIL - I am still mindful of a Bear 'Flag' within this Dn/Trend Channel unless negated
By: Sahara | March 4, 2024
• ... $WTIC $OIL - I am still mindful of a Bear 'Flag' within this Dn/Trend Channel unless negated.
Wkly Ivory 11/EMA could be considered spprt...
Nutty-Natty may still have one more swipe lwr tho, as it didn't reach my final target& Lwr-Parallel...
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$NATGAS #energy - Update.
By: Sahara | March 4, 2024
• $NATGAS #energy - Update.
These charts have kept us out of this commodity unless short.
Nutty-Natty may still have one more swipe lwr tho, as it didn't reach my final target& Lwr-Parallel...
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | March 2, 2024
• Following futures positions of non-commercials are as of February 27, 2024.
WTI crude oil: Currently net long 274.5k, up 36.8k.
With the daily now looking to unwind its overbought condition, West Texas Intermediate crude unsuccessfully tested the upper bound of a 17-month range between $71-$72 and $81-$82. This was the first time in over three months the top of the range was tested, and it held firm, with Friday tagging $80.85 intraday and closing at $79.97/barrel, up 4.6 percent for the week.
The crude remains just above the 200-day ($77.72). Friday’s session high also kissed the daily upper Bollinger band. A loss of the average in the sessions ahead opens the door toward the lower band.
In the meantime, as per the EIA, US crude production in the week to February 23rd remained unchanged week-over-week for four weeks in a row at 13.3 million barrels per day, which is a record and was first hit in the week to December 15th. Crude imports decreased 269,000 b/d to 6.4 mb/d. As did stocks of gasoline and distillates, which respectively declined 2.8 million barrels and 510,000 barrels to 244.2 million barrels and 121.1 million barrels. Crude inventory, however, grew 4.2 million barrels to 447.2 million barrels. Refinery utilization increased nine-tenths of a percentage point to 81.5 percent.
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Two weeks ago we turned bullish on $USO and $XLE. We remain Bullish as both continue to look strong by moving higher and breaking above resistance. Upside targets remain in effect as long as they stay above the 200d SMA and Ichimoku Cloud
By: Intelligent Investing | March 1, 2024
• Two weeks ago we turned bullish on $USO and $XLE. We remain Bullish as both continue to look strong by moving higher and breaking above resistance. Upside targets remain in effect as long as they stay above the 200d SMA and Ichimoku Cloud.
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Natural Gas Poised for Higher Prices Once Support Tested
By: Bruce Powers | March 1, 2024
• Recent correction in natural gas saw steep declines, increasing potential for a counter-trend rally; a weekly close above 1.79 would confirm bullish breakout.
Upward momentum in natural gas stalled on Friday leading to a minor pullback to below Thursday’s 1.83 low. The low of the day was 1.81, a little shy of testing support around the 20-Day MA, which is currently at 1.795. A successful test of support at the 20-Day line and subsequent bullish reversal will confirm the initial breakout above the line two days ago. Such a development would show an improvement in the uptrend and that it is gaining strength. Therefore, a move to higher prices may be in the works once a successful test of support around the 20-Day line is complete.
Key Near-term Support at 20-Day Moving Average
The area of the 20-Day MA was clearly resistance on Tuesday, the day before a bullish breakout that saw natural gas close above the line. Once there are signs that prior resistance at the 20-Day MA has become support, upward momentum should be ready to proceed.
Due for a Continuation of Counter-trend Rally
The current correction likely completed at last week’s 1.52 low. That was a long-term support level from March 2020 and the subsequent bullish reversal on the weekly chart shows demand improving.
Just by the fact that the recent correction saw a 58.2% decline in the price of natural gas in only 17 weeks, increases the chance of a counter-trend rally of some degree. So far, it has been minimal. The rally has not yet reached the 38.2% Fibonacci retracement. Generally, that level of retracement is looked at as the primary minimum retracement of even a strong trend, a downtrend in this case.
Next Key Metric is a Weekly Close Above Last Week’s High
Further evidence for a near-term bullish outlook will be indicated by a weekly close above last week’s high of 1.79. At the time of this writing trading is happening above that price level and natural gas is on track to close above it. If it does, that will confirm the bullish breakout and increase the chance for a continuation higher. A range from the prior bottoms of the decline off the August 2022 peak at 1.95 to 1.97 would then be the next target. Above that price area is the 38.2% Fibonacci retracement at 2.04.
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Lionhearted. The Energy Report
By: Phil Flynn | March 1, 2024
Oil prices are coming in like a lion. March is here and the Energy Information Administration (EIA) had to admit that US oil demand has been at a 4 year high and Russia is cutting exports of diesel and putting a floor on the price of their oil as fears that maybe sanctions might start to bite. Continuing and expanding backwardation suggests a tight oil market and crack spreads for gas and diesel snapped back after its Monday post (EIA) report plunge and sign that demand in India and perhaps even China is changing the narrative that current supply versus demand did not matter as we were going into a recession. Yet banking concerns could prove to be a headwind for the oil market that looks like it’s leaping toward a global shortage.
