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Natural Gas Sharp Rally Targets Higher Resistance Zones
By: Bruce Powers | July 22, 2024
• Natural gas surged from its recent low, breaking an internal downtrend line and aiming for key resistance levels, indicating strong bullish momentum.
Natural gas accelerated an advance on Monday off the recent 2.015 swing low of 2.015. That low completed a 36.2% bearish correction. A five-day high of 2.27 was reached today before there were minor signs of resistance. Where natural gas closes Monday’s trading session will be telling. Slightly stronger demand will be indicated on a daily close above 2.19 rather than below that price level. Given the wide range green candle for today, natural gas looks like it will be testing higher potential resistance levels before this bounce is complete.
Bullish Momentum Points to Higher Targets Starting with 2.39
Today’s sharp rally triggered a breakout of the internal downtrend line, and the subsequent strong bullish reaction shows the market aware of the line. Once the internal downtrend line is broken, the higher trendline becomes a target. Since the purple 20-Day MA, currently at 2.39, recently converged with the higher downtrend line, it can be watched together with the trendline as a potential resistance zone. Moreover, the 20-Day line is quickly followed by a confluence of indicators showing potential resistance at a range from 2.44 to 2.48. It starts with the blue 200-Day MA at 2.44, and includes the 38.2% Fibonacci retracement at 2.45, then ends at an interim swing low of 2.475 from May 28.
The May 28 swing low had significance previously as it was part of the rising price structure of higher swing lows and higher swing highs. Once it was broken to the downside following the June 11 trend high, another bearish reversal signal was indicated. It happened to correlate with support around the 200-Day MA at the time.
Higher Target Zone Begins at 2.57
In case the 2.475 level is broken to the upside, the next higher price zone looks to be from 2.57 to 2.59. The first level is the orange 50-Day MA and the second is the 50% retracement zone at 2.59. Of course, if this higher price level is reached, natural gas will be back above the 200-Day line, 20-Day line and downtrend line, a sign of strength.
Weakness an Opportunity to Position for Upside Continuation
Given the above short-term bullish scenario pullbacks into today’s price range of 2.09 to 2.27 will likely be used by traders as an opportunity to position themselves for a continuation of today’s bounce. If last week’s low completed the retracement, then not only is the 20-Day MA an initial target, but today’s bullish momentum may be the beginning of an advance that eventually attempts another breakout of the top long-term downtrend line.
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Should we be surprised at crude oil weakness? History suggests “No, not really.”
By: Jay Kaeppel | July 22, 2024
• Should we be surprised at crude oil weakness?
History suggests “No, not really.”
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$Oil $WTIC - Update...
By: Sahara | July 22, 2024
• $Oil $WTIC - Update
Took the Red-Route, and has slipped its Daily 42 & 150/MA's. Failure to recover quickly will question the 'Truncated-(E)' as Spprt
There is a 'Broadening' Plot formed (green). Which I would class as bullish, yet need a signal...
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Phil Flynn: The Energy Report
By: Phil Flynn | July 22, 2024
It looks like the democrats are the threat to democracy as the candidate that received the most votes in their primary is being forced to step down. Biden, the man who got the most votes in history in the last election and swept his party‘s nomination voting, is out of it. We did not hear that directly from him but in a press release he said among other things that, “while it has been my intention to seek reelection, I believe it is in the best interest of my party and the country for me to stand down and to focus solely on fulfilling my duties as President for the remainder of my term.”
Many people believe the reason why the president is stepping down is because he’s losing his mental faculties. Yet that raises questions as many Americans wonder why the democratic party and many members of the press covered for him when it was obvious he was in decline at time when geopolitical risks are rising. That is especially true for risk and policies that impact energy.
The Biden administration’s attempt to get back into the ill-fated Iranian nuclear deal is now looking like another major mistake. Secretary of State Blinken is warning that Iran now is now just 1 or 2 weeks from breakout capacity to produce nuclear material for a weapon. This comes after a policy approval that appeased the Iranian regime allowing them to sell more oil which hit near a six year high. That brought them billions of dollars.
The administration still failed get into the type of agreement that Joe Biden wanted while they argue that it’s all Trumps fault for pulling out of the JOCPA agreement in the first place . A deal that all expets knew would still allow Iran to get a nuclear weapon and also had allowed them to acquire ballistic missiles.
The reality is that after Trump pulled out of the deal that was a bad deal, he then put pressure on Iran and their oil revenue had fallen to a trickle. Now after the Biden appeasement, they rebuilt their oil and gas industry. They were able to send billions of dollars to support Hamas, the Houthi rebels and Hezbollah. Because of that the world has become a more dangerous place.
Now activity has raised the risk of a wider conflict after Israel was attacked and then struck back. The AP reported that, “The Israeli military said it intercepted a missile fired from Yemen early Sunday, hours after Israeli warplanes struck several Houthi targets in the Arabian Peninsula country. The Israeli airstrikes — in response to a deadly Houthi drone strike on Tel Aviv — were the first time Israel is known to have responded to repeated Houthi attacks throughout its nine-month war against Hamas. The burst of violence between the distant enemies has threatened to open a new front as Israel battles a series of Iranian proxies across the region.
Bloomberg reports that Rosneft PJSC’s major Tuapse refinery in southern Russia caught fire after a Ukrainian drone attack early Monday, regional authorities said.
Biden was the most anti fossil fuel and anti-US energy president in history. A president that called the US energy industry ‘price gougers and war profiteers’ and then tried to take credit for record breaking oil production. Of course it was the US energy industry that became more efficient and most of those innovations came before Biden.
Reuters reported, “U.S. energy firms this week added oil and natural gas rigs for the second 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, rose by two to 586 in the week to July 19, its highest since late June. Despite this week’s rig increase, Baker Hughes said the total count was still down 83 rigs, or 12%, below this time last year.
The rig count that is sharply lower than it was a year ago it’s a signal that U.S. oil production may be peaking and it’s going to be a challenge for the next president to keep that production going in the right direction.
And if Vice President Kamala Harris is the standard bearer for the democrat party, the outlook may even be bleaker for US energy and innovation. Vice President Harris has been open coming out against fracking, she has made a career suing US oil and gas companies. She has also been very supportive of the policies that have appeased dirty oil producers like Iran and Venezuela. If you did not like Biden’ s energy policy, beware of Harris because she is even more radical
China’s economy may be weak, but they are breaking records for air travel. China flight stats reported a record breaking 3,024,798 flights. That is up 11.98% from a year ago and a new record high.
This comes as Bloomberg reported, “An uptick in purchases of Middle Eastern oil by Chinese refiners is helping to support the physical crude market, even as deep-seated concerns remain about the trajectory of the nation’s demand.” They say that companies including Unipec and PetroChina Co. have boosted spot purchases of September-loading Middle Eastern crude to arrive in September-October, according to traders and analysts. That comes as state refiners ramp up following maintenance, a new private refiner prepares to start operations, and more buying is expected for the nation’s strategic reserves.
We also must keep an eye on Canada and oil production shut-ins. Reuters reports, “Wildfires raging through the northern part of Canada’s Alberta have forced evacuations of three communities, a provincial body said on Saturday, as the oil-rich province continues to fight five different ‘wildfires of note’ in separate areas. Wildfires of note is often considered to be of significant threat to public safety, communities, and critical infrastructure. The evacuation orders have been issued across John D’Or, Fox Lake and Garden River communities in northern Alberta, covering close to 62,000 hectares and comprising 5,000 inhabitants.
The oil market today has been the flip flopping from positive to negative over the last 24 hours since the Joe Biden news. Our expectations are that we should find a bottom here as the global market is tightening. In the short term, we’re starting to see some hesitation to move higher. Until we get a clearer direction on which way the country is going to go, the market is looking at a Trump presidency as a potential negative to oil prices as he will allow increased oil and gas production.
Natural gas prices are holding in as demand continues to be strong.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | July 20, 2024
• Following futures positions of non-commercials are as of July 16, 2024.
WTI Crude Oil: Currently net long 316.9k, up 16.9k.
In May last year, West Texas Intermediate crude bottomed at $63.57, earlier having peaked at $130.50 in March 2022. After the May bottom, it then peaked at $95.03 last September – for a lower high. Another lower high was hit this April when the crude retreated after ticking $87.67. A falling trendline from the September high drew sellers two weeks ago at $84.52. This has been followed by back-to-back weekly declines, with this week down 4.3 percent to $78.64/barrel.
Inability to defend $81-$82, which marks the top end of a 10-point range, opens the possibility that WTI eventually heads toward $74, which is where a rising trendline from the May 2023 bottom lies. Early June, the crude bottomed at $72.48 before attracting bids.
In the meantime, US crude production in the week to July 12th was unchanged w/w at a record 13.3 million barrels per day; the level was earlier hit seven times from last December to February. Crude imports rose 277,000 b/d to seven mb/d. As did stocks of gasoline and distillates, which respectively grew 3.3 million barrels and 3.5 million barrels to 233 million barrels and 128.1 million barrels. Crude inventory, however, fell – down 4.9 million barrels to 440.2 million barrels. Refinery utilization decreased 1.7 percentage points to 93.7 percent.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | July 20, 2024
• Top Movers
Platinum / Gold Ratio 2.5 %
Oats (Minneapolis) 1.69 %
Oats (CBOT) Futures 1.43 %
Lumber (CME) Futures 1.42 %
Wheat CBT Futures 1.38 %
• Bottom Movers
Cocoa (NYCSCE) Futures 4.7 %
LBMA Silver in USD 4.5 %
Tokyo Palladium Futures 4.08 %
NY Crude Oil Futures 3.27 %
NY Silver COMEX Futures 3.06 %
*Close from the last completed Daily
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | July 20, 2024
NY Crude Oil Futures closed today at 7864 and is trading up about 9.75% for the year from last year's settlement of 7165. Presently, this market is currently trading below last month's close and it had been weak for the past 3 months and if the market continues to remain beneath the previous month's close of 8154, then it will be in a weak position just yet. This price action here in July is reflecting that this has been still a bearish reactionary trend on the monthly level. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 8452 intraday while it is still trading above last month's close of 8154.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Looking at the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bearish position at this time with the overhead resistance beginning at 8001 and support forming below at 7758. The market is trading closer to the support level at this time.
On the weekly level, the last important high was established the week of July 1st at 8452, which was up 4 weeks from the low made back during the week of June 3rd. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed beneath that low which was 8081. This was a very bearish technical indicator warning that we have a shift in the immediate trend. We are trading below the Weekly Momentum Indicators warning that the decline is very significant and we need to pay attention to the timing and reversals. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8452 made 2 weeks ago. Still, this market is within our trading envelope which spans between 6635 and 9279.
Looking at this from a broader perspective, this last rally into the week of July 1st reaching 8452 failed to exceed the previous high of 8767 made back during the week of April 8th. That rally amounted to only twelve weeks. Right now, the market is below momentum on our weekly models casting a bearish cloud over the price action as well as trend. Looking at this from a wider perspective, this market has been trading up for the past 6 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in April at 8767. After a four month rally from the previous low of 8070, it made last high in April. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in July, this market has held above last month's low of 7248 reaching 7248.
Some caution is necessary since the last high 8767 was important given we did obtain two sell signals from that event established during April. That high was still lower than the previous high established at 9503 back during September 2023. Critical support still underlies this market at 6760 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
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Natural Gas Price Stability Signals Support
By: Bruce Powers | July 19, 2024
• While in a downtrend, natural gas prices remain stable, needing to rise above 2.21 to signal strength and test the 200-Day MA at 2.44.
Natural gas prices remained relatively stable on Friday, up for the day and reaching a high of 2.14, which exceeded yesterday’s high. However, it remains in a downtrend and the past two days of price action are contained within Wednesday’s one-day trading range. Resistance for the day was seen at the internal downtrend line. That line marks the first line of resistance for the current bearish retracement.
Bear Trend Remains Dominate
The bear trend can be expected to continue until there are signs that sentiment is starting to change. Certainly, having found support at this week at a low of 2.015 shows potential for a bullish reversal but there are no signs of it yet. Given the current price pattern natural gas would need to rise above 2.21 and stay above it for an indication of strength that may be sustainable for at least a few days. If that happens a test of the 200-Day MA as resistance is a likely target as it is also marked by several other indicators. The 200-Day line is now at 2.44.
Above 2.21 Shows Strength
A rally above 2.21 would also put natural gas well above the internal downtrend line, a sign of strengthening. That would make the higher trendline a target. Notice that the purple 20-Day MA has converged with the internal trend line, and they are identifying a similar area of price. The 20-Day line is now at 2.41. That would put the target of the 20-Day MA slightly below the 200-Day line, as it is now. There are several other indicators identifying a similar price area as the 200-Day MA. Together, they create a potential resistance zone from 2.44 to 2.62.
Minor Bullish Sign in Weekly Chart
Natural gas is about to complete its fifth week in a row with lower weekly lows and lower highs. Also, this week it is on track to close at the highest price relative to the week’s trading range. In other words, relative to the week’s range, this week is set to close stronger than the prior five weeks. Not a big deal, but rather a small indication that natural gas is seeing some support off this week’s lows.
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All Charged Up. The Energy Report
By: Phil Flynn | July 19, 2024
Energy innovation is about to be unleashed after President Trump signaled that he would do away with Biden’s electric car mandate that had the government pick winner and loser and allow government resource to be used in a way that will not stifle the imagination and creativity. While some argue that Biden EPA regulations do not mandate electric vehicles at all, the reality is that it would make internal combustion engine cars more expensive and less reliable.
Biden’s Electric car push cost automaker billions of dollars in losses even with additional billions of dollars wasted of taxpayer money. The electric car push was ridiculous. It was a government policy that was designed by government bureaucrats to force Americans to change their habits and give up their freedom of choice. They tried to force Americans to buy a technology that was more expensive and less efficient than the cars they already had.
This I guess was supposedly to save the planet from what they believe is the ‘existential threat of climate change’ while failing to grasp that the production of these electric cars adds three-times their carbon emissions to produce than it would take to produce an internal combustion engine. Not to mention the challenge to the power grid to charge millions of the carbon intense produced cars.
It would take trillions of dollars in investment to meet that demand and it would take multiple nuclear power plants to make a dent in carbon emissions. Yet the reality is that more than likely the grid would be powered by natural gas and coal. Because wind and solar really would not be reliable enough to carry much of that increased load.
Nor did they have a plan to deal with the inevitable billions of dollars of cost to dispose of these car batteries when they reached the end of their life. Or a plan to deal with the shorter lifespan of electric cars that lose their value because no one wants to buy a used electric car because they know that when the battery goes, the cost to replace it will mean the car is headed to the junk yard.
This is a perfect illustration because the government with all of your tax money can’t make something happen that was never meant to be. By forcing their will upon the industry more than likely they stifled real innovation.
