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Today's Futures Heat Map • Strongest: Bitcoin, Cotton, Natural Gas, Soybean Meal
By: Barchart | February 28, 2024
• Today's Futures Heat Map
Strongest: Bitcoin, Cotton, Natural Gas, Soybean Meal
Weakest: Cocoa, Orange Juice, Palladium, Heating Oil
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Natural Gas Price Forecast: Momentum Builds as First Target Exceeded
By: Bruce Powers | February 28, 2024
• Despite a bearish signal last week, natural gas surged to a three-week high, suggesting a bullish reversal and potential for further gains.
Natural gas hit resistance at the 20-Day MA on Tuesday before busting through it today. That marks another piece of evidence for the bulls, at least in the short term. Also, yesterday a bullish trend continuation signal was triggered on a rally above the prior swing high of 1.79 (B) and subsequent close above that price level. This shows improving strength and therefore increases the chance that higher price levels will be tested as resistance before this rally is complete.
Bullish Price Action Follows Tuesday’s Strong Close
In addition, the price of natural gas closed strong yesterday, in the top quarter of the day’s trading range. Today, the first target of 1.85 derived from the 100% completion of a rising ABCD pattern was reached and exceeded as buyers took control and stepped up to support rising prices. Tuesday’s advance also took the price of natural gas above the long-term downtrend line that starts from the August 2022 trend high.
Next Upside Target is 1.92
Once the first target from the ABCD pattern is exceeded, the chance the next higher target will be reached increases. That next target is at the 127.2% Fibonacci extension of the pattern at 1.92. Subsequently, if 1.92 is exceeded to the upside a relatively wide price range from 1.95 to 2.04 is then the next higher target zone to watch for resistance or a bullish breakout through the top of the range. T
Weekly Bullish Price Action
Price action seen in the weekly chart further supports further strengthening for natural gas. Last week completed a potentially bearish shooting star candlestick pattern and the week ended at a new closing trend low. Given this week’s bullish price action it looks like that was a false indication last week as today natural gas advanced to a three-week high. So, there is a clear bullish weekly reversal and a failure of the bearish signal from last week. False moves are frequently followed by a slingshot of sorts in the other direction. If correct, natural gas has a chance of eventually exceeding 2.04. We will be watching its behavior around and within the 1.95 to 2.04 price range carefully for clues.
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Losing The Charge. The Energy Report
By: Phil Flynn | February 28, 2024
While OPEC signals to the market that their production cuts will be extended and signs that Chinese oil demand will continue to rebound, today the market is pulling back on a rising dollar as the market tries to assess the timing and the quantity of potential Fed Rate cuts. This comes as the American Petroleum Institute (API) reported a large 8.428-million-barrel crude oil increase due to refinery outages and maintenance, but a worrisome 3.272 million barrel drop in gasoline supply as well as a 520,00 drop in distillate is putting product supply further below average and sending pump prices higher.
The ongoing problems at the Whiting, Indiana BP refinery are being felt causing more inflationary pain to those on a fixed budget. Oh Wait! I forgot, Transportation Secretary Pete Buttigieg suggested that it’s probably their fault for not buying an electric car. Probably not a good time to bring that up as Apple abandons its plans to build an electric car as it becomes clear that the so-called electric car transition was never based in reality or science and they are better off focusing on Artificial Intelligence which really will transform the economy and environment better than throw away electric vehicles that are dirtier to produce and are too expensive to fix or replace the batteries.
This comes after the Biden administration changed the emission rules to back off the previous push towards electronic vehicles. Part of the problem is Americans do not want the car. Even democrats love their internal combustion engine as it appears that most of them don’t want to buy electric cars. So I guess it’s back to focusing on the realities of oil where the green energy pipe dreams have led to underinvestment leaving a larger future supply gap as well as replacement and decline rates will not be replaced.
Yet today that’s a problem for another day as the market focuses on the dollar and the bond market. This week we get a ton of data. Today we get the GDP as well as the Energy Information Administration (EIA) Petroleum Status Report. Inflation data is going to be key as the market tries to assess the Fed’s next move and when they get the scissors out to start cutting the rates.
We look at the oil market right now and the backwardation in the market seems to suggest a very tight oil market with considerable upside risk. We expect that OPEC will not only follow through with their extended cuts through the end of the year including their voluntary production cuts but they may even suggest that producers that had overproduced their quota will make up for it over the coming months. In OPEC’s mind, they feel they need to have some spare production capacity available if geopolitical events cause a major oil price disruption.
The oil market is also playing down talk that there could be a potential ceasefire between Israel and Hamas in the Gaza Strip. Israeli Prime Minister Netanyahu said he was surprised by Biden’s comments on the possibility of a ceasefire in Gaza by Monday. That comes after Qatar also seemed confused by Biden’s statement. Maybe he knows something they don’t know or maybe he doesn’t know anything. You are the judge.
Supply tightness of products is also becoming an issue with the deep backwardation in Brent crude. It’s clear the market is concerned about very tight supply pressure from refiners to meet distillate demand and that should keep gasoline inventories tighter than normal.
Natural gas production is falling but not fast enough to avert a historic glut. Natural gas production fell to 101.7 according to Woods McKenzie and that’s down 2.3 BCF from the week before. The pain in the natural gas industry is being felt and we’re assuming there’s going to be some bankruptcies and some major cutbacks very shortly.
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$WTIC $OIL - Update. Another failed pop?. Watch the Ivory/MA for Spprt...
By: Sahara | February 28, 2024
• $WTIC $OIL - Update.
Another failed pop?. Watch the Ivory/MA for Spprt...
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Today's Futures Heat Map • Strongest: Natural Gas, Bitcoin, Cotton, Sugar
By: Barchart | February 27, 2024
• Today's Futures Heat Map
Strongest: Natural Gas, Bitcoin, Cotton, Sugar
Weakest: Orange Juice, Cocoa, Soybean Meal, Milk
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$WTIC $OIL - Update. Reuters: OPEC+ to consider extending voluntary oil output cuts into Q2
By: Sahara | February 27, 2024
• $WTIC $OIL - Update.
Reuters: OPEC+ to consider extending voluntary oil output cuts into Q2
Recovered the Daily Ivory 11/EMA & is attacking the Red Res-Line again...
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The Houthis Calling the Shots. The Energy Report
By: Phil Flynn | February 27, 2024
The Iranian-backed Houthi rebels have not been thwarted from attacking ships on the Red Sea by the Biden administration and seem to be calling the shots in the Red Sea as the global oil supply continues to tighten.
This morning a Houthi spokesman graciously put out a statement regarding talk of a cease-fire in Gaza saying that if, “Israeli aggression stopped, and humanitarian aid could get into Gaza perhaps we could reassess the situation in the Red Sea.” While Biden is eating his ice cream cone, he suggested that the ceasefire could be done by the beginning of the weekend or the end of the weekend. The reality is that Hamas is not saying that they’ve agreed to anything yet. Qatar’s foreign minister seemed flummoxed by Biden’s comments about a ceasefire by Monday and offered no comment but instead said they are working hard to get an agreement, but nothing has been agreed upon yet. Meanwhile, it should be a bit embarrassing that this ragtag group of rebels can continue to call the shots in the Red Sea against the United States, the most advanced military on the face of the earth. It makes you wonder about the stability of the rest of the market and the globe.
Zerohedge reported that, “Biden administration officials speaking with CNN told the outlet that the war is not having its desired outcome, that the Houthis’ military capabilities continue to surprise the White House, and that the Pentagon is unaware of the extent of weapons stockpiles in Yemen. “They continue to surprise us. We just don’t have a good idea of what they still have,” said one senior defense official. Multiple officials revealed the issue is that Washington does not know the size of the Houthis’ arms stockpiles and cannot assess if the hundreds of US bombs dropped on Yemen have impacted the Houthis military abilities. Some administration officials now believe the best way to end the conflict is by ending the war in Gaza, according to CNN.