As reported by Bloomberg US domestic fuel consumption reached 20.23 million barrels a day last year, the highest level since 2019, according to Energy Information Administration data released Thursday. US demand should continue to strengthen this year to an average 20.39 million barrels a day, just below 2019 levels, said the agency. Forecasts for oil use are being closely watched by market participants, with global balances teetering into oversupply. Bloomberg says, “The EIA has in recent years come under fire for underestimating US demand in its weekly reports, only to revise them markedly higher in the monthly data. In its Thursday report, the EIA raised its estimate for December jet fuel demand by 5%. The agency also revised its figures for year-end gasoline and diesel consumption.
Oil also popped on signs that Russia with cut oil exports if they do not get the price they want as new sanctions are making buyers wary. Bloomberg reports that Moscow has for the first time activated its so-called price floor mechanism to shield the flow of petrodollars to its state budget from Western energy sanctions. Russia, which banned gasoline exports for six months, now is rumored to potentially ban diesel exports which would be a major problem for the globe because the diesel market is way under-supplied. Reuters reported that Russian Deputy Minister Alexander Novak said on Wednesday that Russia is not considering a ban on diesel exports and that a ban on gasoline exports may be lifted at any moment if the market becomes saturated. Yet this morning Reuters is reporting that Russia’s exports of ultra low-sulphur diesel (ULSD) from the Baltic Sea port of Primorsk are set to fall by 13% month on month to 1.73 million metric tons in March, down from the 1.86 million tons scheduled for February, two traders said on Friday.
So that’s why the Biden Administration pushes Russia with new sanctions Russia could cut back creating a global supply deficit by withholding exports that could potentially cause another huge price surge there’s a growing risk of a huge upside move if this happens and hedgers better be prepared just in case.
In the meantime, gasoline demand in the United States continues to be strong refinery outages in Whiting, IN continue to wreck havoc with the supply side and that’s keeping gasoline prices relatively strong, especially across the Midwest. And keeping the national average high, diesel could be a big problem if Russia cuts off exports so stay tuned.
It was reported by India News that India’s demand for jet fuel in February surged past pre-pandemic levels as increased air travel boosted consumption, preliminary data of state-owned firms showed on Friday. Aviation turbine fuel sales by three state-owned fuel retailers soared 7.1 percent to 6,32,600 tonnes in February compared to the year-ago period. This was 55.2 percent higher than the consumption in Covid-marred February 2022 and a shade better than the 6,32,100 tonne demand in February 2020, just before the pandemic set in. Month-on-month jet fuel sales were up 3.5 percent, the data showed.
Yet banking issues could cause a problem for oil bulls. Barrons reported that, “A month after shaking the regional bank industry with a surprise provision for loan losses, New York Community Bancorp rattled nerves again by announcing a $2.4 billion December quarter earnings hit. At the same time, it said it identified “material weaknesses” in its loan review process and abruptly changed CEOs.”
In China, consumer demand for energy is rising but manufacturing is still a worry. China’s manufacturing PMI index hit 49.1 for February, down from 49.2 in January but in line with expectations.
Natural gas is trying to bottom but spring time is making it difficult. The EIA said that working gas in storage was 2,374 Bcf as of Friday, February 23, 2024, according to EIA estimates. That represented a bigger-than-expected decrease of 96 Bcf from the previous week. Stocks were 248 Bcf higher than last year at this time and 498 Bcf above the five-year average of 1,876 Bcf. At 2,374 Bcf, the total working gas is above the five-year historical range.
Still the IEA point out that the United States was again the largest supplier of liquefied natural gas (LNG) to Europe (EU-27 and the UK) in 2023, accounting for nearly half of total LNG imports, according to data from CEDIGAZ. Last year marks the third consecutive year in which the United States supplied more LNG to Europe than any other country: 27%, or 2.4 billion cubic feet per day (Bcf/d), of total European LNG imports in 2021; 44% (6.5 Bcf/d) in 2022; and 48% (7.1 Bcf/d) in 2023
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$WTIC $OIL - Poppin
By: Sahara | March 1, 2024
• $WTIC $OIL - Poppin
Held that Daily Ivory 11/EMA & is piercing the final res-line here.
Needs to hold as it has had a habit of dropping back leaving a wick before the close...
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Natural Gas Price Forecast: Resistance Seen After Target Hit
By: Bruce Powers | February 29, 2024
• Monthly and weekly charts suggest a bullish outlook, with potential for a breakout above recent highs, leading to a gap fill opportunity.