Now overnight a Microsoft outage gave markets a scare. What they are calling a global technology outage for Microsoft products is creating turmoil around the world. A Microsoft IT outage has caused airline and media groups, banks, and other businesses to basically get shutdown. United Airlines reportedly said that they were holding all aircraft at their departure airport. Reports of planes in the air are being asked not to land. Bloomberg is reporting now that the underlying cause of the outage has been fixed but said it is not a cyber-attack. Of course, that was the markets’ first thought. After the reports of the outage, the market sold off because of the type of world we live in. Oil and oil products fell on the news but are now stabilizing. Stock market also is trying to get a bid.
This comes with all the uncertainty surrounding the increase in oil products last week. The Brent crude spreads and the WTI spreads for oil or the signal in the very tight market this is very much in line with what we have been expecting. A major reduction in Russian exports it’s supporting this movement in the Brent crude time spreads. And with the US recount falling and the supplies of oil globally tightening, it will only be a matter of time before OPEC and its favorite coconspirator Russia will start waving the mission accomplished flag. If you believe what the markets are telling you the supply deficit is here, it’s happening right now before your very eyes
That means of course you should be hedged on both oil and gas products, especially in the winter months. Quantum Oil Daily said prices eased back after the ECB kept rates unchanged at its Thursday meeting, while Europe’s central bank continues to waver over the timing of the next rate cut.
Natural gas prices are still hanging in there. Still Bloomberg reports that, “natural gas traders are giving up on the idea that a sweltering summer will boost demand for the power-plant fuel and curb a massive US supply glut.
The spread between October and January gas futures — essentially a bet on how tight stockpiles will be heading into the northern hemisphere’s winter — has collapsed in recent weeks. By the end of October, inventories stored underground in depleted reservoirs, aquifers and salt caverns are expected to reach the highest since at least 2016, according to a government forecast.
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Crude Oil Bull Signal Above 84.69
By: Bruce Powers | July 18, 2024
• Crude oil's resistance at $83.69 marks a pivotal point. A breakout could confirm strength and lead to higher targets, with $87.90 in sight.
Crude oil rallied into resistance around the downtrend line on Thursday before pulling back from the highs. Resistance was seen from the day’s high of 83.69. That was slightly above the line. Crude remains in a corrective formation taking the form of a declining ABCD pattern of lower swing highs and lower swing lows. Thursday is on track to generate a second lower swing high. Therefore, a continuation of the correction is possible or a successful breakout above the downtrend line.
83.69 is Now Key Price Level
Since today’s high is part of the downtrend price structure, a rally above it will trigger a potential bullish reversal of the bearish correction and a breakout above the downtrend line. A daily close above each would confirm strength. Of course, today’s high carries greater weight than the trendline as it a primary trend structure. Once there is a daily close above 83.69, crude should be able to accelerate an advance as a trendline was broken and a breakout from a large symmetrical triangle will have triggered.
Potential Symmetrical Triangle Breakout
Crude has been tracing out the triangle for more than six months. This means once the trendline is busted to the upside, the potential for a sharp increase in demand that helps propel prices higher is a possibility. During the triangle volatility dies down, which is evident by the tightening swings. Since crude would be breaking out of two patterns, the trendline and triangle, it has a chance to see a noticeable pickup in demand following the breakout.
Higher Targets Start at 85.64
Following an upside breakout above 83.69, crude would first be heading towards the recent swing high at 84.74 (A). Higher initial targets include Fibonacci levels at 85.64 and 86.12. Nevertheless, once a daily close above 84.74 confirms strength, cruise has a chance to test the April swing high at 87.90. There is a good chance it could eventually get above that price level given the breakout of the symmetrical triangle.
Rising off Strong Support Zone
On the downside, support for the bearish correction was found at the recent swing low of 80.29. It completed a 61.8% Fibonacci retracement of the shorter upswing and was followed by a two-day rally. That low also completed a 38.2% Fibonacci retracement of the full upswing, beginning from the June swing low. Further, the 50-Day MA was a little lower at 80.00.
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Natural Gas Finds Temporary Support, Eyes Potential Rally
By: Bruce Powers | July 18, 2024
• Natural gas found support at 2.02 to 2.00, suggesting a potential rally if it holds, with key resistance at 2.44 and 2.47.
Natural gas found at least temporary support on Wednesday, that led to a bounce on Thursday. It is set to complete an inside day today with a high of 2.13 and a low of 2.02, at the time of this writing. Support was seen at 2.015 on Wednesday, the current low of the bearish retracement. That was right at a support zone identified from around 2.02 to 2.00. Today’s advance improves the chance that the 2.02 to 2.00 price zone could hold as support and lead to a higher advance.
Downtrend Line Marks First Line of Resistance
The internal downtrend line marks dynamic resistance for the current bear trend (retracement) as a rally above it will provide the first sign of strength that could lead to additional confirmation of strength. However, once today is complete, a rally above today’s high provides a short-term bullish indication. Upside follow through would then be key. Yesterday’s high was 2.21. It is fair to say that a sustainable bullish signal is not likely until natural gas rallies back above that high. That is as it stands now.
Initial Upside Target from 2.44 to 2.47
If a rally can get moving, an initial upside target for natural gas looks to be around 2.44. That begins a potential resistance zone up to 2.47, marked by several indicators. Both the 200-Day MA and 20-Day MA are at 2.44. A prior swing low support level, now potential resistance, lies around 2.47. Further, the downtrend line converges with this price area. But it doesn’t end there. The 38.6% Fibonacci retracement of the decline is within the zone at 2.45. Finally, notice that the most recent minor internal upswing caught resistance on July 9 at 2.45.
Below 2.00 Targets 1.92
Although there are reasons to suspect that the 2.02 to 2.00 price zone may continue to act as support, followed by a rally, the 61.8% Fibonacci retracement was exceeded to the downside on Monday. That opens the door to the 78.6% Fibonacci retracement at 1.92. The 2.02 to 2.00 price zone is derived from the completion of a descending ABCD pattern extended by the 161.8% golden ratio. It is anchored by a prior swing high from early-March at 2.00, which is also the top of a bottom symmetrical triangle pattern.
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EIA Natural Gas Storage Build Of +10 Bcf Misses Analyst Expectations
By: Vladimir Zernov | July 18, 2024
Key Points:
• Working gas in storage increased by 10 Bcf from the previous week.
• At current levels, stocks are 465 Bcf above the five-year average for this time of the year.
• The price of natural gas is trying to settle above the $2.10 level.
On July 18, 2024, EIA released its Weekly Natural Gas Storage Report. The report indicated that working gas in storage increased by 10 Bcf from the previous week, compared to analyst consensus of +28 Bcf.
At current levels, stocks are 250 Bcf higher than last year and 465 Bcf above the five-year average of 2,744 Bcf for this time of the year. High stocks have served as a major bearish catalyst for natural gas markets in recent weeks.
Natural gas prices gain ground as traders react to the encouraging report. Natural gas markets have been under pressure since early June as traders focused on high inventory levels and Freeport LNG outage.
Demand was strong due to hot weather, but it did not provide sufficient support to natural gas prices.
It remains to be seen whether current rebound would be sustainable as weather forecasts indicate that demand for natural gas would be moderate in the upcoming days.
From the technical point of view, natural gas prices received support in the $2.00 – $2.05 range as some traders were ready to bet that natural gas markets were oversold. In case natural gas manages to settle above the $2.10 level, it will head towards the nearest resistance, which is located in the $2.25 – $2.30 range.
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Let’s Get Physical. The Energy Report
By: Phil Flynn | July 18, 2024
As the polls turn on the Biden-Harris ticket, they may toast themselves and say “We’ll always have Paris” but a Trump-Vance ticket means the Paris Climate accord will have to go. I wonder if we can get our money back.
The Paris Climate accord is just one aspect of the failed Biden energy policy that is one of many reasons his popularity is plunging. Getting back into the accord was one of his sfirst executive orders Biden signed when coming into office effectively spending billions of dollars of taxpayer money before he moved into the White House.
Yet the accord’s failures are legendary and now is facing a global backlash from citizens in the countries where their leadership backs the accord. Despite the billions of dollars spent and the billions of dollars of lost opportunity, the accord has done almost nothing to make a real difference in global greenhouse gas emission that will hit a global all-time high this year.
This comes as EU News reported that, “12 EU countries are set to miss their national climate targets under the Effort Sharing Regulation (ESR), according to a study analyzing national climate plans. Another seven are at risk of not meeting their goals. If they don’t meet their required emissions reductions, they may have to pay financial penalties.
Which means the citizens of their countries will have to be taxed more for policies that have already made their lives miserable. The blowback from the failures of the Paris accord and its impact on global energy prices and its global energy security and the negative impact on people’s lives, is creating a popular global groundswell against these global elitist policies that enriches them and enslaves everyone else.
The Biden electric car mandate is also going up in smoke despite the billions of dollars wasted on a technology that is not equipped to replace the internal combustion engine. Not to mention the billions of dollars of losses that car makers suffered because the government tried to force them into building cars that no one wanted. Not to mention all the union jobs that will not be created because of Biden’s electric car fantasy.
Yet the Biden administration does not let failure or reality kill the dream! And he is willing to keep spending your money to try to make something happen that will not happen.
The Daily Caller wrote the Biden administration announced Thursday that it is spending billions of dollars more to help automakers mass-produce electric vehicles (EVs). The Department of Energy (DOE) is spending $1.7 billion to help manufacturers convert closed or struggling manufacturing facilities to produce EVs or EV components in eight states, including swing states like Pennsylvania and Georgia, as the American EV market struggles. The funding complements $12 billion the DOE unveiled in August 2023 to help major manufacturers retrofit plants for EV production, and the agency projects that the cash announced Thursday will allow for the retention of 15,000 union workers while creating nearly 3,000 jobs.
Of course, when has the Agency been right about any of their green job expectations. This latest taxpayer spending spree is just another desperate attempt to buy some green votes.
Those might be buying some more time after West TX intermediate futures failed to breakthrough $80.00 a barrel on the downside late in the day. The American Petroleum Institute reported that crude supplies fell by 4.44 million barrels which does suggest that the crude oil market in the United states is tightening and that is something that the market has been sensing. We have seen it in the spreads over the last couple weeks.
On the flip side of that, the report showed that distillate inventories rose by 4.92 million barrels. But let’s face it, the distillate worries, especially for heating fuels and winter-based fuels, are out of season. It’s important for the market to build those supplies because the United States is still well below average in distilling inventory.
The API did report an increase of 365,000 in gasoline supply. This comes as US Air travel remains near record highs. US air travel TSA total traveler throughput in million passengers – 7-day average 7.2% above 2019 level.
Russia is promising OPEC that they plan to make compensation cuts to make up for their previous cheating. They say they will make the cuts during the summer season when their domestic demand is weaker because they don’t have the Arctic chill to deal with, but it may be also because the Ukrainians keep hiding their energy infrastructure. Oil exports are now reportedly at the lowest level since January.
On the Internet, Houthi rebels are posting a tape of an attack on an oil tanker in the Red Sea. While nobody was seriously injured, it’s wrong that Houthi rebels can taunt the world with their lawlessness.
Natural gas is flat. This cones as Russia’s Novatek Slashes Gas Output at Sanctioned Arctic LNG 2. The Arctic LNG 2 project in Russia, which Western sanctions have hit in recent months, significantly reduced its production of natural gas in May as it hasn’t exported any LNG yet, a source with knowledge of output data told Reuters on Tuesday. Arctic LNG 2, in which Russian gas producer and LNG exporter Novatek has 60%, extracted 55 million cubic meters of natural gas in May, down from 215 million cubic meters in April, according to Reuters’s source. Located in the Gydan Peninsula in the Arctic, the Arctic LNG 2 project was considered key to Russia’s efforts to boost its global LNG market share from 8% to 20% by 2030-2035.
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Crude Oil Hesitates After Big Move
By: Christopher Lewis | July 18, 2024
• The crude oil market has ran into a significant amount of hesitation after a big move and has started to pull back a bit. With this, the market will be looking for a bounce just below. Will it get it?
WTI Crude Oil Technical Analysis
The West Texas Intermediate Crude Oil Market has fallen a bit during the early hours on Thursday as we are trying to sort out whether or not we are going to pull back and find buyers or if we have peaked again. I suspect at this point in time, there are buyers underneath because the cyclical nature of this market is that we should see plenty of strength through the summer. Furthermore, we have a lot of geopolitical conditions that warrant concern about supply. So, at this point in time, I do think this ends up being a buying opportunity. The $80 level of course has offered significant support. So that is something worth paying attention to.
Brent Crude Oil Technical Analysis
The Brent market fell to the $84 level in the early hours as it is trying to hang on to it. This was an area that’s been important multiple times, so we’ll have to see whether or not it holds. If it turns around and takes out the $85 level, then I think both grades of oil probably go higher. A drop from here could open up and move down to $83, where we had seen support previously.
Keep in mind both of these markets tend to feed off of each other so if one starts rallying, it will drag the other one up with it. Pay attention to the US dollar that probably has some say as well as the dollar strengthening drastically can sometimes, not always, but sometimes hurt crude oil. Either way expect volatility, but I don’t really have any interest in shorting at this point in the year.
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Natural Gas Tests Key Support After Sharp Drop
By: Bruce Powers | July 17, 2024
• Despite a sharp selloff to 2.02, natural gas could find support at 2.00, signaling possible buyer interest and a potential rebound.
Natural gas fell to a new retracement low of 2.02 on Wednesday. That put it in a position to test support around the next target zone from 2.02 to 2.00. The first price is the completion of a falling ABCD pattern with the CD leg of the decline extended by 161.8% of the AB leg. As of today’s low, natural gas has dropped by 1.14 or 36.2% from the most recent 3.16 swing high. Downward pressure remains and at the time of this writing, natural gas continues to trade near the lows of the day.
Lower Support Starts Around 1.92
If the 2.02 support zone fails to hold, a drop below 2.00 will have the price of natural gas heading towards the 78.6% Fibonacci retracement at 1.92. That price is given further significance as it confirmed by the gap up support level from late-April at 1.91.
Natural gas fell hard on Wednesday as it was down by as much as 0.16 cents or 7.5% for the day. It has established a wide price range for the day with a full body red candle. And it is on track to close weak, in the lower third of the day’s trading range.
Current Support May Lead to a Bounce
Nonetheless, it is possible that the 2.00 price area holds as support and attracts buyers. Today’s sharp selloff has occurred further into the downtrend and therefore, nearer to the end of the decline than it had been previously. A sharp drop near the end of a trend can sometimes signal capitulation as holders can longer take the pain of loss and finally sell. That creates a vacuum that allows for a potential sharp bounce.