I think there’s a growing concern about the tightening supplies of oil around the world right now based on what we’re seeing on the time spreads. It suggests a tightening of the market. John Kemp at Reuters points out that the calendar spreads show traders expect crude supplies to tighten significantly throughout 2024 as global manufacturing activity starts to expand again while Saudi Arabia and its OPEC? allies continue to restrict production.
Crack spreads for gasoline and diesel came back yesterday with diesel hitting a 4-month high. The time spreads in oil are pricing in the tightness of crude supplies in Europe. And despite all of the talk about weakness in the Chinese economy, Bloomberg wrote that Chinese refineries have been snapping up cargoes from across the world since the mid-February holiday, according to traders, as well as having increased term supplies from Saudi Arabia for March. There’s been a lot of talk about a rebound in Chinese demand after the lunar new year holiday.
The oil market technically hasn’t broken out of the upside of its range at the risk that it will soon be significant. We expect to see the crude oil deficit start to hit home when refiners come out of maintenance. Signs by the Biden administration that they’re going to be buying back from the oil reserve further out in the curve is probably good thinking because the back end of the curve is undervalued. Yet at the same time the Biden administration may be forced to release some oil from the reserve in the short term because of the tightening market and because they want to try to win an election.
The oil product situation is looking very friendly while the market has to focus on a very real global diesel shortage that has been alleviated somewhat by warm temperatures. It will come at the expense of gasoline. The gasoline price increase that we’ve seen in recent weeks could continue into April.
Reuters is reporting that Russia on Tuesday ordered a six-month ban on gasoline exports from March 1 to keep prices stable amid rising demand from consumers and farmers and to allow for maintenance of refineries in the world’s second-largest oil exporter. The ban, first reported by Russia’s RBC, was confirmed by a spokeswoman for Deputy Prime Minister Alexander Novak, President Vladimir Putin’s point man for Russia’s vast energy sector.
While the Biden administration puts a pause on LNG export approvals, Qatar is acting fast to fill that void. Axios reports that Qatari officials unveiled plans to further expand its liquefied natural gas export capacity — something that’s become a politically charged topic in the United States. Why it matters: The announcement Sunday is a bet on robust long-term demand driven by Asia.The latest: State-owned QatarEnergy is adding another 16 million metric tons annually of production by 2030, which would bring its total to 142 by decade’s end. “We still think there’s a big future for gas for at least 50 years forward and whenever we can technically do more, we’ll do more,” energy minister and QatarEnergy CEO Saad Sherida Al-Kaabi told reporters in Doha, per Reuters. The big picture: The U.S. last year became the world’s largest LNG exporter, ahead of Qatar and Australia, with shipments pushing or even exceeding 90 million tons.
Reuters also reports that, “A more than 25% slump this year in northwest Europe’s benchmark natural gas price has helped push the price of gas-fired power generation below the cost of coal-fired generation, and sets the stage for fuel switching by key regional power producers. Utilities that operate networks of both gas and coal-fired plants, such as in Europe’s largest economy Germany, are likely to dial up generation from gas plants and cut back output from coal plants in response to the swing in operating costs.
Natural gas got a boost ahead of the positioning of the merged contract and signs that production is topping out at least in the short term. We could have the market find the bottom. Still, at the end of the day though, if we don’t see demand for natural gas pick up, the glut is going to get larger. That could potentially lead to another price crash later on but at least in the short term, because of the excessive fund short position, the possibility of a rally is very possible. We like puts and calls. Calls out in November and puts for May.
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Natural Gas Price Forecast: Key Support Levels Tested, Rally Potential Ahead Above 1.73
By: Bruce Powers | February 26, 2024
• Natural gas prices tested key support levels, indicating potential for a counter-trend rally with targets at 1.85 and 1.92. However, further confirmation of strength is needed first.
Last Friday natural gas retraced its prior advance to the 78.6% Fibonacci level before finding support at 1.58. Today, Monday, it found a higher support level at the day’s low of 1.59 and managed to exceed Friday’s high of 1.72 briefly before falling back into that day’s trading range. The high for today was 1.73. It is possible that Friday’s low completes a second test of support for the trend low hit last week at 1.52. That low completed a 58.2% decline from the 2023 peak at 3.64.
Advance Above 1.73 Shows Strengthening
A decisive rally above today’s high of 1.73 is a sign of strength and it will increase the chance that Friday’s low will retain support thereby clearing the way for a counter-trend rally. If so, a rising ABCD pattern can be considered for near-term targets. The ABCD pattern provides a couple nearby targets with the first at 1.85. It is interesting to note that the 20-Day MA (purple) at 1.84 is very close to the first target for the ABCD pattern at 1.85. Therefore, a daily close above 1.85 will also be a close above the 20-Day line. Once the 20-Day line is exceeded to the upside the outlook for the price of natural gas should improve, at least a little.
Next Upside Price Levels
The 127.2% extended ABCD target is at 1.92, just shy of the next identified resistance zone from around 1.95 to 2.04. The higher level is the 38.2% Fibonacci retracement, and the lower level was previously the bottom of the downtrend until it was broken on February 8. The 161.8% extended ABCD target confirms that price zone as it is within that range at 2.02.
Once the 20-Day line is exceeded a daily close above the prior trend low and low of the potential resistance zone at 1.95 is a sign of strength and points to a likely test of higher levels within the zone. As well, as price heads into the potential resistance zone the price of natural gas could turn down from somewhere within that price area. However, a daily close above 1.95 should make that less likely or increase the chance the advance may continue following a pullback or consolidation.
An advance above last week’s high of 1.79 will provide a more reliable bullish indication than a breakout above today’s high. That high was at resistance seen in September 2020 and it was followed by a sharp advance.
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Today's Futures Heat Map • Weakest: Natural Gas, Crude Oil, Gasoline, Heating Oil (Ouch for Energy!!)
By: Barchart | February 23, 2024
• Today's Futures Heat Map
Strongest: Cocoa, Orange Juice, Palladium, Feeder Cattle
Weakest: Natural Gas, Crude Oil, Gasoline, Heating Oil (Ouch for Energy!!)
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Natural Gas Continues to See Plenty of Negativity Despite Positive Week
By: Christopher Lewis | February 23, 2024
Natural gas markets have rallied a bit during the course of the trading week, but it is still a very bearish market that I think a lot of people will be looking for value.
Natural Gas Weekly Technical Analysis
We are taking a look at the natural gas weekly chart and it is a positive candle, I can give it that, but we’re still at extreme lows. It looks like $1.50 is probably going to be an area of interest. And you can see why, I mean, it’s been a significant floor for some time.
The problem of course is when you go to the daily chart, you can see just how uninterested most traders are. Above $2, then I think you have people starting to jump in. If you’re a longer term trader, then you need to be patient. You perhaps need to trade an ETF, or at least use very little leverage because this is a market that may not have anywhere to be for quite some time. Keep in mind that we are heading into the slow season, and we’re already down here.
We may get a winter storm sometime between now and spring that could cause a short-term spike, but beyond that, you’re not looking at a market that is likely to continue to have any follow through. Quite frankly, they find more natural gas every day, so it’s not exactly a rare commodity anymore. So, keep that in mind. I’d be very cautious, and I certainly would cut down on any leverage if I chose to buy this market. As far as selling this market is concerned, it really can’t go too much lower because eventually drillers will just stop producing.
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Crude Oil Market Continues to Build Its Base
By: Christopher Lewis | February 23, 2024
Crude markets have pulled back just a bit, but it looks like we are trying to find plenty of support underneath to turn things around.
WTI Crude Oil Weekly Technical Analysis
Taking a look at the crude oil market on the weekly timeframe, you can see that the WTI crude oil market has pulled back just a bit from the 50 week EMA and the $80 level as well. Ultimately, this is a market that continues to build upon a previous consolidation range, and I think a lot of people will be looking at it through that prism.