Natural gas continued its advance on Thursday, triggering a new daily high and daily low. The day’s high of 1.92 completed a 127.2% extension of a rising ABCD pattern (D), thereby reaching the second initial target. Yesterday’s closing price was 1.87. If natural gas can close above that price level today, Thursday, it will represent a stronger close than if it ends below that price level.
Signs of Improving Demand
For Thursday, there were several indications showing short-term demand improving. The 20-Day MA was exceeded to the upside and the session closed above it. Currently, the 20-Day line is at 1.81. Second, the day ended above the downtrend line. And third, natural gas busted right through the first target zone at 1.85 with little hesitation and closed above that price level. The 1.85 target is the 100% completion of a rising ABCD pattern.
Potentially Bullish Monthly Pattern Forms
On a monthly basis, natural gas will complete the month of February with a potentially bullish hammer candlestick pattern bottom. A bullish breakout would then occur on a rally above this month’s high of 2.17. That high happens to be the high following the gap down on January 29. In other words, a monthly breakout will put the price of natural gas heading into that gap. Therefore, there would be a good chance the gap would fill, at a minimum, given the significance of a monthly breakout.
Weekly Behavior is Bullish
The weekly chart is also bullish. A bearish shooting star candle completed last week at the lowest weekly closing price in about 189 weeks. It was June 2020 when the weekly close was lower. However, the potentially bearish shooting star pattern failed to follow through. Instead, natural gas rallied above last week’s high, triggering a bullish reversal. The fact that it followed a bearish pattern increases the chance for a continuation higher as some of the fastest bullish moves come after failed bearish signals.
If natural gas continues to rally above today’s high of 1.92 it will next face two potential resistance areas initially. The first is from around 1.95 to 1.97. A second high price area is then at 2.02 to 2.04.
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Product Flop. The Energy Report
By: Phil Flynn | February 29, 2024
Oil prices hit a three-and-a-half month high, yet the oil products flopped in hopes that refiners may be able to meet current demand. Even as gasoline demand hit a three-week high, distillate demand pulled back on the winter heat wave that gripped most of the nation. This comes as Russia, as usual, plays hard to get to agree to the trial balloon put out that would have OPEC PLUS extend voluntary production cuts until the end of the year. Deputy Prime Minister of Russia Alexander Novak, former Russian energy Czar and former stand-in as Russian president for Putin, said it was premature to talk about the production cut extension. Novak of course had a part in pausing Russian gasoline exports driving down domestic gas prices in Russia but also raising concerns that Ukraine’s attacks on Russian refineries could be reducing their ability to refine oil products.
Yet Russian refinery outages may further tighten the global supply of distillates which could be a problem for the global economy as well as for us here at home. Quantum Commodity Intelligence pointed out that in yesterday’s Energy Information Administration (EIA) US stocks fell for the sixth straight week in the seven days to 23 February, albeit marginally and despite a big fall in weekly deliveries of diesel. Total inventories were pegged at 121.1 million barrels, down 510,000 barrels on the week to hit their lowest level since early December.
Oil on the other hand did improve. US crude inventories rose by 4.2 million barrels. That puts commercial crude oil stocks at the highest levels since mid-November. Cushing, OK oil stocks also hit a 6-week high of 31 million barrels. The API’s report had put the Cushing build closer to 1.8 million barrels. Total crude oil stocks hit an eight-month high of 807.4 million barrels.
Gasoline inventories fell by 2.87 million barrels as warm temperatures caused a surge in gasoline demand as motorists tried to take advantage of a bit of summer in winter.
Yet while we have seen improvement in crude supply, we are still below average in a world where supplies are below average and demand expectations are rising. JODI Data reported that Chinese demand rose by 1.2 mb/d to a 4-month high of 11.42 million barrels a day. Not quite the US demand of 19.5 million barrels a day but impressive nonetheless. U.S. commercial crude oil inventories are about 1% below the five-year average for this time of year. Total motor gasoline is about 2% below the five-year and distillates are 8% below the five-year average.
Quantum Commodity Intelligence pointed out that US ethanol stocks rose to an 11-month high last week amid a slowdown in exports despite gasoline demand hitting a three-week high. US ethanol stocks were reported at 26.022 million barrels in the week ending February 22, up 2% on the week and 5% higher on the year. Giovanni Staunovo reports that the EIA will release oil demand/supply data for December today. November crude production was at 13.308mbpd, EIA forecasts 13.338mbpd for December. US oil demand is forecasted at 20.065mbpd in December 23, was at 19.327mpbd in December 22.