Breakout Above Trendline Give First Sign of Strength
Unfortunately, on a daily chart there is no sign of strength until natural gas rallies above today’s high of 2.21. Of course, that may change in the coming days as alternative price levels may become apparent. Be that as it may, more aggressive investors and traders may key off intraday price patterns as they watch for signs of a bullish reversal from a key support zone. As noted previously, a rally above the internal downtrend line will provide a sign of strength, but trendlines are typically not too reliable on their own. Breaks through trendlines are more useful when confirmed by additional signs of strength.
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Here’s Looking At You, Kid. The Energy Report
By: Phil Flynn | July 17, 2024
As the polls turn on the Biden-Harris ticket, they may toast themselves and say “We’ll always have Paris” but a Trump-Vance ticket means the Paris Climate accord will have to go. I wonder if we can get our money back.
The Paris Climate accord is just one aspect of the failed Biden energy policy that is one of many reasons his popularity is plunging. Getting back into the accord was one of his first executive orders Biden signed when coming into office effectively spending billions of dollars of taxpayer money before he moved into the White House.
Yet the accord’s failures are legendary and now is facing a global backlash from citizens in the countries where their leadership backs the accord. Despite the billions of dollars spent and the billions of dollars of lost opportunity, the accord has done almost nothing to make a real difference in global greenhouse gas emission that will hit a global all-time high this year.
This comes as EU News reported that, “12 EU countries are set to miss their national climate targets under the Effort Sharing Regulation (ESR), according to a study analyzing national climate plans. Another seven are at risk of not meeting their goals. If they don’t meet their required emissions reductions, they may have to pay financial penalties.
Which means the citizens of their countries will have to be taxed more for policies that have already made their lives miserable. The blowback from the failures of the Paris accord and its impact on global energy prices and its global energy security and the negative impact on people’s lives, is creating a popular global groundswell against these global elitist policies that enriches them and enslaves everyone else.
The Biden electric car mandate is also going up in smoke despite the billions of dollars wasted on a technology that is not equipped to replace the internal combustion engine. Not to mention the billions of dollars of losses that car makers suffered because the government tried to force them into building cars that no one wanted. Not to mention all the union jobs that will not be created because of Biden’s electric car fantasy.
Yet the Biden administration does not let failure or reality kill the dream! And he is willing to keep spending your money to try to make something happen that will not happen.
The Daily Caller wrote the Biden administration announced Thursday that it is spending billions of dollars more to help automakers mass-produce electric vehicles (EVs). The Department of Energy (DOE) is spending $1.7 billion to help manufacturers convert closed or struggling manufacturing facilities to produce EVs or EV components in eight states, including swing states like Pennsylvania and Georgia, as the American EV market struggles. The funding complements $12 billion the DOE unveiled in August 2023 to help major manufacturers retrofit plants for EV production, and the agency projects that the cash announced Thursday will allow for the retention of 15,000 union workers while creating nearly 3,000 jobs.
Of course, when has the Agency been right about any of their green job expectations. This latest taxpayer spending spree is just another desperate attempt to buy some green votes.
Those might be buying some more time after West TX intermediate futures failed to breakthrough $80.00 a barrel on the downside late in the day. The American Petroleum Institute reported that crude supplies fell by 4.44 million barrels which does suggest that the crude oil market in the United states is tightening and that is something that the market has been sensing. We have seen it in the spreads over the last couple weeks.
On the flip side of that, the report showed that distillate inventories rose by 4.92 million barrels. But let’s face it, the distillate worries, especially for heating fuels and winter-based fuels, are out of season. It’s important for the market to build those supplies because the United States is still well below average in distilling inventory.
The API did report an increase of 365,000 in gasoline supply. This comes as US Air travel remains near record highs. US air travel TSA total traveler throughput in million passengers – 7-day average 7.2% above 2019 level.
Russia is promising OPEC that they plan to make compensation cuts to make up for their previous cheating. They say they will make the cuts during the summer season when their domestic demand is weaker because they don’t have the Arctic chill to deal with, but it may be also because the Ukrainians keep hiding their energy infrastructure. Oil exports are now reportedly at the lowest level since January.
On the Internet, Houthi rebels are posting a tape of an attack on an oil tanker in the Red Sea. While nobody was seriously injured, it’s wrong that Houthi rebels can taunt the world with their lawlessness.
Natural gas is flat. This cones as Russia’s Novatek Slashes Gas Output at Sanctioned Arctic LNG 2. The Arctic LNG 2 project in Russia, which Western sanctions have hit in recent months, significantly reduced its production of natural gas in May as it hasn’t exported any LNG yet, a source with knowledge of output data told Reuters on Tuesday. Arctic LNG 2, in which Russian gas producer and LNG exporter Novatek has 60%, extracted 55 million cubic meters of natural gas in May, down from 215 million cubic meters in April, according to Reuters’s source. Located in the Gydan Peninsula in the Arctic, the Arctic LNG 2 project was considered key to Russia’s efforts to boost its global LNG market share from 8% to 20% by 2030-2035.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | July 17, 2024
• Top Movers
Lean Hogs (CME) Futures 3.22 %
NY Silver COMEX Futures 1.69 %
NY Gold Futures 1.6 %
NY Natural Gas Futures 1.39 %
Kuala Lumpor Palm Oil Crude Futures 1.26 %
• Bottom Movers
Cocoa (NYCSCE) Futures 8.74 %
Tokyo Palladium Futures 3.92 %
AU - Victoria Base-Load Electricity Futures 3.55 %
Zinc (99.995%) Spot 2.47 %
Zinc 2.46 %
*Close from the last completed Daily
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Natural Gas Set for Further Declines Amid Bearish Correction
By: Bruce Powers | July 16, 2024
• Natural gas remains in a bearish trend, with key support levels identified at 2.17 and 2.00 indicating possible further declines.
Lower prices look likely to remain on the agenda for natural gas given Tuesday’s bearish behavior. Although a new retracement low was not reached today, natural gas consolidated in a relatively narrow range inside day. The day’s trading activity was largely contained in the lower half of Monday’s trading range. This reflects continued downward pressure on the price of natural gas.
Accelerated Downtrend Remains Intact
The slope of the retracement accelerated following the June 26 high. Since then, price action has been contained below the lower downtrend line and the line has since been confirmed since by an additional touch with price. Therefore, the internal downtrend line can be used as a guide for initial trend resistance. The decline can be anticipated to continue until there is at least an advance above the trendline. So far, that has not happened, indicating that the downtrend remains in force.
Drop Below 2.15 is Bearish
A drop below yesterday’s low of 2.15 signals the likely continuation of the bear trend. The next lower support zone is identified around 2.02 to 2.00. Notice that an earlier bull breakout was confirmed on a rally above 2.00 on April 29. That was the top of a bottom symmetrical triangle consolidation pattern. Consequently, a full round trip will be completed at 2.00.
Since natural gas has gotten this close and given the continuing bearish signs, it seems very possible that 2.00 may be tested as support before the correction is complete. Nonetheless, this doesn’t mean it will be achieved. The market for natural gas will provide additional clues as it continues to evolve.
Interim Lower Target of 2.17
Prior to the 2.00 price target there is an interim target of 2.17. It is interim because the price level was resistance during a minor swing high on way up from the triangle bottom. As shown on the chart the 2.02 price level is indicated by a falling ABCD pattern. This pattern identifies symmetry between the two downswings. One labeled AB and the other CD.
An initial target from the pattern looks for a similar move in price for each leg of the pattern. Subsequently, additional targets can be found by incorporating a harmonic ratio to extend the completion of the CD target. A 127.2% ratio generated a target of 2.20, which was exceeded yesterday. Once that target failed to stop the decline, a second extended target was added. The extended target reaches its completion at 2.02.
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Crude Oil Nears Key Support Levels Amid Pullbacks
By: Bruce Powers | July 16, 2024
• Following a 61.8% retracement, crude oil approaches critical support at the 50-Day MA, with potential bullish signals on the horizon.
Crude oil continued to retrace its prior advance on Tuesday, with a new pullback low of 80.29. The decline completed a 61.8% retracement today at 80.46. Completion of a declining ABCD pattern is next on deck along with a likely test of support around the 50-Day MA (orange). Price symmetry between the AB and CD legs of the pattern match at the 80.10 pivot. Concurrently, a 38.2% Fibonacci retracement completes at 80.15. Meanwhile, the 50-Day line is down around 79.88.
Next Key Support at 50-Day MA
The 50-Day MA is rising and it may be closer to the 80.10 price area before it is reached. It presents a formidable support area given signs that the uptrend from the early-June swing low of 72.73 has been showing improvement. In mid-June, crude busted up through the 50-Day line for the first time since falling below it on May 1. As it pulls back crude is on track to test it as support for the first time since June upside breakout.
200-Day MA is a Little Lower
If the 50-Day line fails to hold as support, the 200-Day MA is a little lower at 79.00. And it matches a 127.2% extended downside target for the ABCD pattern at 79.07. Notice that a 78.6% Fibonacci retracement is also nearby at 79.80. Further, the 50% retracement of the full uptrend, starting from the June low, is at 78.74.
Bull Trend Should Continue Once Pullback Complete
Once the retracement is complete and demand improves, signaled by a bullish reversal, crude is anticipated to be set to continue to advance above the recent swing high of 84.74. That high ended in a 16.5% rally. However, there may be more upside to go. A second possible trendline breakout is first indicated on a rally above the most recent interim swing high of 83.88.
An advance above that price level puts crude back above the downtrend line and in sight of challenging the 84.74 (A) swing high. Rising above 84.74 should see upside momentum improve as it also signals a bullish breakout of a large symmetrical triangle showing in crude oil.
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Rational Energy Policy. The Energy Report
By: Phil Flynn | July 16, 2024
Many in the US oil and gas industry are cheering President Trump’s Vice Presidential pick JD Vance as a sign that the United States might be headed back to a rational energy policy. Industry leaders have been frustrated by the Biden administration’s unfounded and unfair attacks but really worry that the policies that the Biden administration has put in place is not only creating the energy crisis of the future, but also leaving our country in a situation that will not allow us to compete in the global economy but also damage our national security.
It has been the crazy and vindictive Biden energy policies, including the cancelation of the Keystone XL pipeline, the short sighted electric car push, drilling moratoriums or energy decisions based on diversity, equity and inclusion, and a slew of incomprehensible executive orders that has put the US energy industry in a bad situation. The industry is looking forward to having adults back in the room. They look forward to having an administration that understands the vital nature of the US oil and gas industry. They look forward to an Administration that will work with them instead on shunning them and work against them. The Industry wants an energy policy that is working to provide cleaner energy and have an energy policy that is based on realities and not in aspirational politics.
Vance is an energy realist. He understands that to power the future economy and to increase our National Security, the US, the cleanest producer of fossil fuels, will have to continue to lead the way to meet the undeniable demand for fossil fuels in the future.
Maybe oil prices today are lower in deference to the fact that the Trump Vance ticket looks like it’s destined to win in November but really, it’s probably more being impacted by the fact that we’ve passed the 4th of July holiday and weak China demand and a rising dollar.
Leave it to the Fed Chairman Powel to cool off oil prices. Reuters reported that Federal Reserve Chair Jerome Powell said on Monday the three U.S. inflation readings over the second quarter of this year do “add somewhat to confidence” that the pace of price increases is returning to the Fed’s target in a sustainable fashion, remarks that suggest a turn to interest rate cuts may not be far off. “In the second quarter, actually, we did make some more progress” on taming inflation, Powell said at an event at the Economic Club of Washington. “We’ve had three better readings, and if you average them, that’s a pretty good place.” What we’ve said is that we didn’t think it would be appropriate to begin to loosen policy until we had greater confidence” that inflation was returning sustainably to 2%, Powell continued. “We’ve been waiting on that. And I would say that we didn’t gain any additional confidence in the first quarter, but the three readings in the second quarter, including the one from last week, do add somewhat to confidence.”
After that last comment, the dollar seemed to rise and if the markets seem to interpret them while the Fed is still on track to cutting rates, it’s not going to happen as early as July. Not that many people thought that was going to happen anyway. After Mr. Powell spoke the price of the dollar went up and oil went down.
China oil demand seems to weigh on prices as well but even as the market is focused on short term fundamentals, the bigger picture for oil continues to look very bullish. We continue to expect to see a supply deficit leading to bigger drawdowns in the future and the market seems less concerned about that today as we head to the option expiration for the August crude future tomorrow. And while the market seems to be a little bit weak starting today, perhaps the American Petroleum Institute inventory numbers can change that momentum.
We’re expecting another drawdown in crude supplies of 3 million barrels, and we also expect the inventories of both gasoline and diesel will fall by three million barrels as well. Refinery runs should be unchanged. There is some concern that we will see some impact from the Hurricane Beyrl in the numbers. That may be another reason why we are seeing some hesitation to buy in.
Natural gas is up a little bit this morning and trying to hold its ground after some fundamentals that normally would be very bearish.
Reports show that the Freeport LNG export project in Texas canceled at least four scheduled shipments because of Hurricane Beryl, according to Bloomberg News. Extended power outages in Texas also should have hurt demand and now there are some worries on the production side. Maybe once again producers will produce us into a glut.
Celsius Energy tweeted that with natural gas prices now seemingly on the fast track back to $2/MMBTU, commodity traders may reinforce producers to re-institute production shut-ins to restore S/D balance. So far, we have not seen this with output holding near multi-month highs just shy of 102 BCF/d.
Yet despite all these fears technically the market seems to be holding in there. It’s almost as if the market’s looking ahead to what they believe will be record demand for natural gas.
The anticipation of record liquefied natural gas exports in the United States and more hope that it will increase in the years ahead. Now the industry has renewed hopes that US LNG exports will support prices and create jobs. Now the real possibility that a Trump Vance ticket will mean that the United States will dominate the exporting clean liquefied natural gas to the world. That will lead to reducing coal emissions and help reduce carbon faster than any wind turbine or solar panel ever could.
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Natural Gas Sellers Dominate as Support Levels Break
By: Bruce Powers | July 15, 2024
• Sellers dominate natural gas as it falls to 2.16, testing and breaking support levels, with potential further declines if it closes below 2.17.
Sellers continued to dominate trading in natural gas on Monday as it further retraced the previous advance. Natural gas fell to a new retracement low of 2.16, at the time of this writing, and it continues to trade near the lows of the day. It entered a potential resistance zone starting at 2.23 but has so far seen no slowdown in the descent. The price zone has a lower border around
Lower Target Price Zone Fails to Stop Descent
Two Fibonacci targets were tested as support, and they failed to stop the decline. A descending ABCD pattern completed at 2.20. The target comes from an extended version of the pattern where the second decline marked by CD is 127.2% the distance in price for the first leg down, from point A to point B. The 127.2% Fibonacci ratio is derived from square root of 1.618 (the golden ratio) multiplied by 100. Further, a 61.8% Fibonacci retracement completed at 2.18. The low of the potential support zone as highlighted on the chart was 2.17.