The 200 week EMA sits right in the middle of this range that extends from $80 on the top to $68 on the bottom. And therefore, I think we’re stuck here, but we are building up a rounded bottom. I do think that given enough time, just the seasonality of it all, we’ll send this market higher.
Brent Crude Oil Weekly Technical Analysis
Brent is very much the same scenario right now, I believe that 84.50 is a major barrier above, somewhere between there and 84, I should say. And now I think short-term pull backs will continue to attract attention, with $72 level underneath being the massive floor in the market. Again, this comes down to the same common themes, supplies dropping a bit, it’s becoming summertime, and therefore people will be looking to drive more and fly more.
And then of course, central banks around the world loosening monetary policy will drive up demand for energy, at least that’s the hope. So, with all that being said, if we can break above our barriers in these markets, in the case of Brent, we could go to $95 as an example. I am bullish in these markets, I like buying dips, but longer term traders, you’re probably going to have to be a little bit patient.
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The Securities and Climate Commission. The Energy Report
By: Phil Flynn | February 23, 2024
The Biden Administration has tried to weaponize almost all government agencies in its desire to have the government do whatever it takes and almost by any means push its climate agenda. But Reality is starting to hit back as not only has the Biden team had to push back on its agenda as its electric car push is hurting Union job creation but also, but it’s also trying to turn the Securities and Exchange common to the Securities and Climate Commission and the Federal Reserve as the new climate policy. Yet the Biden team again has to push back as the Biden Energy Policies are becoming unworkable and putting undue hardship on hard-working Americans, labor, and the US oil and gas industry.
In an exclusive Reuters report, they say that the SEC is now dropping some emissions disclosure requirements from draft climate rules that the Biden Administration tried to force down the rights of public companies.
Reuters wrote that “The U.S. Securities and Exchange Commission (SEC) has removed some of its most ambitious greenhouse gas emission disclosure requirements from corporate climate risk rules it is preparing to adopt, people familiar with the matter said on Thursday. The SEC has dropped a requirement for U.S.-listed companies to disclose so-called Scope 3 emissions, (Scope 3 emissions account for greenhouse gases, such as carbon dioxide, released in the atmosphere from a company’s supply chain )which was included in its original draft of the rules published in March 2022, the sources said.”
Reuters wrote that “If adopted, the new draft would represent a win for many corporations and their trade groups that lobbied to water down the rules. But it would also deviate from European Union rules which make Scope 3 disclosures mandatory for large companies starting this year and potentially complicate compliance for some global corporations. The SEC’s original draft proposed mandatory disclosure of emissions for which companies are more directly responsible, dubbed Scope 1 and Scope 2. Some lobbyists pushed the SEC to require such disclosures only if they are material to a company’s business. Reuters could not ascertain whether the latest draft changed the Scope 1 and 2 requirement thresholds.”
In my opinion, I believe the Biden administration had to back off these requirements because it was almost impossible for many companies to look at the entire chain of their of their carbon supply chain. This would also add to the cost of good feeding into long-term inflation and be detrimental to the ability of many companies to do normal business.
This comes as the American Petroleum Institute and others in the oil and gas industry roll their eyes at the Claims by the Biden Administration and other mis formed people that Biden has been great for the US oil and gas instantly since we have seen record oil production.
The reality is that the reason why we have seen record oil production is due to investments in technology and innovation by the oil and gas that were made before Biden got into office.
The mistake that these people are making is that current oil production is based on investments made years ago and if you want to get a sense of the real impact of the Biden Administration impact is the lack of replacement oil for the inevitable sharp decline rate that is coming. In other words, you must look ahead and that is where this Anti-fossil fuel crusade is going to needlessly raise prices in the future. Its called the reserve-replacement ratio (RRR) which is the amount of oil added to a company’s reserves divided by the amount extracted for production which has fallen under Bbiden.
OPEC has warned that the oil industry needs at least $12 trillion in investment between now and 2045 to prevent energy prices from increasing. The American Petroleum Institute (API) President Mike Sommers warned that “Despite the silver lining of increased production, we’re very concerned about what the clouds look like ahead if we don’t get the policies right now. The continued signals from this administration and the policies they are pursuing – we have real concerns that is sowing the seeds for the next energy crisis.”
OPEC and the API are warning about this. OPEC should be taken seriously because the US Federal Reserve says they do.
In their note “Reasons Behind Words: OPEC Narratives and the Oil Market” The Fed states that their analysis of the content of the (OPEC) communications and whether it provides information to the crude oil market. To this end, we derive an empirical strategy that allows us to measure OPEC’s public signal and test whether market participants find it credible.
Using Structural Topic Models, we analyze OPEC narratives and identify several topics related to fundamental factors, such as demand, supply, and speculative activity in the crude oil market. Importantly, we find that OPEC communication reduces oil price volatility and prompts market participants to rebalance their positions. Our analysis indicates that market participants assess OPEC communications as providing an important signal to the crude oil market.”
In the meantime, US demand for products bounced back last week for both oil and gasoline according to the Energy Information Administration (EIA). The EIA reported a 3.5 million barrel increase in crude oil supplies which was smaller than what was reported by the American Petroleum Institute. Even with that build crude supplies are still 2% below the five-year average for this time of year. We saw an increase in strategic petroleum reserve supplies but still with the drawdown and SPR stocks the cushion of backup supplies is much smaller than it was in previous years.
Globally distillates continue to be a problem even with the flip back to above normal temperatures because of El Nino conditions US supplies have distilled fell by 4 million barrels last week and that puts us 10% below the five-year average for this time of year. Gasoline inventories also fell by 300,000 barrels and are 2% below the five-year average for this time of year if you look at total overall stocks, they fell by 800,000 barrels.
I did see that we saw a bounce back in crude oil refinery inputs as they average 14.6 million barrels a day which was 31,000 barrels a day more than the previous week refineries are still operating at only 80.6% of their capacity due to seasonal maintenance as well as the continuing problems at the Whiting IN BP plant.
While diesel prices are soaring and plunging grain prices starting to raise questions as to whether farmers are going to plant as big a crop as they normally would. Here in the United States, low grain prices have led to surging meat prices’. The cattle herd needs to be rebuilt to meet demand.
The lack of interest in China buying US grain at this point is putting the US farmer behind the 8 ball while the Biden administration bowed to pressure to increase the usage of E15 in many parts of the country year-round it still might not be enough to bail out the farmers especially because he put it off until after the election.
The tightness in diesel supplies means that we need to be hedged going into the planting season. Even as oil prices seem hesitant to break above 80 the first time around the likelihood that we’ll see $80.00 plus oil in the coming weeks is highly likely.
Natural gas is trying to build on hopes that production will cut back to meet the lack of winter demand. Shanir LNG for one is saying that they are not going to let the Biden administration’s pause on LNG export facilities change their future expansion plans there’s a growing sense in the industry that Biden will have to back down and this overreach in his green energy agenda. People in the industry see this as just another political move by President Biden who is getting desperate it’s his poll numbers and approval ratings are dismal. The markets going to watch very carefully for any signs of potential bankruptcies in the natural gas-producing areas.
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$XLE Seasonality
By: Jay Kaeppel | February 22, 2024
• I don't have much of a position in energy at the moment. That could change in the near future.
Jay’s Trading Maxim #52: “Don’t fight price” is good advice.
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Fantasy Island. The Energy Report
By: Phil Flynn | February 22, 2024
The OPEC Secretary General HE Haitham Al Ghais wants to welcome you to Fantasy Island, as the private jets landed at the last climate conference. On the anniversary of the founding of the OPEC cartel, he said that “our energy future needs to be based on facts, not fantasy. This is the only way to deliver a just inclusive and realistic energy transition. This warning comes as the big green energy lobby is coming after Republicans as OPEC warns the world not to buy into the fantasy of the Green Energy Transition that the International Energy Agency (IEA) has made its main mission as opposed to energy security.