Winter’s return and production reductions are giving natural gas hopes for a short-term bottom. With storage above normal and storage full in Europe, today’s EIA report will be critical. Yet despite the price crash and the fact that many producers are going through pain, the long-term outlook for LNG is strong. Anthony Harrup at the Wall Street Journal that U.S. natural gas inventories likely saw another below-average withdrawal last week as milder-than-usual temperatures continued through much of February. Natural gas in underground storage is expected to have decreased by 91 billion cubic feet in the week ended Feb. 23 to 2,379 Bcf, according to the average estimate in a Wall Street Journal survey of 11 analysts, brokers, and traders. Estimates in the survey range from a draw of 103 Bcf to one of 79 Bcf. The forecast implies a bigger withdrawal than the previous week’s 60 Bcf, but below the five-year average draw for the week of 143 Bcf. Stocks the previous week were 22.3% above the five-year average.
The U.S. Energy Information Administration said last week that if the rate of withdrawals matched the five-year average for the remainder of the withdrawal season, inventories would end March at 2,084, or 451 Bcf above the average.
The Gulf Times reported that, ”The global glut plaguing liquefied natural gas markets may start to dwindle in five years, threatening to spur a deficit equivalent to twice the output of leading producer Qatar. New projects are needed to fill the shortfall, with demand for the super-chilled fuel forecast to double in the 20 years to 2035, Cedigaz, a Paris-based industry research group, said in its LNG Outlook. Buyers in Asia are boosting use of the fuel at a “staggering” pace, Jack Fusco, chief executive officer of US exporter Cheniere Energy Inc, said in a Bloomberg Television interview. While plants currently in operation or being built will add to global oversupply, aging facilities and shrinking resources in some areas mean capacity will start declining after 2021. That’s a boon for companies from Royal Dutch Shell to Tellurian Inc and Novatek PJSC looking to invest in new production in the next decade to meet demand. “The continuous growth of the LNG market will leave a large margin for the implementation of new projects,” Cedigaz said in the report e-mailed on Thursday.
The US shale boom may make the country one of the biggest LNG producers by the end of the period, according to the Cedigaz report. Output will end in some nations such as Trinidad and Tobago. “I foresee that the LNG market needs at least a hundred million tonnes of new liquefaction capacity above what’s under construction today in order to meet demand needs of the market by 2025,” Meg Gentle, chief executive officer at Tellurian, said by phone on Thursday. “Demand is growing more than people expected.”
Global LNG capacity is expected to peak at 387mn tonnes a year by 2021-2022 from 288mn tonnes this year at existing or under-construction plants, Cedigaz said. Trinidad and Tobago, the world’s ninth-biggest producer, will stop production in 2029. The Atlantic LNG venture in the Caribbean nation has already curbed output and cut its workforce due to feed-gas shortages.
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Crude Oil Markets Continue to Find Buyers on Dips
By: Christopher Lewis | February 29, 2024
• The crude oil market continues to see a lot of buy on the dip” behavior, therefore I think it comes down to the idea that I had we are heading into a cyclical bullish time of year, and a lot of people will have to pay close attention.
WTI Crude Oil Technical Analysis
As you can see, the crude oil market has been very resilient every time we get a little close to the top of this massive range. That being said, this is a market that I think we’ll continue to see the $80 level as a significant barrier that, if we can break above it, we can really start to take off. The market breaking above there then opens up the possibility of a move to the $88 level. Short-term pullbacks at this point will continue to see buyers in the 200-day EMA and the 50-day EMA indicators underneath as we are forming a huge, rounded bottom.
Brent Crude Oil Technical Analysis
Brent looks very much the same as we’re hanging around the 200 day EMA. The $84.50 level of course will open up the possibility of a bigger move over here and at this point you are still jumping in and buying dips in Brent also. Tensions in the Middle East will continue to drive oil prices higher given enough time. And of course, demand is supposed to be picking up this time of year, typically from a cyclical standpoint. The Federal Reserve is going to continue to be a player as well, as it’s possible that they may cut rates rather aggressively, and if they do, that should spur industry, which of course should drive up demand for crude oil also.
Either way, I have no interest in shorting this market, and therefore, I’m either going to wait for a breakout or buy short-term dips in a back-and-forth manner. I have zero interest in trying to short this market. Because of this, I think you have a situation where if you are patient, you will get paid quite nicely over the longer term. That being said, you also have to be patient, so keep that in mind as well. Regardless, I do think that crude oil is probably going to be one of the stronger trades of the year given enough time.
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Agriculture Daily Market Movers (% Price Change)
By: Energy | February 29, 2024
• Top Movers
NY Natural Gas Futures 4.26 %
• Bottom Movers
NSW Baseload Electricity Continuous 4.76 %
London IPE Gas Oil Futures 2.92 %
NY Heating Oil Futures 2.66 %
AU - Queensland Base-Load Electricity Futures 2.34 %
AU - Victoria Base-Load Electricity Futures 1.92 %
*Close from the last completed Daily
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