Close Below 2.17 Points to Lower Prices
Since the bottom of the support zone has been broken to the downside the next lower support zone is at risk of being reached. Nevertheless, support zones are areas of possible support. If a daily close occurs today above 2.17, natural gas may have a chance to bounce in the short-term.
Otherwise, a daily close below 2.17, points to lower prices in the near-term. There looks to be an interim price level around 2.09, from a prior internal swing high. But the next key lower price zone where support may be seen is down to around 2.00. That is an even number and where the recent rise in prices began.
Lower 2.00 Support Zone
The initial bullish advance off the confirmed an upside breakout of a symmetrical triangle bottom consolidation pattern at 2.00. That was the top of the triangle pattern where a rise above further confirms the bull breakout. There is also the completion of another lower target for an extended falling ABCD pattern at 2.02. In this case, the extension utilized the 161.8% ratio to identify a lower target for the CD leg of the decline. Lower still is the 78.6% Fibonacci ratio at 1.92.
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Act Of God. The Energy Report
By: Phil Flynn | July 15, 2024
US and global political turmoil averted by what can only be described as an act of God. The assassination attempt on President Donald Trump came at a critical time in world history as people of reason question the institutions of the United States after criminal attempts to take down President Trump.
They used fake FISA warrants against US citizens, fake Russian collusion investigations that was started by the Hillary Clinton campaign and admission by both the CIA and FBI that they had abused their powers. The weaponization of the Justice Department to go after Donald Trump while downplaying proven crimes by his political opponents has created disorder in the government and distrust among its people.
This has been aided and abetted by major parts of the mainstream press that has conspired with the government to push knowingly false narratives against President Trump and has openly allowed him to be unfairly demonized to the public. Biden, who once said that when you are President ‘words matter’, said that it was time to “put Trump in a bullseye” and sadly someone took that literally. That, along with many in his party, called Trump a threat to democracy.
Now an unrepentant press continues to attack President Trump. They refuse to acknowledge widespread voter fraud and withheld evidence from the January 6thdebacle that would have kept innocent Americans out of jail. The press continues to spew their venom. They failed to confirm the validity of the Hunter Biden laptop that contained evidence of real crimes.
While an act of God saved Donald Trump, sadly one supporter who was probably derided by some as ‘extreme MAGA’ was killed. We need to pray for a hero retired firefighter Corey Comparator who was killed during the attempted assassination as he tried to shield his family from the assassins’ bullets. We also need to pray for America and pray for our leadership in their quest for power is enough. Pray for America.
Oil prices and commodity prices have enough information so on the Sunday opening, no risk premium was put in. Oil dipped Friday on China’s oil demand concerns but as far as oil demand, India is trying to pick up where China left off.
Oil dipped Friday on a report that China’s oil products imports slumped 33.2% from May to a 20-month low of 2.97 million mt in June, data from the General Administration of Customs showed July 12, as independent refineries cut feedstock fuel oil purchases. Independent refineries’ fuel oil imports fell 15.2% on the month to 939,000 mt in June, S&P Global Commodity Insights data showed.
The average utilization rate of independent refineries in Shandong was 52% in June, the lowest since the pandemic first struck the country in 2020, according to local information provider JLC. The utilization rate was previously lower at 43.8% in February 2020.
This comes as the Wall Street Journal reports that, “China’s economy slowed sharply in the second quarter, piling pressure on the country’s leaders to act more aggressively to rev up growth as they gather in Beijing to chart the course of the economy over the next half-decade.
Gross domestic product expanded 4.7% in the second quarter compared with the same quarter a year earlier, China’s National Bureau of Statistics said Monday. The result was weaker than the 5.3% growth rate recorded in the first quarter and lower than the 5.0% figure expected by economists polled by The Wall Street Journal.
On a quarter-to-quarter basis, growth more than halved, sliding to just 0.7% versus a revised 1.5% previously. The world’s second-largest economy is losing momentum thanks to a festering property slump, tepid consumer spending and rising trade tensions with the rest of the world. Yet in India oil demand contuse to grow. Jodi reported that India crude imports rose by 510 kb/d and was up 8.1% y/y
In the BP Outlook they say that Idia’s oil consumption is projected to rise to 7 million barrels per day (mbd) by 2030 from 5 mbd in 2022 in the ‘current trajectory’ scenario of the latest BP’s Energy Outlook.
China’s oil consumption is projected to rise to 17 mbd from 14 mbd in the same period while the oil demand in the US is expected to decline to 18 mbd from 19 mbd. India will remain the world’s third-largest oil consumer in 2030, behind the US and China, as it is today.
Iraq admitted it was cheating on its OPEC production cuts but they promised to do. S&P global reported that Iraq acknowledged it produced 184,000 b/d over its OPEC+ quota in June, based on secondary sources estimates, and pledged to compensate for its excess output by a September 2025 deadline under the latest OPEC+ agreement by making additional cuts of equivalent volume.
Now OPEC’s second largest oil producer has habitually pumped cruder than allowed for under its OPEC+ quota, drawing the ire of other members, but said in a statement that it will adhere to the 4 million b/d limit for the coming months. Iraq has not yet publicly revealed its compensation plan.
“Iraq affirms its complete commitment to the agreement and to the voluntary adjustments, and will compensate for any overproduction since the beginning of 2024,” the statement from Iraq’s oil ministry said.
Iraq in June cut output by 60,000 b/d to 4.22 million b/d, according to the latest Platts OPEC+ survey from S&P Global Commodity Insights, one of seven secondary sources used by the producer alliance to monitor member production.
The OPEC+ joint ministerial monitoring committee, co-chaired by Saudi Arabia and Russia, is scheduled to meet online Aug. 1. Among its duties, it assesses member compliance with quotas and can also recommend changes to OPEC+ production policy. The full 22-country OPEC+ alliance is scheduled to meet Dec. 1.
The oil spreads continued to look pretty strong and while oil seems to be based on WTI to build the base, the focus is going to be on demand for products.
Gasoline demand week to week has been erratic but it’s been slowly creeping above the four-week moving average for this time of year as gasoline prices have remained somewhat stable this summer it should improve the demand prospects as we head towards the end of summer can’t up demand for gasoline seems to be something that the market is starting to talk about.
Global markets are increasingly pricing in a supply deficit and that should keep products supported this week we are looking for draws of 3,000,000 barrels in crude oil 3,000,000 barrels in distillate inventories, and three-million-barrel drop in gasoline. Refiners have been running at a high pace and we expect them to continue with refinery runs unchanged from the week before.
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$XLE Energy stocks are SURGING
By: TrendSpider | July 15, 2024
• Energy stocks are SURGING. $XLE
Top Holdings: $XOM, $CVX, $EOG, $SLB, $COP, $MRO
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Crude Oil Continues to See Support
By: Christopher Lewis | July 15, 2024
• The crude oil markets overall look well supported, and I think at this point in time we are going to continue to see the overall sideways but positive attitude.
WTI Crude Oil Technical Analysis
The West Texas Intermediate crude oil market has initially pulled back just a bit overnight, but it looks as if it is well supported between the $80 level underneath and the $81 level, which is where we find ourselves near the open of open CRI trading.
With that being said, I think the market is likely to continue to see an overall consolidation and therefore I do think we break higher. Whether or not it ends up being a massive move higher is completely open to debate. But right now, I think we are in the midst of forming some type of double bottom. And of course, you have to pay close attention to the $80 level because it has proven itself to be important. And of course, it’s a large, round, psychologically significant figure.
Brent Crude Oil Technical Analysis
The Brent market looks very similar with the $84 level offering support, and it has a lot of the same factors. The first thing, of course, is the cyclicality of the market being very strong in summer most of the time. So that’s something that you have to pay attention to.
But we also have a lot of geopolitical tensions that could flare up. I understand that there are some concerns about refineries in Russia being targeted, and that does influence some of the supply of crude oil around the world. All things being equal, I do think that this is a market that continues to find buyers on dips, but how far have we gone to the upside? I think that remains to be seen in the short term. I think this is just a market that is very rangebound and looks likely to remain at least somewhat elevated through the rest of the summer.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | July 13, 2024
• Following futures positions of non-commercials are as of July 9, 2024.
WTI Crude Oil: Currently net long 300k, up 5.4k.
In May last year, West Texas Intermediate crude bottomed at $63.57, earlier having peaked at $130.50 in March 2022. After the May bottom, it then peaked at $95.03 last September – for a lower high. Another lower high was hit this April when the crude retreated after ticking $87.67. A falling trendline from the September high drew sellers last week at $84.52. This week, WTI gave back 1.1 percent to $82.21/barrel.
Inability to defend $81-$82, which marks the top end of a 10-point range, opens the possibility that WTI eventually heads toward $74, which is where a rising trendline from the May 2023 bottom lies.
In the meantime, US crude production increased 100,000 barrels per day week-over-week to 13.3 million b/d, matching a record which was hit eight times from last December to February. Crude imports rose 213,000 b/d to 6.8 mb/d. As did distillate stocks, growing 4.9 million barrels to 124.6 million barrels. Stocks of crude and gasoline, however, fell – down 3.4 million barrels and two million barrels respectively to 445.1 million barrels and 229.7 million barrels. Refinery utilization increased 1.9 percentage points to 95.4 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | July 13, 2024
This market made a new high today after the past 2 trading days. The market opened higher and closed lower. The immediate trading pattern in this market has exceeded the previous session's high intraday reaching 8374. Therefore, this market closed below the opening print while also closing down from the previous closing.
Clearly, this market is still above the critical support point at this time, which lies at 8215. Initial support lies at 8199. Our underlying pivot providing some support lies at 8198 and a close below this level will warn of a shift to retest support. Presently, the projected extreme resistance stands at 8540.
Additionally, our central point cyclical study models also ended in a bearish mode for the closing warning that the upward momentum is subsiding. Given the fact that we have made a new high and this study just turned down today, caution is advised that this may prove to be a temporary high and a break of today's low of 8210 would tend to confirm that possibility. During the last session, we did close above the previous session's Intraday Crash Mode support indicator which was 7958 settling at 8262. The current Crash Mode support for this session was 8091 which we closed above at this time. The Intraday Crash indicator for the next session will be 8162. Remember, opening below this number in the next session will warn that the market may enter an abrupt panic sell-off to the downside. Now we have been holding above this indicator in the current trading session, and it resides lower for the next session. If the market opens above this number and holds above it intraday, then we are consolidating. Prevailing above this session's low will be important to indicate the market is in fact holding. However, a break of this session's low of 8210 and a closing below that will warn of a continued decline remains possible.
Intraday Projected Crash Mode Points
Today...... 8091
Previous... 7958
Tomorrow... 8162
This market has not closed above the previous cyclical high of 8452. Obviously, it is pushing against this resistance level.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Focusing on our perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 8163 and overhead resistance forming above at 8248. The market is trading closer to the resistance level at this time.
On the weekly level, the last important high was established the week of July 1st at 8452, which was up 4 weeks from the low made back during the week of June 3rd. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed lower. We are still trading above the Weekly Momentum Indicators so we have not undermined critical support as of yet. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8452 made 1 week ago. Still, this market is within our trading envelope which spans between 6658 and 9310.
Looking at this from a broader perspective, this last rally into the week of July 1st reaching 8452 failed to exceed the previous high of 8767 made back during the week of April 8th. That rally amounted to only twelve weeks.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend. Looking at this from a wider perspective, this market has been trading up for the past 5 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in April at 8767. After a four month rally from the previous low of 8070, it made last high in April. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in July, this market has held above last month's low of 7248 reaching 7248.
Some caution is necessary since the last high 8767 was important given we did obtain two sell signals from that event established during April. That high was still lower than the previous high established at 9503 back during September 2023. Critical support still underlies this market at 6760 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible.
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Natural Gas Eyes Bullish Retracement Amid Key Reversal
By: Bruce Powers | July 12, 2024
• Natural gas dipped to 2.25 before reversing above 2.34, indicating a potential bullish retracement toward resistance zones at 2.45 and beyond.
Natural gas dipped briefly to a new retracement low of 2.25 earlier on Friday before buyers took control and drove it back above yesterday’s high. It is on track to confirm a reversal day if it can close above yesterday’s high of 2.34. At the time of this writing, natural gas continues to trade near the highs of the day.
Buyers Show Interest
Today’s low was just shy of reaching of potential support zone for around 2.23 to 2.17. Nonetheless, a likely strong daily close and a key reversal day shows buyers stepping up. That may lead to a bullish retracement to test potential areas of resistance. If natural gas stays within the downtrend (retracement) price structure following a bounce, a test of the lows and possibly the slightly lower support zone may yet occur.
Resistance Zone from 2.45 to 2.475
A key price zone to watch for resistance is around the 200-Day MA, which is now at 2.46. That moving average can be watched together with the previous swing low of 2.475 as they are close to each other. Moreover, the most recent minor swing high of 2.45 is a little lower than the 200-Day line. It has some significance as it was the first day in eight days down that exceeded the previous day’s high.
An advance above 2.45 improves the chance that natural gas can challenge resistance around the 200-Day MA. It would show strength as the 2.45 swing high makes up part of the downtrend price structure of lower swing highs and lower swing lows. A daily close above the price level would confirm strength and improve the chance for a continuation higher. The next higher potential resistance zone looks to be from the 50-Day MA at 2.56 and up to the 20-Day MA at 2.59.
Higher Target Goes From 2.56 to 2.59
Notice that the 50-Day line continues to rise, and it is approaching the 20-Day line. Also, the 20-Day line is falling and has converged with the 38.2% Fibonacci retracement at 2.60. In general, in Fibonacci analysis, a minimum retracement to at least the 38.2% retracement is common. On June 28 support was found around the same price area as the 38.2% retracement. However, that support level didn’t last long as the next day natural gas continued to fall. A downtrend line for the current decline has been added to the chart to provide additional guidance during an advance.
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Crude Oil Continues to Look Seasonally Bullish
By: Christopher Lewis | July 12, 2024
• The crude oil market initially fell during the course of the week but turned around to show signs of life as we are forming hammers. That being said, this is a market that I think is cyclically bullish this time of year, and therefore I think it’s probably only a matter of time before we rallied.
WTI Crude Oil Weekly Technical Analysis
The crude oil market in the West Texas Intermediate Grade initially pulled back a bit during the trading sessions that made up the week, but the 50 week EMA seems to be offering support. It’s interesting because we are in the middle of one of the most bullish times of year, and therefore we have to keep in mind that there’s a cyclical trade going on as people travel more during this time of year.
Ultimately, if we can break above the $86 level, it could send this market much higher, perhaps to the $90 level, and that wouldn’t surprise me at all. In the meantime, I think every time we pull back, traders will be looking to pick up a little bit of value in this market as we have been forming a very long term bottoming pattern.