This comes as US crude supplies build in yesterday’s American Petroleum Institute (API) report on reduced refinery runs due to the Whiting outage and refining margins that have pulled back from recent highs. The API reported that crude supply increased by 7.168 million barrels versus +4.298 million expected. Yet a 2.908 drop in distillate will support diesel and a 415,000-barrel increase in gasoline was not sufficient enough of an increase as it competes with diesel for refiners’ attention. Energy watcher Patrick Bourque says that refinery outages are right that were 600.000 barrels a day but should improve to 400,000 barrels a day roughly.
Global diesel tightness comes as Russia starts flexing its energy muscles raising their price to buyers and Russian sanctions have failed to reduce Russia’s oil revenue. Even India is complaining that they can’t get any more of that cheap Russian oil. Pricing power for Russia has returned as sanctions fail. So get ready for the Biden administration’s promised new sanctions that cause a surge in aluminum prices that will more than likely make Russia even more money.
Bloomberg News reported, “Aluminum and nickel jumped after US President Joe Biden said the US plans to unveil a “major” sanctions package against Russia on Friday following the death of opposition leader Alexey Navalny. Aluminum prices on the London Metal Exchange rose as much as 1.8% while nickel gained up to 1.3% after Biden’s comments Tuesday to reporters at the White House.” Yet John Kemp points out that non-OPEC production may be one reason that oil prices are not exploding. He writes that, “Brazil’s net petroleum exports climbed by 22% to a record 76 million cubic meters in 2023. Growing output from Brazil as well as other Western Hemisphere producers including the United States, Canada and Guyana have blunted OPEC? efforts to reduce excess stocks and lift prices”
Breitbart is reporting that, “A leaked confidential 66-page document from a top environmentalist association obtained exclusively by Breitbart News reveals a plot by supporters of democrat Joe Biden’s signature legislative accomplishment to begin a pressure campaign against republicans to push them to protect green energy subsidies Biden secured for them. The document, a “February 2024 Board Memo” prepared for board members of the American Clean Power Association, is striking in how specific and aggressive it is in detailing plans for its members to push Republican lawmakers to oppose any GOP effort to repeal all or parts of Biden’s inaptly named Inflation Reduction Act (IRA). The IRA, which passed during Biden’s second year as president, did not lower inflation but did aggressively expand government spending, including perhaps most controversially on the left’s radical green energy agenda.”
They write that, “This 66-page document obtained by Breitbart News is marked on nearly every page as “ACP Confidential Information.” The first dozen or so pages of it include a breakdown of the normal business of a trade association, including a discussion about the election of board members and officers of the group, as well as the organization’s financials. The financial report section explains that the group pulls in tens of millions of dollars annually in revenue, and spends tens of millions of dollars per year as well—making this group a powerhouse trade association in the green energy space. The document, for instance, says the trade association’s finance team estimated a total of more than $62 million in revenue in 2023 and expenses at $55.8 million. In short, this group is extremely well-funded—and the document brags about ACP having more than $49 million in cash available on hand to begin 2024.”
This comes as climate-based fearmongering is out of control. The best way to get you to submit to the green energy agenda, reduce your standard of living and pay sky rocketing energy costs is to report on studies that scare the fantasy island out of you. Bloomberg covered a report that said, “Climate change will drive 200 million Africans into severe hunger, cut crop revenue by 30%, and slash GDP by 7.1%, according to a study”. NOOOO!
Bloomberg cites, “The Center for Global Development study, The Socioeconomic Impact of Climate Change in Developing Countries in The Next Decades, shows that the developing world will bear the brunt of the impact of a warming world. While “moderate economic loss” will be experienced until 2050, after that date the impact will be significant and Africa will be the hardest hit.” Of course, they do not comment on how their past doom and gloom predictions have panned out. Well not very well as their main focus is hyping climate change to try to get rich countries to take their wealth and fund poor countries as they increase their carbon footprint or as they said in 2014, “Climate change is regressive–awful for the rich, but catastrophic for the poor.” But great for the green energy lobby and the policymakers.
All of this energy madness comes as energy prices are working their way stubbornly higher. Oil prices are creeping higher even after the big building inventory and today we will get the Energy Information Administration report at 10:00a central time. Yesterday’s API report with the big build did slow down the market momentum but oil prices are hanging in there on the reality that supplies globally are tightening.
Natural gas prices are getting a boost as the reality that low prices are going to squeeze many producers out of business is causing many of the hedge funds to cover their massive, short position. We do know that there is still a glut of natural gas on the market because of the warm winter. At the same time these prices are so ridiculously low that they are almost out of touch with reality. Low prices cure low prices, and we probably are going look back at these prices longingly in a few years. That’s especially true if Biden looses out and we can see our LNG exports feed the world.
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Natural Gas Price Forecast: Potential for Further Upside
By: Bruce Powers | February 21, 2024
• Natural gas saw a bullish reversal, rallying above last Friday’s high, signaling potential for further upside.
A bullish reversal in natural gas finally triggered late Tuesday on a rally above last Friday’s 1.64 high. Natural gas closed strong, near the highs of the day. The bulls remained in control on Wednesday, driving a rally up to test resistance with a high of 1.79. That price level was previously support at the spike low from September 2020. Since the market is recognizing a previously identified price resistance level, higher price levels may also be recognized by the market.
A Rally Above 1.79 Targets 1.95
Following an advance above today high, the next potential resistance zone is near prior support of the long-term downtrend. It starts from 1.95 and goes up to 1.97. Moreover, the 38.2% Fibonacci retracement is slightly higher than that range at 2.04. Following an advance above 2.04 natural gas heads up into a large consolidation range that includes several key price levels that may stand out. First, there is the high from the gap day on January 29 at 2.17. A rally above there puts natural gas into a gap that fills at 2.31.
Solid Resistance Zone Previous Trend Lows
Notice the additional confirmation of the next target zone that is highlighted in red. The purple 20-Day MA is included within the zone at 1.995, along with two declining trend lines. This is not to say that natural gas goes straight up. Just that it has the potential to test the 1.95 price zone as resistance before it is done, at a minimum, given the significance of the zone. Significance is increased when multiple indications identify a similar price area.
Response to Fast Drop May be a Sharp Advance
This week’s low of 1.52 completed a 58.2% decline in natural gas in only 17 weeks. That’s a relatively sharp decline. Therefore, it wouldn’t be surprising to see a sharp response in the opposite direction. Today’s aggressive one-day rally has seen the price of natural gas rise by over 11% at the day’s high and it follows a strong bounce yesterday. This alludes to the possibility of an aggressive continuation higher. Most rallies over the past year have started relatively quickly, after only a day or two at a bottom.
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Today's Futures Heat Map • Strongest: Natural Gas, Coffee, Cocoa, Cotton
By: Barchart | February 21, 2024
• Today's Futures Heat Map
Strongest: Natural Gas, Coffee, Cocoa, Cotton
Weakest: Palladium, Platinum, Orange Juice, Bitcoin, Corn
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Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | February 21, 2024
• Top Movers
• Bottom Movers
NY Heating Oil Futures 2.99 %
NYMEX RBOB Gasoline Futures 2.7 %
NY Natural Gas Futures 2.05 %
London IPE Gas Oil Futures 1.93 %
NY Crude Oil Futures 1.81 %
*Close from the last completed Daily
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Compression. The Energy Report
By: Phil Flynn | February 21, 2024
Oil and product prices are compressing in a range as natural gas pops in hopes that low prices may start to cure low prices. Reports that Chesapeake Energy will start cutting drilling activity next month suggest that most other producers will do the same or just fade away into the sunset of Chapter 11. The short-term on natural gas looks very bearish and because the fundamentals on oil are bullish, it may take some time before they complete the bottom but definitely the sign that we’re getting close when you start to see production cutbacks.