Brent Crude Oil Weekly Technical Analysis
Brent, of course, looks very much the same as $85 has offered support. A breakout to the upside here could open up the $90 level, which of course is a large, round, psychologically significant figure. If we pull back from here, the $80 level could be a, significant support level as well.
But all things being equal, this is a market that I think we are trying to form some type of, rounding bottom maybe, but ultimately this is a market that should continue to find plenty of value hunters out there to take advantage of this setup. I have no interest in shorting either grade of crude oil.
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Time After Time After Time. The Energy Report
By: Phil Flynn | July 12, 2024
If you’re lost, you can look, and you will find me, Time after Time. If you fall, I will catch you, I’ll be waiting, Time after Time. Joe Biden looks lost and could be running out of time as time and spreads on oil may signal another problem for our befuddled president.
The time spreads in the oil market are showing that the market for oil is starting to tighten. Refiners that are running close to full capacity are bidding up barrels to keep up with demand and that signals that even after yesterday CPI came in cold, oil and gas prices may again start to heat up. That is causing widening backwardation that seems to confirm predictions by reporting agencies of a growing supply versus demand deficit.
This week the Energy Information Administration said that the global oil supply deficit was 500,000 barrels a day in the first half of the year and will increase to 700,000 barrels a day in the second half of the year.
OPEC data suggests that the EIA numbers on a supply deficit might be conservative. They say that world oil demand should rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. That means that OPEC supply will fall short of expected demand by 1.5 million bpd in August. The shortfall widens to 2.2 million bpd in the fourth quarter.
Now, after a soft CPI report and the odds of a September rate cut is being priced in, takes away one of the constant bearish fears from the oil market. Well prices have been held back because of a very strong dollar in the expectation that the Federal Reserve would not be able to cut interest rates this year. Now with this weakening data on the CPI and if the producer price index firms today, the likelihood that the Fed will cut rates will keep oil buoyant.
Reports that the Department of Energy is seeking bids to buy back up to 4 million barrels of oil for the strategic reserve. It’s coming at a time when we’re already seeing supplies tighten. Maybe the Biden administration wants to buy back oil for the Strategic Petroleum Reserve (SPR) while the buying is good because they are fearful of a price hike. They probably fear more criticism for the way that they use SPR in part for their political piggy bank.
Oil is also getting support from mixed Chinese data that suggests that some of the doom and gloom surrounding China’s oil demand expectations might be overstated. The Wall Street Journal reported that China’s exports grew more than expected in June, while imports fell unexpectedly in another sign of weak domestic demand. Outbound shipments rose 8.6% from a year earlier in June, up from May’s 7.6% increase, the General Administration of Customs said Friday. The result beat the 7.8% growth expected by economists in a Wall Street Journal poll. Economists project that China’s exports will stay strong for a while as buyers and sellers rush to front-load shipments before more punitive measures on Chinese goods are imposed by Western governments.
However, imports dropped 2.3% in June. That compared with a 1.8% increase in May and the 3.2% growth expected by the economists surveyed. That brought June’s trade surplus to $99.05 billion, the highest since at least 1994, according to figures from local data provider Wind dating back to August 1994.
Retail gasoline prices, which hit a higher level than a year ago yesterday, have pulled back a bit as Hurricane Beryl’s impact on demand may be greater than its impact on supply. There’s still a lot of focus on refinery restarts in the aftermath of the storm but it seems that hurricane’s barrel impact on gasoline prices will be short lived. Still, keep up with the latest developments by downloading the Fox Weather app.
Retail gas prices are at 353.8 down a little bit from yesterday and down slightly from year ago levels.
Natural gas prices that have held up well in the face of hurricane Beryl’s but couldn’t overcome a surprisingly bearish weekly inventory report. Natural gas producers just can’t help themselves and continue to creep up on the production side.
EIA said that, “Working gas in storage was 3,199 Bcf as of Friday, July 5, 2024, according to EIA estimates. This represents a net increase of 65 Bcf from the previous week. Stocks were 283 Bcf higher than last year at this time and 504 Bcf above the five-year average of 2,695 Bcf. At 3,199 Bcf, total working gas is above the five-year historical range.
Lower-48 state dry gas production Thursday was 100.3 bcf/day (+0.1% y/y), according to BNEF. Lower-48 state gas demand Thursday was 78.1 bcf/day (+4.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 11.1 bcf/day (-13.9% w/w), according to BNEF
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Natural Gas Approaching Key Support Zone Starting at 2.23
By: Bruce Powers | July 11, 2024
• Natural gas fell below 2.27 support, targeting the 2.23-2.17 price zone. A bearish weekly close looms.
Natural gas fell on Thursday and triggered a continuation of the bearish retracement. It dropped below the previous retracement low of 2.27 and looks to be heading towards the next lower support zone that starts around 2.23. Resistance at 2.17 from the early-February high marks the lower edge of the price zone. However, that range is an estimate and there is no assurance that it will stop the descent. Nonetheless, there is reason to believe that it might.
Targets 2.23 to 2.17 Support Zone
Within the 2.27 to 2.17 price zone are two additional indications on the daily chart that support the identification of that price zone. First, there is a descending ABCD pattern where the CD leg of the pattern has been extended by 127.2% of the initial AB decline. It reaches the target at 2.20. In addition, there is a 61.8% Fibonacci retracement that completes at 2.18.
Since today is Thursday, if natural gas stays around current price levels or lower heading into the weekend, it is set to end with another bearish weekly candlestick pattern and a close near the lows of the week. Regardless, this week will complete the fourth sequential week of lower weekly highs and lower weekly lows. As of the 2.26 low today, the price of natural gas has declined by 28.4% from the June swing high of 3.16 (A).
Challenging Below 200-Day MA
If support is seen in the price zone that leads to a bullish reversal, rallies will first need to contend with possible resistance around the 200-Day MA, currently at 2.46. It represented resistance earlier this week and may do so again. Given how persistent the current correction has been to date, there is a chance for a bounce up into resistance, followed by a turn back down.
Either way, if the 2.17 price area is decisively broken to the downside, the initial bullish breakout from the top of a bottom symmetrical triangle pattern could eventually be challenged as support. That price level is at 2.00 and highlighted on the chart with a red box.
The current retracement followed a failed attempt to break out above the downtrend line in early-June. That created a lower swing high and kept the downtrend price structure in place. Failed moves can lead to fast moves and that looks to be what we’ve been seeing in natural gas since the June high.
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Crude Oil Rally Targets 89.23 Amid Bullish Momentum
By: Bruce Powers | July 11, 2024
• Crude oil triggered a bullish reversal today, targeting 89.23 and a likely second breakout above trendline resistance.
Crude oil looks to be in the process of completing a bottom from a bearish retracement from yesterday’s low of 80.96. That swing low successfully tested support at the prior interim swing high of 81 from May 29. Also, a 50% retracement was completed at 81.23. A strong intraday rally followed generating a green reversal candle and a strong daily close. The close was in the top quarter of the day’s range and back above the 20-Day MA (purple).
That was a quick recovery following a dip below the 20-Day line earlier in the session. Further, notice that the area around an earlier long-term downtrend line retained support. The line was kept on the chart for this purpose. It provides an additional indication for support on weakness.
Bullish Reversal Above 82.81 Triggers
A bullish reversal triggered today with an advance above Wednesday’s high of 82.81. Crude continues to trade near the highs of the day at the time of this writing, following a successful test of support at the 20-Day MA earlier in the day’s trading session. Notice that both today and Tuesday, crude found support around the 20-Day MA. It will be a slightly stronger close above 82.81 rather than below it. Nevertheless, the bullish reversal sets the stage for crude to challenge the recent swing high of 84.74.
Second Breakout Above Trendline may be Next
An upside breakout through the top trendline that triggered last week failed to follow through leading to this week’s retracement. Today’s bullish reversal may be the beginning of a rally that could trigger a second breakout that may see greater success. Notice that resistance around the downtrend line was tested over four days but demand was not strong enough to take it forward. Furthermore, last week’s high completed a relatively aggressive 16.5% rally in 23 trading days. In other words, it was extended and overdue for a retracement.
Bull Trend Continues Above 83.01
Going forward, a rally above today’s high, currently at 83.01, will trigger a continuation of the rally off yesterday’s low. There are two trendlines the cross around 83.80 and that area may present some resistance. Nonetheless, a decisive breakout above last week’s high of 84.74 triggers a continuation of the bull trend that began from the early-June swing low.
Measured Move Targets 89.23
Taking into consideration previous measured moves in crude (marked on chart), it looks like crude has the potential to reach the 89.23 price area before this rally is complete. That price level would complete a 23.1% advance and match the lowest performance of the earlier strongest rallies, since the March 2023 swing low. Notice that 89.23 is within a larger Fibonacci confluence zone target.
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Change The Peaking Subject. The Energy Report
By: Phil Flynn | July 11, 2024
When things are not quite going your way, it is probably a good time to try to change the subject. Or the peaking subject anyway. In other words, try to misdirect people away from the fact that things are a shambles and try to change the narrative. Look over there, nothing to see here. Pay no attention to that man behind the curtain.
For example, let’s take BP, that once stood for British Petroleum and then later “Beyond Petroleum” and then back to BP again. The same company that brought you the “Deep Water Horizon” Is now making a daring prediction that oil demand might “peak” next year at a time when the company is struggling and on a downward spiral.
Let’s forget for a minute that all the major reporting agencies like the Energy Information Administration, OPEC, and the International Energy Agency all see oil demand breaking records. At least for the moment the headlines BP might get might be more about their crazy peak demand prediction instead of the company’s dismal performance. Is it any wonder when a company can’t decide what its core business is?
Javier Blass at Bloomberg pointed out that, “Six months since BP appointed a new CEO with the promise of “growing the value”, its market cap has slumped to a 2-year low of ~£75 billion. BP is a shadow of the mighty oil behemoth it once was — and living on borrowed time. He writes that, “Murray Auchincloss had a clear message to his shareholders days after becoming chief executive officer of BP Plc: “I’m focused on growing the value of BP.” Nearly six months since his promotion, however, the promised improvement is nowhere to be seen.
BP’s market value this week fell to a two-year low of roughly £75 billion ($96 billion). Worse, the company is worth today about the same as it was 25 years ago, when oil changed hands at $10 a barrel, rather than today’s price of more than $80 a barrel. BP is a shadow of the mighty oil behemoth it once was. It would be unfair to blame Auchincloss — who celebrates six months on the job next Wednesday — for all the problems. Some predate him.
Yet it’s not just BP that is trying to redirect our attention away from the reality in front of our eyes, but the Biden administration as well. Perhaps one of the most shortsighted and nonsensical pushes from the Biden Administration is the impossible task of trying to electrify our nations electronic fleet. Obviously, this is more evidence that this administration does not follow science.
Yet even though almost half of the people that have been sucked into buying electric cars want to go back to gasoline and based on sales hardly anyone want an electric car, the Biden administration wants to continue to waste billions to push this electronic albatross on the American people. Now its latest action to cover for the fact that they have spent billions of dollars on a few car chargers and in a pathetic attempt to try to win some voters in swing states where he is way behind, he plans to double down on this electric car fantasy.
MarketWatch reported that, “The Biden administration has announced $1.7 billion in grants that aim to help convert closed or at-risk automobile facilities into plants that make electric vehicles or EV parts, with the effort due to aid 11 factories across eight states. The grants — which stem from Democrats’ Inflation Reduction Act of 2022 — are slated to include $500 million for a General Motors GM, +0.58% plant in Michigan, $89 million for a Harley-Davidson HOG, +1.35% factory in Pennsylvania, $78 million for a Blue Bird BLBD, +2.38% school-bus factory in Georgia and $208 million for Volvo VOLV.A, 0.81% truck-manufacturing facilities in Maryland, Pennsylvania and Virginia.
Michigan, Pennsylvania and Georgia are among the seven swing states that look poised to decide the 2024 White House race.
Grant money is also due to go to facilities in Illinois, Indiana and Ohio, with Cummins CMI, +2.01% and Chrysler parent Stellantis STLA, +3.34% among the companies benefiting. The Biden White House said in a statement that the new grants are all subject to negotiations, and that the Department of Energy could rescind the grants as reported by MarketWatch.
Yet we know this electric pipe dream is nothing more than smoke and mirrors. Electric vehicles are not as friendly to the environment as the Biden administration would have you believe.
To have the ability to try to power the grid to charge millions of electric cars and at the same time try to meet the real needs of the economy of the future, which is an artificial intelligence and data centers, makes this task close to impossible. Unless we start building a lot of nuclear power plants and spend billions to increase the reliability of the grid. But we won’t have that cash if the Biden administration keeps wasting in on this electric car obsession. Of course, that won’t stop the Biden administration from spending our money if they think they can win a few votes.
In their attempts to save the planet from greenhouse gases the reality is that the demand for oil and gas is just going higher. Even according to the International Energy Agency (IEA) that once famously said that we could stop investing in fossil fuels is now projecting oil demand growth and not a peak next year.
The IEA, normally one of the most pessimistic and usually the most incorrect on global oil demand today said that, “World oil demand growth slowed to only 710 kb/d in 2Q24, its lowest quarterly increase in over a year. Oil consumption in China, long the engine of global oil demand growth, contracted in both April and May, and is now assessed marginally below year earlier levels in 2Q24. That stands in stark contrast to annual gains of 1.5 mb/d in 2023 and 740 kb/d in 1Q24. Demand for industrial fuels and petrochemical feedstocks was particularly weak.
By contrast, second-quarter delivery data of gasoil and naphtha for OECD economies came in higher than expected, potentially signaling a budding recovery in Europe’s ailing manufacturing sector. While the bounce temporarily pushed quarterly OECD demand growth back into positive territory, non-OECD countries will account for all this year’s global gains. World oil demand growth expectations for 2024 and 2025 are largely unchanged at 970 kb/d and 980 kb/d, respectively. (so, no peak predicted).
No peak for OPEC either. Reuters reported that, “OPEC stuck to its forecast for relatively strong growth in global oil demand in 2024 and next year, saying on Wednesday that resilient economic growth and air travel would support fuel use in the summer months. The Organization of the Petroleum Exporting Countries, in a monthly report, said world oil demand would rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.
The Energy Information Administration (EIA) also is not predicting an oil demand peak and on Tuesday raised its forecast for the growth of global demand for oil during the current year to 1.10 million barrels per day, and in 2025 by 300 thousand barrels per day to 1.80 million barrels per day.
The EIA also gave oil a bounce as refiners ran wild suggesting more supply draws for crude once refiners recover from Hurricane Beryl.
EIA said that U.S. crude oil refinery inputs averaged 17.1 million barrels per day, which was 317 thousand barrels per day more than the previous week’s average. That means refineries operated at extremely strong 95.4% of their operable capacity last week.
Crude oil inventories did fall last week by 3.4 million barrels and our 4% below the five-year average for this time of year.