It was reported that Chesapeake produced 3.66 Bcfe/d in 2023, based on an average of 11 rigs to drill 193 wells, with 166 wells placed on production. Output averaged 3.43 Bcfe/d during the fourth quarter; the company used nine rigs to drill 45 wells and place 52 wells in production. This year, Chesapeake plans to drill 95 wells and place between 30 to 40 in production. Output is expected to range between 2.65 Bcf/d and 2.75 Bcf/d. Last week Comstock Resources, Inc. suspended its dividend and is going from seven rigs to five rigs.
A shaky stock market also rattled the cages of the energy markets. A big sell-off in Nvidia stock is raising concerns that the overall economy might be on shaky ground
Yet from an oil demand standpoint, we hear from JODI that oil demand continues to be at record highs around the globe and what’s more concerning is if you look at global inventories of supply that are well below the five-year average. JODI reported that global crude inventories fell by 8 million barrels in December and were 275 million barrels below the five-year average.
So global oil inventories are a whopping 275,000,000 barrels below the five-year average? Think about that for a moment. Without the record-warm temperatures, we would be in big trouble, not only for diesel but also for the lack of crude supplies.
While supplies tighten, political risk factors are dramatically high. Houthi rebels are threatening the EU after they vowed to step up enforcement and protection of the Red Sea where the Houthi are becoming more belligerent and there are reports now that Iran is supplying Houthi rebels with drone submarines. Of course all of this is not going to matter to the oil market until it matters.
Oh Canada, what are you thinking? Reuters reports that, “Canada has secured the surrender of the last remaining permits for oil and gas development off its Pacific Coast, the federal natural resources minister said on Wednesday, after Chevron Canada (CVX.N), opens new tab voluntarily relinquished 23 permits this month. Energy and Natural Resources Minister Jonathan Wilkinson said the relinquishment of the permits marked an important milestone in permanently protecting the ecologically rich waters of Canada’s west coast.”
What is the suggestion that the White House is making the decision based on the sales of ethanol for purely political decisions? I’m shocked! Reuter reports that, “The White House will approve a request from a group of Midwest governors to allow year-round sales of gasoline with higher blends of ethanol, but will push the start date into next year, two sources familiar with discussions said. The decision will likely be bittersweet for the biofuel industry, which wants to expand sales of corn-based ethanol but might be frustrated by the 2025 start date. The one-year delay could put off any potential localized price spike.
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$Oil $WTIC #Energy - $BPENER Poppin. Awaiting for that Pattern B/Out on Oil...
By: Sahara | February 21, 2024
• $Oil $WTIC #Energy - $BPENER Poppin
Awaiting for that Pattern B/Out on Oil...
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$NATGAS #energy - Update: Nice turn but may only be a much needed correction
By: Sahara | February 21, 2024
• $NATGAS #energy - Update.
Got to within 20c to my final target from that Bear 'Wedge' I was mocked for at the time.
Nice turn but may only be a much needed correction. Though scaling in down here in bargain basements is an option. Bearing in mind March can be lacklustre...
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Natural Gas Price Forecast: Will Support at 1.52 Lead to a Reversal?
By: Bruce Powers | February 20, 2024
• Despite the current downtrend, natural gas could see a turnaround as support at 1.52 holds, prompting a potential rally towards key resistance levels. But a bullish signal is needed first, otherwise the downtrend could continue.
Natural gas has reached a price area where it might see support that could stop and reverse the decline. However, it is too early to say how the current situation will play out. Since February 5, natural gas has fallen with a consecutive series of lower daily lows and lower daily highs. There was only one day different and that was an inside day from last Friday.
Natural Gas Stalls Descent at April 2020 Low
The corrective low to date is 1.52. That matches solid support seen at 1.52 in March and April 2020. Although those lows were exceeded to the downside briefly in June 2020, the 1.52 level was shown as support over two months in 2020. Given that the current decline has stalled at 1.52, it remains a potential reversal point. A rally above today’s high of 1.62 would provide the first sign of strength that could lead to higher prices. Given that a rally above a prior day high is a clear change in the recent downtrend pattern, upside follow through may be seen.
Key Price Levels if Rally Triggers
Price levels to watch during a rally start with the 1.60/1.61 price zone from the March 2016 swing low followed by the 8-Day MA (light blue) at 1.70. It is quickly followed by a price level that was key support in September 2020 at 1.80. Further up are the prior trend lows from 1.95 to 1.97. The 20-Day MA (purple) is at 2.03 and marks a key near-term trend indicator. This is particularly true since the 20-Day line converged with the short downtrend line starting from around the gap down on January 29.
Lower Price Levels
On the downside, the downtrend is still intact and pointing to lower prices. Unless there is a bullish reversal signal first, natural gas may continue its correction and fall below 1.52. In that case, the next area to look for support is around 1.49. Reaching that price will complete a 127.2% Fibonacci extension (greater than 100% retracement) of the most recent rally that began from the December 13 swing low. Further down is possible support around 1.44, which is a 28-Year low reached in 2020.
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Today's Futures Heat Map • Weakest: Cotton, Heating Oil, Gasoline, Silver
By: Barchart | February 20, 2024
• Today's Futures Heat Map
Strongest: Cocoa, Wheat, Hard Red Wheat, Palladium
Weakest: Cotton, Heating Oil, Gasoline, Silver
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Back-Track. The Energy Report
By: Phil Flynn | February 20, 2024
It seems that the oil trade is backtracking on calls for ‘peak oil demand’ and is now more focused on the possibility of ‘peak oil’ production in the US and around the globe. Oil demand is on track to hit another record high. The failure of alternative energies to fill the void is raising concerns about the ability of the world to meet demand in the next few years. This comes as plunging natural gas prices may force a lot of US drillers out of business and some predictions that the shale miracle in the United States has seen its best days. I don’t believe that the shale revolution is behind us. I do believe that because of the push from the Biden administration away from US fossil fuel production, it will have long-term consequences for the US economy and the stability of the globe.
The Wall Street Journal reports that US crude oil output is expected to increase by just 170,000 barrels a day in 2024 from last year, that’s down from a jump of 1 million barrels a day in 2023, according to federal record-keepers. That is the smallest annual increase since 2016, not counting the pandemic. The Journals says that, “gushers of new U.S. crude have helped cap soaring oil prices despite OPEC production cuts and global turmoil, including most recently in the Middle East. The gains were driven by private producers that commandeered rigs after Russia’s invasion of Ukraine sent prices soaring to more than $120 a barrel in early 2022. Now, that growth is expected to slow dramatically. Declining oil prices led producers to lay down rigs last year. Then, many of the operators that had been drilling with abandon were acquired by bigger players looking for ways to expand in the U.S. Those big public companies have given priority to returning cash to shareholders over drilling new wells according to the Journal.
Oil prices are backtracking even after the Biden administration backtracked on their electric car push which is proving to be a disaster on so many levels. I am sure it will only be a matter of time before they blame President Trump for the lack of electric car sales that the Biden administration tried to force them to buy. The 2023 mandate by Biden to automakers required them to make sure that every 7 out of 10 cars that they sell is electric…whether we want them or not. The problem is they can’t force Americans to buy a product that they do not want, not only because it’s more expensive but also is not as reliable.
Reuter News reports that, “Joe Biden’s administration is set to ease proposed yearly requirements through 2030 of its sweeping plan to aggressively cut tailpipe emissions and ramp up electric vehicle sales, two sources told Reuters on Sunday. Automakers and the United Auto Workers had urged the Biden administration to slow the proposed ramp-up in EV sales. They say EV technology is still too costly for many mainstream U.S. consumers and that more time is needed to develop the charging infrastructure.”
Of course, the electric car transition was never based on science as it takes much more greenhouse gas emissions to build an electric car and the EV is only as clean as the power it uses to charge its batteries.
The Wall Street Journal reported in some parts of the world, such as China, the electricity used to charge the batteries of the country’s growing number of EVs comes largely from CO2-heavy coal, diminishing an EV’s impact on combating climate change. In 2022, China’s electric power production, which runs largely on coal and oil, pumped 530 grams of CO2/KWH into the atmosphere.
Now The New York Times is reporting that, “In a concession to automakers and labor unions, the Biden administration intends to relax elements of one of its most ambitious strategies to combat climate change, limits on tailpipe emissions that are designed to get Americans to switch from gas-powered cars to electric vehicles, according to three people familiar with the plan.”
Geopolitical risk factors for oil are providing support. Bloomberg reported that, “The crew of a commercial ship in the Red Sea abandoned the vessel following a Houthi attack — the first such evacuation since the militant group began menacing trade in the vital waterway late last year. Two ship ballistic missiles damaged the Belize-flagged Rubymar on Sunday evening local time, US Central Command said Monday on social media platform X.” The Houthi rebels, that have caused so much concern about the safe passage through the Red Sea, have been bought and paid for with Iranian oil money. That money also funds and supports Hamas and Hezbollah.
Even the New York Times acknowledges that the Biden administration has been a total failure when it has come to enforcing sanctions on Iran. The New York Times reports that there is a $2.8 billion hole in U.S. Sanctions on Iran a Times investigation reveals how lax government oversight allowed shadowy oil tankers, covered by American insurance, to fund Iran’s regime. The Times writes that, “Treasury Secretary Yellen told Congress that her teams were “doing everything that they possibly can to crack down” on illegal shipments, and a senior White House adviser said that “extreme sanctions” had effectively stalled Iran’s energy sector. But the sanctions failed to stop oil worth billions of dollars from leaving Iran over the past year, a New York Times investigation has found, revealing a significant gap in U.S. oversight. The oil was transported aboard 27 tankers, using liability insurance obtained from an American company. That meant that the U.S. authorities could have disrupted the oil’s transport by advising the insurer, the New York-based American Club, to revoke the coverage, which is often required for tankers to do business.
Instead, the 27 tankers were able to transport shipments across at least 59 trips since 2023, the Times found, with half the vessels carrying oil on multiple journeys. The Treasury Department did not respond to a question about whether it was aware the ships had transported Iranian oil while insured by the American Club. The tankers exhibited warning signs that industry experts, and the Treasury, have said collectively warrant greater scrutiny.”
That is not a surprise to readers of the Energy Report as we have mentioned the fact that these sanctions have not been enforced. Anybody who’s been following this situation realizes that the Biden administration’s decision to try to allow Iran to export oil in return for some Iranian nuclear deal in better relations, was a major miscalculation based upon what’s been happening with Iranian oil money and its support for these terror groups around the globe.
Oh, by the way, the Houthi rebels are once again considered a terror group by the Biden administration. You remember they took them off of the terror list that President Trump put them on.
Also, the so-called sanctions on Russia, the toughest ever according to Biden, are not working either. Even CNN reports that, “Russia is entering its third year of war in Ukraine with an unprecedented amount of cash in government coffers, bolstered by a record $37 billion of crude oil sales to India last year, according to new analysis, which concludes that some of the crude was refined by India and then exported to the United States as oil products worth more than $1 billion. CNN says, “This flow of payments, ultimately to Moscow’s benefit, comes from India increasing its purchases of Russian crude by over 13 times its pre-war amounts, according to the analysis by the Centre for Research on Energy and Clean Air (CREA), exclusively shared with CNN.
More climate policy calamities. The FT reports that, “ExxonMobil has warned it is willing to withhold billions of dollars in climate-related investments in Europe unless Brussels cuts environmental red tape which the company blames for the “deindustrialization of the European economy”.
Oil prices continue to be solid but pulled back in a light volume Presidents Day trade. Oil demand concerns continue to be the mantra of the bears while with tightening global market is the base case for the bulls.
The bears are having a much harder time ignoring the tightening global oil supplies that we’ve been talking about was going to happen for many months more of the big banks are turning very bullish on oil despite today’s action.
We still see significant risk to the upside. OPEC is going to make sure that they regain control of prices and Russia can afford to help with their sanction money windfall. Tass Reports that, “Russia intends to fully meet its OPEC+ quota in February despite a decrease in refining, Deputy Prime Minister Alexander Novak said. “We will fulfill our obligations,” he told reporters when asked whether Russia will boost the export of oil in February to offset a decline in refining. Russia’s OPEC+ obligations imply a reduction of both supplies of oil and petroleum products.
The natural gas crash on the other hand is creating major issues and could put many producers out of business. When the second polar vortex did not materialize, we flipped to an extremely warm pattern that just crushed demand for natural gas. The production continues to be high because of associated gas. Prices hit an inflation-adjusted 30-year low when front-month futures touch $1.58/MMBtu. That allowed gas inventories to hit a six-year high. This will force cutbacks in drilling. Since January 13, the price of gas has fallen by more than 40% to $1.6 for an MMBTU. Probably a time to buy some puts and calls.
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Crude Oil Continues to Look Bullish
By: Christopher Lewis | February 20, 2024
• The crude oil markets continue to look bullish overall, as the markets are in the midst of forming some kind of “rounded bottom” that the market participants can all see, and we have an obvious barrier just above.
WTI Crude Oil Technical Analysis
You can see that crude oil in the WTI grade has pulled back just a bit only to turn around and show signs of life. With that being the case, the 200-day EMA of course is an indicator that a lot of people will be paying close attention to, and it does look like it’s trying to offer a little bit of support. This is a market that continues to attract buyers based on value anytime the markets drop in the slightest.
If we can clear the $80 level, then I believe that the crude oil market, the WTI grade could go to $82.50, possibly followed by the $88 level. Underneath we have the 50-day EMA that comes into the picture as well, as it could offer significant support. This is a commonly watched technical indicator, so it makes a lot of sense that this is a region worth paying attention to.
Brent Crude Oil Technical Analysis
Brent continues to look very bullish at this point with the 200 day EMA offering support and the $84 level above offering resistance. If we can clear that level, then I think it’s likely we go to the $90 level. The 50 day EMA underneath continues to offer support with the $80 level, and I think that’s your short-term floor. I believe both of these are going to form rounded bottoms and take off to the upside. The seasonality certainly favors crude oil at the moment as we are getting ready to head into the summer season, which of course means more driving, more transportation, more flights, things like that.
So typically, crude oil does fairly well this time of year anyways. With that being said, everything is pointing to higher pricing. And I think that short-term pullbacks continue to offer buying opportunities in a market that is starting to see dwindling supply. So that of course comes into the picture. Furthermore, central banks around the world cutting rates could increase economic activity, and I think that is also something that traders are trying to get in front of as well.
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Natural Gas Seeks Support Amid Steep Declines
By: Bruce Powers | February 19, 2024
• Natural gas started the week with a gap down, falling to a trend low of 1.52 before finding support and bouncing. Today's low is a 46-month low, nearing a 28-year low of 1.25.
Natural gas started the week with a gap down opening, falling to a trend low of 1.52 before finding support and bouncing. Today’s low is a 46-month low, and it puts the price of natural gas within reach of testing a 28-year low of 1.25. There is nothing bullish about the current setup in natural gas, other than the short-term intraday bounce seen today that will put it in the green for Monday.
Sellers Remain in Control
Until there is at least an initial sign of a potential bottom or a low, the trend can be expected to continue. If today’s low is busted to the downside and natural gas keeps falling, then the 1.49 price zone is the next area of interest for potential buyers. That is where the 127.2% Fibonacci extended retracement completes. Further below there is the 28-year low.
Rally Above 1.58, Sign of Strength
A decisive rally above today’s high of 1.58 would provide the first sign of strength that may see further upside in prices. Once a new low is found that leads to a bullish reversal the subsequent advance could be sharp. That is given the fact that the price of natural gas was down as much as 55.5% today in only 25 days. Measured from the secondary high from January 25, it had declined by 47.5% in 17 days. Further, the drop seen from the high of the gap down day on January 29 is 29.7% in only 15 days.