Instead of selling oil from the reserve it’s interesting to note that the Biden administration announced a plan to buy 4 million barrels back for the reserve. Of course if prices go up, they’ll probably release some more oil from the reserve again.
The EIA did also report that gasoline inventories fell 2,000,000 barrels from the week before and are 1% below the five-year average. Distillate inventories increased by 4.9 million barrels but are still 8% below the five-year average.
The EIA did see demand stay solid as total products supplied over the last four-week period averaged 20.9 million barrels a day, up by 3.0% from the same period last year.
Gasoline demand that 9.3 million barrels a day last week that’s up 0.4% from the same period of last year and that’s the first time the four-week moving average moved above last year’s levels and we also saw distillate fuel inventories average 3.7 million barrels a day and that was up 4.4% from the same period last year.
So don’t let peak demand fears keep you awake be prepared for a significant tightening of supplies of both oil and products later in the year. Today of course we’re going to have to look at the consumer price index to give us a bit of an idea of where the feds head might be but ultimately use this weakness to put on your winter hedges.
Natural gas prices are still holding in pretty spectacularly even in the aftermath of hurricane Beryl. We think it would be a good idea to put on some long-term strategies for natural gas and get ready for winter because even in the dog days of summer, winter isn’t that far behind.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | July 11, 2024
• Top Movers
LME Aluminum Alloy 9.76 %
Orange Juice (NYCE) Futures 3.21 %
Palm Kernel Oil 2.69 %
LME Tin (99.85%) 2.04 %
NSW Baseload Electricity Continuous 1.6 %
• Bottom Movers
Lean Hogs (CME) Futures 4.22 %
Iron Ore 62% Fe CFR China (TSI) 3.7 %
Coffee (NYCSCE) Futures 2.56 %
Canola Futures 2.28 %
Oats (CBOT) Futures 2.07 %
*Close from the last completed Daily
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Natural Gas Remains Bearish as Resistance Holds Strong
By: Bruce Powers | July 10, 2024
• Downturn following test of 200-Day MA resistance is short-term bearish behavior and improves chance of testing lower support zone.
Natural gas followed through to the downside on Wednesday after Tuesday’s rally encountered resistance around the 200-Day MA. Yesterday’s low of 2.33 was exceeded to the downside before natural gas found support at the day’s low of 2.29, which led to a bounce.
Today’s price action did little to comfort bulls as a downtrend is well in place and today’s decline following yesterday’s test of potentially significant resistance is bearish behavior. Until there is a clear change in character natural gas remains bearish and a test of support at the next lower target zone continues to be the next likely scenario to unfold.
Confluence of Indicators Point to 2.23 and Lower
There is a confluence of price levels that appear from around 2.23 to 2.17. That is not too much lower than the current retracement low of 2.27. The range provides a potential support area given the confluence of indicators pointing to the price range. Two key levels include the 61.8% Fibonacci retracement at 2.18 and the completion of a falling ABCD pattern at 2.20. Each method is looking to identify a harmonic price level associated with prior swings highs and lows. The target from the ABCD pattern is an extended target using the 127.2% Fibonacci ratio.
Bullish Sentiment Begins to Dominate Above 2.46
An alternative to the bearish scenario unfolds with a rally above Tuesday’s high of 2.45, along with the 200-Day MA at 2.46. An earlier initial indication of strength would be seen in a rally above today’s high of 2.385. However, an advance above 2.385 puts the price of natural gas heading back up into potential resistance around the 200-Day line. And resistance may be seen again.
Once the 200-Day line is exceeded, a potentially significant near-term barrier to a continuation higher is resolved. It would set the stage for a rally up to the 50-Day MA at 2.55 and the 38.2% Fibonacci retracement at 2.61. A little higher will be a price range from around 2.67 to 2.71. That range consists of the 20-Day MA and 50% retracement, respectively.
20-Week MA Further Confirms Support Zone
Regarding the next lower potential support zone, in addition to four price levels that identify the price range there is also confirmation of the range on the higher time frame weekly chart. The 20-Week MA is present on the weekly chart (not shown) at 2.19. Also, the 50-Week MA is a close match with potential resistance around the 200-Day line. It shows potential resistance at 2.49.
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Crude Oil Inventories Declined by 3.4 Million Barrels
By: Vladimir Zernov | July 10, 2024
Key Points:
• Gasoline inventories decreased by 2.0 million barrels from the previous week.
• Strategic Petroleum Reserve increased from 372.6 million barrels to 373.1 million barrels.
• WTI oil is trying to settle above the $82.00 level.
On July 10, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories decreased by 3.4 million barrels from the previous week, compared to analyst consensus of -3.0 million. At current levels, crude inventories are about 4% below the five-year average for this time of the year.
Total motor gasoline inventories declined by 2.0 million barrels from the previous week, compared to analyst forecast of -0.5 million barrels. Distillate fuel inventories increased by 4.9 million barrels.
Crude oil imports increased by 214,000 bpd, averaging 6.8 million bpd. Crude oil imports averaged 6.7 million bpd over the past four weeks.
Strategic Petroleum Reserve increased from 372.6 million barrels to 373.1 million barrels as U.S. continued to buy oil for reserves.
Domestic oil production increased from 13.2 million bpd to 13.3 million bpd. This is an important development which shows that current prices provide sufficient incentives to boost production.
WTI oil made an attempt to settle above the $82.00 level as traders reacted to the EIA report. Interestingly, rising domestic oil production did not serve as a beraish catalyst for WTI oil in the near term. Traders focused on falling crude oil and gasoline inventories, which indicate that demand is strong. A move above the $82.00 level will push WTI oil towards the nearest resistance at $83.50 – $84.50.
Brent oil settled near the psychologically important $85.00 level after the release of the EIA data.
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Inflation Not The Only Risk We Face. The Energy Report
By: Phil Flynn | July 10, 2024
Fed Chairman Jerome Powell knows how to throw cold water on a commodity rally, and he did so after he told a Senate Banking committee inflation is not the only risk the economy faces.
And while I can scare myself to sleep thinking about the many risks posed by this governments reckless spending and crazy foreign policy moves, one risk that is real and one that we have been warning about is a coming energy shortfall created by crazy climate policies and crazy regulations. And while folks believe that those concerns are somewhere far off in the future, the reality is, it’s a small way and we are already there.
The Energy Information Administration (EIA), in their Short-Term Energy Outlook, not only raised their price and demand projections but acknowledged that we are going to see a supply versus demand imbalance when it comes to oil. In plain English, the EIA said that global oil demands this year will reach a record 103.80 million barrels a day. But at the same time their projection of daily global oil production is inside 101.98 million barrels a day. So that means that based on those assumptions we will see global oil inventories decline by 1.82 million barrels every day.
The EIA says they estimate that global oil inventories will only fall by 0.5 million barrels per day (b/d) in 1H24 and will fall by 0.7 million b/d in 2H24. Because of that, the EIA also had to raise their oil price forecast now saying that Brent crude will average $89 a barrel in the second half of the year and that is up from $84 a barrel in the first half of the year. Regardless of how you do the math, it’s clear that because we’re heading into a supply deficit the chances of upside price spikes have increased.
Any weather-related supply disruptions or geopolitical events could leave the market vulnerable. And the market must price in this risk especially because we have seen our strategic petroleum reserve gutted in recent years. This comes as EIA had to raise its 2024 demand estimate to 1.11mbpd (was 1.08) and raised the 2025 estimate to 1.77mbpd.
On the plus side the EIA said that gasoline expenditures are not as bad as you might think. They say that a combination of falling gasoline prices, increased vehicle efficiency, and rising incomes mean U.S. households will spend about 2.3% of disposable income on gasoline in 2024 and 2.2% in 2025, less than average for the 2015–2023 period. Even though that may be the case when directly tied to gasoline prices to income, it doesn’t consider the fact that inflation is much higher than it had been during 2015 to 2023. That is why this pronouncement for the average consumer doesn’t really make them feel much better. Still the EIA projects that regular grade retail gasoline price of around $3.50 per gallon (gal) for 2025 which is slightly less than the 2023 annual average and $0.50/gal less than the 2022 annual average.
Yet the real issue going forward is the ability to power the economy of the future. The economy of the future is not electric cars, but on the bill to power artificial intelligence and data centers which will consume massive amounts of electricity that cannot be powered by interruptible resources and while the Energy Information Administration counts the fact that wind power is the fastest growing source of energy it is inefficient, and wind is losing the wind behind its sails.
The EIA reported that the amount of offshore wind generating capacity that is under construction or planned in the United States is in flux after two projects in New Jersey were canceled last year. Of the 7,200 megawatts (MW) of capacity reported in May in EIA’s latest Preliminary Monthly Electric Generator Inventory, projects totaling about 2,400 MW have been canceled since last December while others totaling 4,800 MW remain active in various stages of development. Besides the EIA said that, “Electric vehicles only expected to account for 7% of light vehicles by 2030. Yet the Power grid is going to have to expand quickly to meet demand and keep our economy dynamic.
The EIA said that, “The U.S. electric power sector generated 5% more electricity in 1H24 than 1H23 because of a hotter-than-normal start to summer and increasing power demand from the commercial sector. They are calling for a 2% increase in U.S. generation in 2H24compared with 2H23, with solar power, the fastest growing U.S. source, generating 36 billion kilowatthours (BkWh) more electricity in 2H24 than in 2H23 (an increase of 42%).
They say that after reviewing the responsiveness of fossil fuel generation to natural gas prices, we now expect more power generation from coal and less from natural gas than we did in our previous forecast, especially during the winter. The EIA on natural gas said that the Henry Hub natural gas spot price will average almost $2.90 per million British thermal units (MMBtu) in 2H24, up from $2.10/MMBtu in 1H24.
They say that, “Natural gas prices fell in early 2024 because of mild winter weather that reduced demand for natural gas for space heating. However, low prices reduced natural gas-directed drilling and led producers to curtail some production.
They expect dry production of U.S. natural gas in 2H24 to remain near 104 billion cubic feet per day (Bcf/d) compared with a record of more than 106 Bcf/d in December 2023.
Natural gas inventories. At the end of June, there was 19% more natural gas in U.S. inventories than the five-year average (2019–2023). We expect less natural gas injected into storage than the five-year average this summer season because of relatively flat production in 2H24 and a seasonal increase in demand from the electric power sector. They forecast inventories will end the injection season in October with 6% more natural gas in storage than the five-year average.
We are facing a very tight market for oil and gas natural gas is holding up pretty well suggesting that a bottom is in the making. Be sure your hedge on your oil and gas needs.
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Natural Gas Bullish Reversal Challenges 200-Day MA
By: Bruce Powers | July 9, 2024
• Natural gas shows bullish reversal, testing key resistance levels around the 200-Day MA, setting the stage for either further gains or a continued correction.
Natural gas triggered a bullish reversal on the daily chart today as it broke out above Monday’s high of 2.39. Subsequently, the 200-Day MA was successfully tested as resistance as price was rejected below the 200-Day line from the day’s high of 2.45. Today’s high was 2.45 and the low of the day was 2.33. This sets up the first day in eight with a higher daily low and a higher daily high.
It is not surprising that resistance was seen around the 200-Day line as it was previously marking a support area. Either resistance will continue around the 200-Day MA, followed by either an upside breakout, or a bearish reversal and continuation of the correction is sustained.
Bearish Sentiment Dominates Until Rally Above 200-Day MA
Arguably, the retracement may be complete but there is not enough information yet to make that determination. There remains a lower target zone from 2.23 to 2.17 that has yet to be tested as support. If the 200-Day line continues to reflect resistance, a test of the lower support target becomes more likely. Nevertheless, the bearish scenario begins to soften on a decisive rally above last Tuesday’s high of 2.48. That will put natural gas above the 200-Day line, currently at 2.46. Strength would be confirmed on a daily close above 2.48.
Rally to Test Prior Support at 2.63?
The last breakdown price level was at the swing low of 2.635 (B) from June 24. Therefore, a swing back up to test that price area as resistance may play out if today’s daily bullish reversal can be sustained. Other price levels to watch on an upside move include the 50-Day MA at 2.54, the 38.2% Fibonacci upside retracement at 2.61, and the combined 50% retracement and 20-Day MA at 2.71. Each price area could see resistance on the way up.
Downward Pressure Remains
Given the bearish reaction today when encountering the 200-Day line resistance area, downward pressure remains. Unless there is a decisive rally above the 200-Day line with a daily close above it, the correction is set up to continue. As noted, there is a slightly lower target support zone that is derived from four price levels. Two come from previous support or resistance levels and two are from Fibonacci calculations. Just using the 61.8% Fibonacci retracement as a target level is enough. The other levels further confirm the likelihood of a 61.8% retracement prior to the correction being complete.
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Crude Oil Tests Key Support Levels Amid Bearish Retracement
By: Bruce Powers | July 9, 2024
• Testing key support at the 20-Day MA, crude oil could see a bullish breakout if the line holds and strength returns.
Crude oil continued its bearish retracement with a test of support at two lines. Today’s low was 81.42, putting the price of oil in the vicinity of the purple 20-Day MA (81.58), an earlier downtrend line, and the 50% retracement (81.23) of the full advance starting from the June 4 swing low.
Finding support and completing a retracement around the 20-Day MA would be bullish and certainly is possible. Being a trend indicator, a successful test and subsequent advance off the 20-Day line would set the stage for oil to attempt another breakout of a top trend line. That trend line is also where resistance was encountered last week following the high of 84.74.
First Test of 20-Day MA Support
Today is the first day that crude tested the 20-Day MA as support since it rallied back above the line on June 10. If the line continues to act as an area of support, crude has a chance to again attempt a bull breakout above the trendline. But a breakout above the trendline will also trigger a symmetrical triangle bull breakout.
Preparing to Break Out of Large Symmetrical Triangle
Crude has been ranging within a large symmetrical triangle consolidation pattern since last. Given characteristics of the triangle pattern, the trading range for crude has been shrinking as uncertainty prevails. Following a bullish breakout above last week’s high of 84.74, crude oil will begin to break out and get free of the triangle pattern. It has the potential to see an acceleration of the advance once there is a daily close above 84.74.
Rest Before New Breakout Attempt is Constructive
A period of retracement and/or consolidation prior to a renewed rally above last week’s high will better prepare crude for a sustained bullish breakout. Last week’s high completed a 12 point or 16.5% advance in a short 23 trading days. That put crude in an extended position and due for a correction. If the 20-Day MA continues to show support, it will put crude in a bullish position to continue its advance once there are signs of strength.
Alternatively, a decline below the 20-Day line that doesn’t quickly recapture the line is prone to a deeper retracement. In other words, bullishness is retained if there is a quick drop to the 50% retracement at 81.23 or the previous swing high at 81.00. As long as the price of crude quickly recaptures the 20-Day MA, it is showing strength that could eventually lead to a breakout above last week’s high.