Trend Resistance Levels Potential Upside Targets
Let us now consider a couple trend indicators as possible upside targets once a rally begins. The 8-Day MA (green) marks dynamic resistance of the downtrend in the short-term. Until natural gas gets above the line the short-term and longer-term trends are all down. It is currently at a price of 1.69. A rally above 1.69 would put natural gas at a five-day high and provide a good start to a potential bounce. The purple 20-Day MA has recently converged with the shorter downtrend line, and they are both identifying a similar price zone. It is currently 2.02. Interestingly, the long-term downtrend line is also currently identifying that price area as well.
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Natural Gas Price Forecast: Bearish Continuation or Reversal Signaled?
By: Bruce Powers | February 16, 2024
• Natural gas prices showed a minor shift today, ending an eight-day pattern of new lows. Despite this, the bear trend remains strong, with potential for further downside.
There was a minor change today in the pattern of declining prices seen over the past couple of weeks. On Friday, today, the price of natural gas ended a consecutive decline of eight days with lower daily highs and lower daily lows. Natural gas is on track to complete Friday with an inside day. This doesn’t diminish the bear trend, just presents a one-day pause. Nonetheless, it reflects a slight decrease in downward momentum. Regardless, the downtrend remains well intact, and the expectation is for a bearish continuation signal leads to lower prices for natural gas.
Drop Below 1,573 Signals Lower Prices
A drop below today’s low of 1.575 will signal a likely bearish continuation of the downtrend. Likely, because there needs to be downside follow through to further confirm weakness. Yesterday’s low of 1.573 would also need to be exceeded to the downside. Notice that today’s price range is relatively narrow, and it is contained in the lower half of yesterday’s range, reflecting remaining selling pressure.
Strength Will be Indicated on Advance Above 1.64
Nevertheless, natural gas has been testing a support zone for the past few days. If there is a decisive rally above today’s high of 1.64, it will indicate strengthening. But a bullish reversal with some legs will need to start with a decisive advance above yesterday’s high of 1.67. A daily close above that price level will confirm strength thereby opening the door to higher prices. A rally above yesterday’s high could be sharp as the decline was relatively fast. This doesn’t mean it will be, just that it could be and to be on the lookout. Historically, you can see on the chart how bottoms have frequently led to sharp reversals over the past year.
Daily Close Above 1.67 Confirms Strength
If a daily close above 1.67 occurs, natural gas will then have a decent chance of rising to test prior support levels as resistance. In addition, there is a gap starting at 2.17 on January 29 that has not been filled. A confirmed bullish reversal should, at a minimum, pullback to test the prior trend lows at a range from 1.95 to 1.97. That zone was previously the lows for the downtrend. In addition, the previous swing low at 2.31 is a potential target.
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Today's Futures Heat Map • Strongest: Silver, Natural Gas, Orange Juice, Copper
By: Barchart | February 16, 2024
• Today's Futures Heat Map
Strongest: Silver, Natural Gas, Orange Juice, Copper
Weakest: Cocoa, Hard Red Wheat, Wheat, Russell 2000 E-Mini
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | February 17, 2024
• Following futures positions of non-commercials are as of February 13, 2024.
WTI crude oil: Currently net long 209.6k, up 17.7k.
On December 13th – the day the Fed made a dovish pivot – West Texas Intermediate crude bottomed at $67.71, which approximated an intraday low of $67.05 posted in June. After the June low, the crude rallied all the way to $95.03 through September.
Once it bottomed in December, WTI has been making higher lows, with last week’s low of $71.41 defending the lower bound of a 14-month range between $71-$72 and $81-$82.
This week, the crude ($78.46/barrel) poked its head out of the 200-day ($77.41); the average stopped rally attempts going back three months. This time around, WTI has a decent chance of staying above the 200-day and then head toward $80, where it has struggled the past three months. Should things evolve this way, the door opens up to at least the upper bound of the range.
In the meantime, as per the EIA, US crude production in the week to February 9th was unchanged week-over-week at 13.3 million barrels per day. This is a record and was first hit in the week to December 15th, then four more times after that. Crude imports decreased 437,000 b/d to 6.5 mb/d. Gasoline and distillate inventory also declined – down 3.7 million barrels and 1.9 million barrels respectively to 247.3 million barrels and 125.7 million barrels. Crude stocks, on the other hand, increased 12 million barrels to 439.5 million barrels. Refinery utilization dropped 1.8 percentage points to 80.6 percent.
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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | February 17, 2024
NY Crude Oil Futures closed today at 7846 and is trading up about 9.50% for the year from last year's settlement of 7165. As of now, this market has been rising for this month going into February reflecting that this has been only still, a bullish reactionary trend.
Up to now, we still have only a 1 month reaction rally from the low established during December 2023. We must exceed the 3 month mark in order to imply that a trend is developing.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Focusing on our perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 7811 and overhead resistance forming above at 7847. The market is trading closer to the resistance level at this time. An opening above this level in the next session will imply that a bounce is unfolding.
On the weekly level, the last important low was established the week of December 11th at 6771, which was down 2 weeks from the high made back during the week of November 27th. We have been generally trading up for the past week from the low of the week of February 5th, which has been a move of 10.30%. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 7929 made 2 weeks ago. Still, this market is within our trading envelope which spans between 6591 and 8227.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in September 2023 at 9503. After a four month rally from the previous low of 8346, it made last high in September. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in February, this market has held above last month's low of 6928 reaching 6928.
Some caution is necessary since the last high 9503 was important given we did obtain one sell signal from that event established during September 2023. That high was still lower than the previous high established at 12368 back during June 2022. Critical support still underlies this market at 6700 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak.
Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | February 16, 2024
• Top Movers
• Bottom Movers
AU - Victoria Base-Load Electricity Futures 37.35 %
NY Natural Gas Futures 4.74 %
NY Heating Oil Futures 2.96 %
NYMEX RBOB Gasoline Futures 2.57 %
London IPE Gas Oil Futures 2.03 %
*Close from the last completed Daily
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Border Security. The Energy Report
By: Phil Flynn | February 16, 2024
Big news! Finally, they are taking steps to secure the border and building fortified enclosures and making contingency plans to deal with an influx of refugees. Oh no, not our borders but in Egypt. Oil prices surged as a pathetic retail sales report put rate cuts back on the table and geopolitical risk concerns started to creep back into the price of oil and products. Dow Jones U.S. retail sales fell a seasonally adjusted 0.8% in January from a month earlier, the Commerce Department said Thursday. The larger-than-expected loss came after a strong round of holiday shopping in December, which the report revised to a 0.4% gain. Excluding autos, sales were down 0.6%; economists expected an increase.
This comes as the International Energy Agency and OPEC continue to have different outlooks for demand growth as the US process starts to cut rigs and major players are killing environment, social, and governance (ESG) policies before it kills them. The FT is reporting that, “Two of the world’s biggest asset managers are quitting an investor group set up to prod companies over global warming and a third is scaling back its participation, in a major setback to the ambitions of Climate Action 100+. JPMorgan Asset Management and State Street Global Advisors both confirmed they were leaving Climate Action 100+. BlackRock, the world’s largest money manager, is pulling out as a corporate member and transferring its participation to its smaller international arm.” OPEC is tightening the screws and even the cheaters are vowing compensation. Iraq and Kazakhstan vowed that they would cut overproduction over the coming 4 months. Israel is on the offensive and the AP reports that Russia’s prison agency says that imprisoned opposition leader Alexei Navalny has died. He was 47. The mingling of all these factors along with our belief that this will cause demand to outstrip supply sets up a very bullish outlook for oil and products.