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$Oil $WTIC - Tried to pop the 'Coil' last week but dropped over the last three days back inside the pattern...
By: Sahara | July 9, 2024
• $Oil $WTIC - Update
Tried to pop the 'Coil' last week but dropped over the last three days back inside the pattern...
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To Recovery Mode. The Energy Report
By: Phil Flynn | July 9, 2024
The Port of Galveston and the Port of Houston are in recovery mode as well as refiners where the biggest damage from hurricane Beryl seems to be the lack of power. There are 2.3 million still without power in Texas post Hurricane Beryl and that is one of the reasons the recovery from the storm is taking time.
Corpus Christi, the largest crude oil export port in the US, is in recovery mode. They reported that, “In response to the impacts of Hurricane Beryl, the Port of Corpus Christi Authority has now fully transitioned to Post-Storm Recovery in accordance with the 2024 Hurricane Readiness Plan. Port personnel are continuing to assess impacts; however no significant impacts have been reported. Port facilities, including the Emergency Operations Center (EOC), Security Command Center and Harbormaster’s Office have maintained continuous uninterrupted operations. Port offices will open as scheduled tomorrow, July 9, for normal operations.
Power outages shut down Marathons Galveston Bay refinery yesterday as well as tripping units at Valero’s Texas refinery. When the power comes back online they should be able to resume operations and we will be watching for updates. Hours ago, the Port of Galveston reported that Galveston Harbor and port operations remain closed as the port and federal agencies assess the impact of Beryl. The U.S. Army Corps of Engineers expects to begin surveying federal portions of waterways on Tuesday. That port is a major exporter of liquefied natural gas and oil but at the same time it is also a spot where many cruise ships start their voyage.
The Port of Houston said that, “after conducting preliminary assessments of our facilities, power, and systems, all Port Houston terminals will remain closed tomorrow (Tuesday, July 9, 2024). They will continue to assess and repair damage this afternoon and tomorrow and will send an update by 4 PM CT tomorrow if there are any further disruptions to operations for Wednesday. The key thing is whether the flooding has impacted shore production and how quickly they can get the power back on.
The futures market already is looking ahead past the storm. It will now start to focus on supply and demand, and we will get a snapshot of that today with the American Petroleum Institute (API) report that comes out at 3:30 pm central standard time. That should be the biggest market mover that we could be impacted by and any comments from Fed Chairman Jerome Powell who speaks today in front of a Senate committee. Oil traders will be listening very carefully to get a sense on whether the recent signs that The US jobs market is starting in the private sector is starting to weaken and signs that inflation has slowed impact the value of the dollar and the price of oil.
The one thing that we do know is that tonight’s API report and tomorrow’s Energy Information Administration (EIA) Petroleum Status Report will be the last reports for a while that won’t be impacted by Hurricane Beryl. This is going to give us our best snapshot of current supply versus demand and give us an idea about expectations of supply and demand going forward.
And if air travel is any indication, it looks like we are going to really be taking off. Taking to the air! The 4th of July holiday saw over 3 million people go through TSA checkpoints breaking all-time records. And lava land there’s a one-man band that will toot its flute for you! Now the question is whether that record-breaking air travel demand will translate into gasoline demand. Gasoline demand while growing has been a bit disappointing. Perhaps the 4th of July travel weekend may rewrite the weak gasoline narrative that is held back the market.
From a technical perspective, if you look at the crude oil daily chart, it could be on the precipice of a major breakout to the upside. While we haven’t broken out yet, the momentum and technical setup could be wildly bullish, and a breakout would confirm that the market is going to see a supply deficit later in the year. We think the market is flashing warning signs and while we may get a pullback from resistance, the overall fundamental suggests that you really need to be hedged because the market has a lot of room to move if we get an upside breakout.
Meanwhile gas demand in the US has still been questionable but in Brazil it seems to be rising. Bloomberg reported that Brazil’s state-controlled oil company is raising domestic gasoline prices for the first time in 11 months as crude prices have climbed and the value of the nation’s currency. Petroleo Brasileiro SA will increase gasoline prices for distributors by 7.1%, to 3.01 reais ($0.55) per liter, according to a statement Monday. The company also raised prices for liquefied petroleum gas used for cooking and heating. It left diesel prices unchanged.
China has been the beneficiary of imports of cheap Russian crude oil as world governments have to admit that the Russian price cap fantasy turned out to be a total failure. Saudi Arabia has lost some market share to Russia on exports to China but are trying to get it back. Reuters is reporting that Saudi crude oil exports to China will rebound in August to at least 44 million barrels after deep price cuts by state energy firm Saudi Aramco. August exports to China will rise for the first time in four months, from about 36 million barrels in July, the sources said. The rebound will help the biggest oil exporter regain its share in the largest import market.
Perhaps the biggest surprise in the aftermath of the hurricane with the fact that natural gas prices held up well. It’s amazing when you think that LNG exports were delayed, and production could have been impacted and massive power outages that would decrease demand so when the market holds up that well even in the face of those challenges, it makes you feel like the bottom is in. It’s probably a good time to put on some bullish strategies for natural gas because the market seems to know something.
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Natural Gas Rallies off Strong Support, Yet Lower Target Remains
By: Bruce Powers | July 8, 2024
• Natural gas saw support at 2.27, sparking a rally, but faces potential resistance at the 200-Day MA, currently at 2.47.
Following a decline to a new retracement low of 2.27 earlier during Monday’s trading session, natural gas subsequently showed signs of support and the potential for a bullish reversal day. Once support was seen from the 2.27 retracement low, a rally followed setting up a potential wide range green candle for the day.
At the time of this writing, trading continues near the highs of the day. Until there is a rally above a prior day’s high, the downtrend remains as there remains a series of lower daily highs and lower daily lows. Friday’s high was at 2.44. Following today’s close, the high for today, currently at 2.39, will be the near-term price level to watch for signs of strength.
Downward Pressure Remains
Moreover, since the downtrend price structure remains, a decline to test the next lower support zone is still a possibility. Keep in mind that rallies will be heading up into potential resistance around the 200-Day MA, currently at 2.47. Since it is a long-term moving average and the price of natural gas continued to fall after an initial decline below the line last Tuesday, it can be expected to mark an area where resistance may be encountered on the way up.
Lower Price Zone Begins at 2.23
The next lower support zone looks to be around 2.23 to 2.17. It begins with a prior swing low from December and a resistance level from early-February. A 61.8% Fibonacci retracement completes within the price zone at 2.18, while an extended falling ABCD pattern completes at 2.20. In summary, there are four indicators pointing to the 2.23 to 2.17 price zone as potential support.
Further, on the weekly chart, the 20-Week MA shows within the price zone at 2.20. The 2.17 price level is shown to have a harmonic relationship with the price drop seen in the first AB leg of the decline. Rather than the AB and CD legs of the decline being equal, a Fibonacci ratio of 127.2% is applied to the price distance seen in the AB leg and that amount is subtracted from the beginning of the CD decline.
When more than normal indicators point to a price range, the market is telling us to pay attention. Therefore, natural gas may rally further from today’s low, but it is heading into potential resistance. If resistance is strong enough it may turn the price of natural gas back down for a potential test of support beginning from the 2.23 price area.
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Sliders On The Storm. The Energy Report
By: Phil Flynn | July 8, 2024
Oil and products are sliding on the storm as some of the worst-case scenarios of Hurricane Beryl thankfully, won’t come to won’t come to be. Still as Fox Weather reports, “Hurricane Beryl made landfall around Matagorda, Texas at 3:50 a.m. CT Monday as a Category 1 hurricane with gusts over 80 mph and while the storm had 90 mph gusts and life-threatening storm surge, the markets believe that the storm will have more impact on demand than it will on supply. While Texas is seeing the storm surge inundate roads and high winds will do some damage, the long-term impact on refining and oil production will be short lived.
Reuters reported that the largest ports in Texas had closed operations and vessel traffic on Sunday to prepare for Tropical Storm Beryl. The ports of Corpus Christi, Houston, Galveston, Freeport and Texas City said they closed after condition “Zulu” was set by Coast Guard captains on Sunday. All vessel movement and cargo operations are restricted as gale force winds are expected within 12 hours.
Corpus Christi, about 200 miles (322 km) from Houston, is the top crude oil export hub in the United States. Texas City, and Freeport also are major oil and refined products shipping hubs on the U.S. Gulf Coast. Port closures could bring a temporary halt to crude exports, oil shipments to refineries, and motor fuels from those plants.
The 52-mile Houston ship channel, which on Sunday operated under transit restrictions before halting all traffic, allows access to 8 public facilities and some 200 private terminals. Almost 14,000 customers in Texas had lost electricity on Sunday evening, according to PowerOutage.us. Power provider Centerpoint Energy(CNP) said it was monitoring the storm and making preparations.
Energy infrastructure company Kinder Morgan (KMI) said on Sunday it shut its West Clear Lake and Dayton natural gas storage facilities, and its Texas City natural gas processing facility ahead of the storm.
Freeport LNG’s liquefaction trains 1, 2 and 3 and a pre-treatment facility were proactively shutdown due to impacts associated with Beryl. Plant operators later restarted them “as efficiently as possible to minimize flaring,” according to a filing with The Texas Commission on Environmental Quality. Freeport said on Sunday that it had ramped down production at its liquefaction facility and intends to resume operations once it is safe to do so after the weather event. Liquefied natural gas producer Cheniere Energy said on Sunday its Corpus Christi facility was operating without interruptions, but all nonessential personnel were released. “Our Gulf Coast assets have robust and proven severe-weather preparedness,” it said in a release. Chemical maker Chemours Co(CC), which has a production facility near Corpus Christi, said on Sunday it escalated its hurricane preparedness plans “to include planning for safe and adequate staffing during and after the storm and securing equipment and assets, should the storm make landfall near our site. “Enbridge Inc (ENB), which operates large crude export facilities near Corpus Christi, said all U.S. Gulf assets were operational, adding that they had activated emergency plans. Gibson Energy (GBNXF), which also operates an export facility in the area, said on Sunday all Gateway and Houston based employees were safe, and facilities and docks were secured after the port of Corpus Christi closure.
Citgo Petroleum Corp was cutting production at its 165,000 barrel-per-day Corpus Christi refinery on Saturday, sources said. The refiner plans to keep the plant in operation at minimum during Beryl’s passage. Some oil producers, including Shell and Chevron (CVX) , had also shut in production or evacuated personnel from their Gulf of Mexico offshore platforms. Yet, the one thing that we do know is that even though we have seen some significant shutdowns most of them will start reopening later today.
There is some talk that the prospect of a ceasefire deal in Gaza could lower energy prices but it has really been a situation where the prospect of a ceasefire in Gaza seems to be a delaying tactic that we have seen time and time again from Hamas.
The AP reported that, “Several officials in the Middle East and the U.S. believe the level of devastation in the Gaza Strip caused by a nine-month Israeli offensive likely has helped push Hamas to soften its demands for a cease-fire agreement. Hamas, over the weekend, appeared to drop its longstanding demand that Israel promises to end the war as part of any cease-fire deal. The sudden shift has raised new hopes for progress in internationally brokered negotiations. Israeli Prime Minister Benjamin Netanyahu on Sunday boasted that military pressure — including Israel’s ongoing two-month offensive in the southern Gaza city of Rafah — “is what has led Hamas to enter negotiations.”
There’s been a lot of questions about Chinese oil demand. The reality is that demand for oil in India is continuing to be very strong. It was reported this morningthat India’s well demand rose 2.6% year over year to 5.3 million barrels a day. And for diesel increase by 1% to 7.984 million metric tons in gasoline demand was up 4.6% to 3.266 metric tons.
OPEC is showing signs that they are serious about production cuts. Argus reported that, “Opec+ crude output by members subject to cuts fell for a third straight month in June, as lower Russian production offset rises from some serial overproducers.” Argus said that OPEC Plus production fell by 90,000 b/d to 33.98mn b/d in June, according to Argus estimates, the lowest in three years. But it could have been lower, with the alliance overshooting its target for the month by 130,000 b/d.
The nine Opec members subject to cuts were 150,000 b/d above target in June, but this was partially offset by the nine non-Opec members of the group, which produced 20,000 b/d below.
Leading non-Opec producer Russia has driven much of the alliance’s output falls in the past three months, as a pre-existing export cut pledge was replaced with an output reduction. And while it reduced production by 120,000 b/d to 9.14mn b/d last month, this was still well above its target of 8.98mn b/d. Much steeper falls could be on the horizon from Russia if it makes good on a promise to compensate for producing above target in recent months.
Kazakhstan was another big overproducer last month, with its output rising by 80,000 b/d to 1.56mn b/d — 90,000 b/d above target. Despite outlining a plan to drive down output and compensate for overproducing this year, Kazakhstan has not met its target in any of the first six months of 2024. But lower production is on the horizon, with Kazakhstan undertaking maintenance at key fields later in the year — probably in August and October, according to its initial compensation plan.
Iraq was again the alliance’s largest overproducer last month, with output rising by 40,000 b/d to 4.2mn b/d — around 200,000 b/d above target. Like Kazakhstan, Iraq has failed to meet its target in any month this year, despite also outlining a plan to compensate for producing above quota. Rising summer temperatures boosted crude burn for power generation last month, but most of its overproduction is down to Baghdad’s unwillingness to acknowledge surging production from the semi-autonomous Kurdish region. Iraq and Kazakhstan’s combined overproduction has averaged 290,000 b/d this year, making their task of compensating much harder in the coming months.
In contrast, an emerging number of Opec+ members have been unable to hit their production targets in recent months. Grappling with natural decline and upstream challenges, Azerbaijan produced 80,000 b/d below its target of 550,000 b/d in the first six months. Malaysia also underproduced, by an average of 40,000 b/d in the same period. War-torn Sudan’s production has fallen to just 20,000 b/d from pre-conflict levels of around 70,000 b/d. And South Sudan, which is entirely reliant on Sudan for its exports, has seen its production more than halve owing to the continuing war.
We think both oil and natural gas are going to see some pressure off the storm but will present good opportunities for longer term hedges. Be patient and get ready to put on a hedge. The key thing here is that demand for oil is going to continue to be strong and we should see significant drawdowns in in the coming weeks. We are looking for crude oil supplies to be down 3,000,000 barrels this week and we also expect diesel supplies and gasoline supplies to be down by the same amount at 3,000,000 barrels. Refinery run should uptick by 1.0.
Fed chief Jerome Powell testifies before Congress, with inflation data due later in the week.
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Energy Sector $XLE Concerning that Crude is very strong and this sector can't get going
By: Options Mike | July 7, 2024
• $XLE Concerning that Crude is very strong and this sector can't get going.
Back under the 8/21D not much to do here
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | June 6, 2024
The market opened lower and closed lower. The immediate trading pattern in this market has exceeded the previous session's high intraday reaching 8452. Therefore, this market closed below the opening print while also closing down from the previous closing yet it was weak going into the close.
Up to this moment in time, we have not broken out and it still remains below our uptrend technical resistance projection which stands at 8586.
Clearly, this market is still above the critical support point at this time, which lies at 8111. Initial support lies at 8309. This market has exceeded intraday 2 of three projected resistance points and it has closed below 2 others. Our underlying pivot providing some support lies at 8257. Up to this moment in time, the projected extreme resistance stands at 8572.
Additionally, our central point cyclical study models also ended in a bearish mode for the closing warning that the upward momentum is subsiding. Furthermore, the short-term Stochastics have also signaled a possible crash is likely. We did close below the previous session's Intraday Crash Mode support indicator at 8054 settling at 0 which alerted us to a further decline was likely going into the instant session. The Intraday Crash indicator for the next session will be 8257. Now since we closed back above this indicator in the current trading session, then holding above this indicator for the next session will imply the decline is subsiding.
Intraday Projected Crash Mode Points
Today...... 0
Previous... 8054
Tomorrow... 8257
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
The perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 8272 and overhead resistance forming above at 8438. The market is trading closer to the support level at this time.
On the weekly level, the last important high was established the week of July 1st at 8452, which was up 4 weeks from the low made back during the week of June 3rd. So far, this week is trading within last week's range of 8452 to 8138. Nevertheless, the market is still trading upward more toward resistance than support. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is cautiously starting to strengthen since the previous low at 7248 made 4 weeks.
Looking at this from a broader perspective, this last rally into the week of July 1st reaching 8452 failed to exceed the previous high of 8767 made back during the week of April 8th. That rally amounted to only twelve weeks.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend. Looking at this from a wider perspective, this market has been trading up for the past 4 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in April at 8767. After a four month rally from the previous low of 8070, it made last high in April. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in July, this market has held above last month's low of 7248 reaching 7248.
Some caution is necessary since the last high 8767 was important given we did obtain two sell signals from that event established during April. That high was still lower than the previous high established at 9503 back during September 2023. Critical support still underlies this market at 6760 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible.
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Natural Gas Hits New Low as Bears Dominate Market
By: Bruce Powers | July 5, 2024
• Natural gas is trading near its daily lows, reinforcing a bearish weekly outlook and increasing the chance of hitting the next lower support zone.
Natural gas continued its retracement on Friday with a new trend low of 2.32. That puts it below a potential support range identified from 2.37 to 2.34. Therefore, the lower support zone from around 2.23 to 2.17 is the next lower target zone. The low of the day was 2.32 at the time of this writing, and trading continues near the lows of the day.
It will likely end the session in a weak position, closing in the bottom quarter of the week’s range. This would keep natural gas in a bearish position for the weekly time frame heading into next week and consequently improve the likelihood of reaching the next lower target zone before the retracement is complete.
Significance of Correction?
So far, the correction down from the 3.16 peak (A) has seen the price of natural gas decline by 0.86 cents or 26.7%. How does that compare with prior bearish corrections? Since the initial February 2023 trend bottom there have been five corrections with a decline of greater than 20% and three that saw drops of more than 26%. Those three corrections were 55.1%, 38.7%, and 35.7%.
Given the history, since a 26% decline has already been exceeded as well as the support zone, the potential of a minimum 35.7% has become more likely. This does not mean that it will happen, but the chance for it to happen has increased. If natural gas reaches 2.03 it will have dropped by 35.7% from the most recent swing high. That will be a pivot zone to watch if it gets that low.
Bears Dominate Bigger Picture
In the bigger picture the bears dominate as there remains a series of lower swing lows and lower swing highs on the chart. That pattern will remain unless there is a rally above the most recent swing high of 3.16, followed by a daily close above it to confirm strength. From the February bottom, the first upside breakout triggered on a move above the top of a symmetrical triangle bottom at 2.00. If a roundtrip is in process, the area around 2.00 could be tested as support given its significance initially as resistance. Of course, that would also more than match a 35.7% price correction.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | July 5, 2024
• Top Movers
Tokyo Palladium Futures 3.92 %
AU - Victoria Base-Load Electricity Futures 3.39 %
Tokyo Silver Futures 2.65 %
Palm Kernel Oil 1.93 %
ICE Newcastle Coal Continuous 1.1 %
• Bottom Movers
NSW Baseload Electricity Continuous 3.23 %
AU - Queensland Base-Load Electricity Futures 2 %
London Aluminum Spot 1.02 %
London Nickel Spot 0.56 %
Tokyo Rubber Futures 0.45 %
*Close from the last completed Daily
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Oil Independence! The Energy Report
By: Phil Flynn | July 3, 2024
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness and if possible, a couple of barrels of oil. The threat to American Energy Independence is clear as the Biden administration campaign to end fossil fuels has had any real effect on global energy demand that will hit all-time highs and sadly has empowered our adversaries and challenged US energy producers. In fact for years one of the biggest threats to our like liberty and sacred fortunes was our dependence on oil supply from countries that did not have our best interests at heart. Yet by the daring risk taking from our founding fathers in the shale patch, like George Mitchell and the late Aubrey McClendon and many others, they were able to start a shale revolution that against all odds set an unlikely path to energy independence.
America was always been thought of as exceptional and these men has made it so. In 2020 the United States became a net exporter of petroleum for the first time since at least 1949. In 2022, total petroleum exports were about 9.52 million barrels per day (b/d) and total petroleum imports were about 8.33 million b/d, making the United States an annual net total petroleum exporter for the third year in a row according to the Energy Information Administration (EIA).
Yet instead of building on this progress, sadly we have a political environment that has seen the Federal government become more hostile to the energy freedom to the oil and gas industry fought so hard to preserve. Instead of working with the US oil and gas industry, they have made them enemies, accusing them of price fixing and war profiteering. I anyone has interfered with prices it has been the Biden administration.
In another desperate attempt to curb gasoline prices, it was announced very conveniently just a few minutes before the 1:30pm central settlement time yesterday that the Biden administration was going to release 1.0 million barrels of gasoline from the reserve. While it won’t impact gasoline prices that are back on the rise going into the Independence Day holiday too much, it is yet another attempt by Biden to deflect blame for his inflationary policies.
This is the same administration that tapped the Strategic Petroleum Reserve to try to cool prices before the Russian War with Ukraine. New reports released saying banks are cracking down on Russian oil and gas exports and it was just reported that India’s crude oil imports from Russia zoomed to a 13-month high in June even as the discounts on Russian crude have narrowed, according to an analysis of data provided by intelligence firm Kpler.
The significant increase in Russia’s share in India’s oil imports can also be attributed to the resumption of imports of more grades of the commodity other than Urals, including Sokol, which faced some issues in the beginning of the year. The country imported 2.13 million barrels of crude oil per day from Russia last month, up 7.2% from the previous month, the data showed. This was the highest since May 2023 when imports from Russia stood at 2.15 million barrels per day. In fact, imports from the Urals reached their all-time high of 1.6 million barrels per day in June reported by Financial Express.
Yet have here in the US, the American Petroleum Institute reported that we saw a significant 9.163-million-barrel drop in crude oil supplies which could be the first of many in the coming weeks. And while we saw a 2.468 increase in gasoline supplies that are raising concerns about weak gasoline demand once again, the preponderance of evidence suggests that we’re going to see further crude draws in the coming weeks.
The API reported that diesel supply fell by 74,000 barrels.
The other thing that is going to keep the market tight is OPEC production cuts. We saw a report that OPEC oil output did rise by 70,000 barrels in May to just 26.70 million barrels for the 2nd consecutive month.
Thre is a perception that OPEC will continue to stay committed to holding the line on production as oil prices have recovered from the OPEC taper tantrum.
Even concerns that OPEC revenues falling might break the will of the cartel seem to be overstated. OPEC revenue fell by $149 billion year over year to $680 billion. The expectation is that they’re going to hold the course and keep supplies tight and that increases the odds of a supply deficit as we move forward.
Yet there is hope. Never trade liberty for security. I think the days of the Federal government crucifying a few innocents to send a message to others are coming to an end. The AP reported, “The Supreme Court The court’s 6-3 ruling on Friday overturned a 1984 decision colloquially known as Chevron that has instructed lower courts to defer to federal agencies when laws passed by Congress are not crystal clear.
The 40-year-old decision has been the basis for upholding thousands of regulations by dozens of federal agencies but has long been a target of conservatives and business groups who argue that it grants too much power to the executive branch, or what some critics call the administrative state. This should be a huge win for the economy, as the government now will have to make very clear goals of what producers can do and this should open up the investment and gas projects and not have to be so concerned that after massive investments have been made, the government can change the rules of the game on a whim. And I’m not even talking about the Keystone XL pipeline. ALSO a judge blocked Biden’s LNG export pause.
Stay tuned to Fox Business and load the Fox Weather app to the track of hurricane Beryl, the earliest category 5 storm on record. It could become an issue for oil and gas. Currently most of the computer models have the storm missing the key oil platforms, refineries and infrastructure in the US. But if the track changes so could the fortunes of oil and gas.
The biggest risk is if the storm boomerangs up closer towards Texas that could put some of the LNG export terminals at risk as well as some US refineries. Fox Weather is reporting that, “Deadly Hurricane Beryl slowly weakened to a Category 4 hurricane on Tuesday as the historic storm continued to spin across the Caribbean Sea with Jamaica and the Cayman Islands in its crosshairs Wednesday. It’s the next move for Hurricane Beryl after the storm made landfall Monday in Carriacou Island, Grenada, as a powerful, high-end Category 4 hurricane with winds of 150 mph. At least six people were killed across the region, and government officials on several islands fear that number could rise as surveys are conducted.
And now, as Hurricane Beryl continues to make its way closer to Jamaica and the Cayman Islands, residents are holding their breath and rushing to complete last-minute preparations while praying for the hurricane to wobble further south and spare the region. But with the storm just hours away, it appears likely the island will feel nearly the full fury of the storm as the eye may scrape or pass just south of the island.
We get the Energy Information Administration report on time at 9:30a but also we will get the natural gas report at 11:00a central time. We are looking for an injection of 33 BCF.
EBW Analytics on Natural Gas says that Near-term weather continues to underperform, shedding an incremental 17 CDDs over the past week to allow NYMEX futures to sag below the $2.50 threshold. Key technical support at $2.37/MMBtu may offer support.
After the 4th of July weekend passes, rebounding heat and post-holiday demand—the subsequent four EIA storage weeks may average 99 CDDs/ week—may lead to rising power burns and stem the bleeding for natural gas. Scorching heat is forecast to endure into August. If forecasts verify, NYMEX futures could trend higher. Still, the weather bust of the past three weeks has led the market to refocus on bloated storage levels—mitigating upside.
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Crude Oil Reverses at Key Resistance, Forms Bearish Pattern
By: Bruce Powers | July 2, 2024
• Crude oil's rally to 84.64 reversed at key resistance, forming a bearish shooting star pattern and indicating a likely pullback before another breakout attempt.
Crude oil rallied to a high of 84.64 on Tuesday before sellers took back control and turned it back down. That high completed a 78.6% Fibonacci retracement and a 11.91 point or 16.4% rally from the trend low at 72.73. Further, resistance around the higher downtrend line was successfully tested as resistance as well as crude reversed lower shortly after.
Subsequently, crude is on track to close weak, in the lower quarter of the day’s trading range, and with a bearish red shooting star candlestick pattern. Today is the first sign of weakness. So, a continuation lower is the most likely path before buyers return to take another attempt at a bullish trendline breakout. Therefore, crude remains within a large symmetrical triangle price formation.
Test of Trendline Support
Support was seen today at a low of 82.98, close the 83.02 resistance from Friday. That low completed a test of support at the lower internal uptrend line. Over the coming few days the 83.02 to 82.98 rough price zone can be used as a proxy for potential support around the line. The top of a small expanding triangle may provide another price area where support is seen. Other possible support areas to watching during a pullback include this week’s low of 81.69, followed by the prior swing high of 81.00 from late-May.
Completed 16.4% Advance
Crude just had a healthy aggressive rally that stopped and reversed right on target (downtrend line/78.5% Fibonacci level) It shouldn’t be surprising that momentum has reversed to the downside. Profit taking has become more aggressive as the target is relatively obvious.
If crude had instead continued above the downtrend line, the further it went the greater the chance for a sharper correction. The developing pullback should eventually provide a more reliable launching pad for another attempt at an upside breakout. The second breakout may have a better chance of seeing a sustained advance above the downtrend line.
Monthly Bullish Reversal Triggers
Finally, the monthly chart (not shown) confirms a bullish move. A bullish monthly reversal was triggered yesterday as crude rallied above last month’s high of 83.02 and then closed above it on a daily basis. Since the longer-term time provides the more dominant pattern, crude has a good chance of again breaking out of the symmetrical triangle pattern with another rally and daily close above the downtrend line.
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Natural Gas Breakdown Signals Lower Targets
By: Bruce Powers | July 2, 2024
• Natural gas broke below the 200-Day MA and prior swing low, signaling a bearish reversal with the next target zone between 2.37 and 2.34.
The 200-Day MA failed to hold as support on Tuesday as natural gas broke below it to reach a low of 2.415 for the day. It is on track to close below the 200-Day line as well. In addition, the prior swing low of 2.47 from May 28 was broken to the downside triggering a bearish reversal. This puts the next lower target zone of 2.37 to 2.34 in line as a downside target. The price zone is comprised of the 50% retracement of the full upswing and the completion of a descending ABCD pattern, respectively. As of today’s low, natural gas was down by 23.6% from the June peak.
200-Day Line Fails to Hold as Support
Both the long-term 200-Day MA and intermediate 50-Day MA failed to stop the descent in the price of natural gas. And it is on track to close clearly below the line today. This increases the short-term bearish outlook and the chance to reach lower targets before the retracement is complete. Below 2.34 begins a price zone from 2.235 to around 2.18.
Nonetheless, this does not mean that natural gas continues straight down as it has the past several days. A bounce is coming sometime. If it comes soon, the first sign of strength would be on a rally above today’s high of 2.48. Potential resistance around the 200-Day MA at 2.47 and the 50-Day line at 2.49 should also be considered, followed by this week’s high of 2.60.
Result of Failed Trendline Breakout
Natural gas is reacting to a failed trendline breakout that began in early-June. It was able to stay above the long-term downtrend line for only four days before it succumbed to selling pressure. Bearish implications were confirmed today with the drop below the 200-Day line. This means that the recovery could take some time.
Possible Time Symmetry
Let’s quickly analyze the timing of the current retracement. As indicated above, it takes the shape of a falling ABCD pattern. The AB decline of the pattern occurred in eight days while the current CD down leg is now in its fourth day. Will a retracement low be reached after an eight-day decline for the CD leg of the pattern? If it does, time symmetry will be represented. As with price, once swings match in time a potential pivot point has been identified.
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