Let’s start with the US supply outlook. John Kemp at Reuters points out that the WTI squeeze is on. Kemp writes that, “U.S. crude futures show increasing signs of a squeeze on inventories around the NYMEX delivery point at Cushing in Oklahoma. The calendar spread from March to April 2024 has surged in the run-up to next week’s expiry of the March contract. We are also seeing reports that standard charter JP Morgan as saying that we need to see Brent crude above $90.00 a barrel to reflect the actual fundamentals of the market. Standard Charter for one has said that we still have to see prices go a lot higher to accurately reflect the rapid tightening of the market as well as the recent escalation of geopolitical risk. This comes since we pointed out yesterday that while the International Energy Agency continues to downplay global demand, they have acknowledged that the global supply side is the tightest it’s been in many years. “Global observed oil stocks plummeted by about 60 mb in January, preliminary data indicate, with on-land inventories falling to their lowest level since at least 2016” according to IEA.
While U.S. oil supply surged this week, Cushing didn’t benefit even with the refining issues in Whiting IN and seasonal maintenance. U.S. oil production seems to be leveling off and it’s a possibility that we have peaked for U.S. oil production. Even Occidental Petroleum, which had awesome earnings, said they plan to not increase production and cut two Permian Basin rigs as well as Cap X.
Seeking Alpha said that OXY Q4 production ticked up ~7K boe/day from the year-earlier quarter to 1.234M boe/day, exceeding the midpoint of company guidance by 8K boe/day, but the average realized price for oil fell by ~2% Y/Y to $78.85/bbl; Q4 production from the Permian Basin rose 4.1% Y/Y to 588K boe/day. Occidental (OXY) said it will trim capital spending in shale and exploration by ~$320M this year and idle two rigs in the Permian Basin, citing “efficiency and moderating activity,” while increasing capex in the Gulf of Mexico, chemicals, and the enhanced oil recovery business.
US producers are cutting back based upon plunging natural gas prices and the lesson learned that has given them fiscal discipline along with mixed signals from the Biden administration that have been hostile to the US oil and gas industry and US oil and gas workers. Scott Disavino at Reuters writes that, “U.S. natural gas producers are slashing spending and reducing drilling activity following a sharp decline in prices, companies said this week during earnings presentations and analyst calls. For months of relatively low gas prices, many producers kept output mostly steady on expectations that demand would rise in 2024 and 2025 when several liquefied natural gas (LNG) export plants entered service. However, this week’s collapse in gas prices to a 3-1/2-year low convinced some drillers to reverse course.
The Biden administration’s politicization of LNG exports is the best hope for the globe to reduce greenhouse gas emissions unless we build a lot of nuclear power plants and it did get some pushback from the US House of Representatives. Reuters reported that, “A bill to strip the power of President Joe Biden’s administration to freeze approvals of liquefied natural gas exports passed in the Republican-controlled U.S. House of Representatives on Thursday, but faces an uphill battle in the Senate. The House approved the bill sponsored by Representative August Pfluger of gas-producing Texas 224-200 on a mostly party-line vote. The legislation needs to be passed in the Democratic-controlled Senate and signed by Biden to become law, both of which are unlikely.
The markets are pulling back because we were a bit overbought. The key today will be the inflation data and the concerns about geopolitical risk going into the weekend. For natural gas, the pain is going to be felt by many producers and we will see many start to go out of business and put pressure on the banks that loan them money. The the seeds are being sewn for a bottom and the cutback in production but with strong oil prices, it might not happen as fast as people think. In the meantime, make sure that you are hedged just in case. Natural gas options are cheap and by next year prices should look a lot better for oil and gasoline and diesel we think there’s still significant upside risk.
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Crude Oil Continues to Bounce
By: Christopher Lewis | February 16, 2024
• Crude oil markets continue to see buyers on dips as the resiliency and the stabilization of the market becomes much more apparent.
WTI Crude Oil Weekly Technical Analysis
As you can see, theWTI market has shown itself to be rather resilient over the last couple of weeks as we are now testing the 50-week EMA. I think given enough time, we are going to break above there and then go looking to the $80 level. If we can clear $80, then that would be a very positive sign, perhaps allowing the market to go much higher. This remains a buy on the dips market, as Middle Eastern tensions alone could cause market basically participants to jump in and try to cover and protect themselves.
Brent Crude Oil Weekly Technical Analysis
Brent is very much in the same situation right now with the $80 level offering support. If we can break above the top of the last couple of candlesticks and by extension the 50-week EMA, it’s likely that the market will go looking to the $90 level and then eventually the $95 level. Either way, I think that every time oil dips you have to look at it as a potential gift that you can buy into. The crude oil market has been forming a basing pattern for a while and I think we’re starting to see it play itself out as we go higher heading into the crucial summer driving season.
Keep in mind that geopolitical concerns in the Middle East, central banks loosening monetary policy, and the idea that perhaps there is going to be an engineered “soft landing” in the United States has oil traders bullish at the moment, not to mention the fact that we had recently tested a major low from a technical analysis standpoint.
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Natural Gas Price Forecast: Natural Gas Hits 1.57, Lowest in Trend
By: Bruce Powers | February 15, 2024
• Natural gas price hits new trend low of 1.57, marking the eighth day of continuous decline, indicating prolonged bearish sentiment.
The sellers remain in control of the price of natural gas as it hits a new trend low of 1.57, for the eighth consecutive day of lower daily highs and lower lows. Despite signs of strength seen earlier in Thursday’s trading session it continues to trade near the lows of the day, at the time of this writing. A daily close below yesterday’s low of 1.59 will indicate more weakness than a close above yesterday’s low. Nevertheless, natural gas remains in an aggressive decline following a drop to a new trend low last Thursday.
Continues to Test 1.60 Price Zone for Support
For the past two days natural gas has been trading in an area of possible support around 1.61/1.60. Wednesday closed right at that price zone. But a daily close below 1.60 will indicate further weakness and an increased likelihood that selling could continue and not reverse at 1.60. That would put the next lower target zone of 1.52 in sight. That price area is part of the historical price structure, and it marked a monthly support area in 2020. An extended retracement of the most recent rising multi month trend channel targets 1.49. Further down is the 28 and a half year low of 1.44.
Downtrend Shows No Signs of Letting Up
Certainly, natural gas is getting extended on the downside. As of Thursday’s low, it had fallen as much as 53.6% below the January 9 swing high of 3.39 (C). That’s more than a 13% greater decline than seen in any prior peak to tough measurement since the February 2023 trend low. It speaks to the degree of bearishness currently in the market.
Nonetheless, the trend continues until it changes. Since there are no signs yet of it changing, the expectation is for a further slide. However, when the bottom and subsequent bullish reversal arrives it could arrive quickly and be followed by an enthusiastic rally up towards prior support levels.
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Today's Futures Heat Map • Strongest: Pork Cutout, Silver, Crude Oil, Palladium
By: Barchart | February 15, 2024
• Today's Futures Heat Map
Strongest: Pork Cutout, Silver, Crude Oil, Palladium
Weakest: Wheat, Sugar, Natural Gas, Hard Red Wheat
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The Energy Report. Disagreeable/St Valentine’s Day Natural Gas Massacre
By: Phil Flynn | February 15, 2024
OPEC and the International Energy Agency can’t seem to agree on anything. Not only has a war of words broken out between these two groups, they continue to see the global energy markets from different world views.
The IEA has changed its mission from securing energy security into a political lobbying group for green energy. As I have written many times before, they are willing to forgo energy security and affordable energy prices and do almost anything to further their green agenda.
OPEC for their part has called out the IEA as it warns like many others in the energy industry that we are green-walking our way into a major global energy crisis and ignoring the fact that we are massively underinvested in fossil fuels and the record investment in green energy has not been enough to change that reality now or in the near future.
Today the IEA is again predicting that oil demand growth will slow while OPEC believes the opposite. In the past the IEA has consistently underreported demand because let’s face it, they are talking from their green energy book. They need to downplay demand so they can convince governments to forgo their energy security and economy to pay homage to the big green energy industry.
The IEA in their most recent report says that, “Global oil demand growth is losing momentum, with annual gains easing from 2.8 mb/d in 3Q23 to 1.8 mb/d in 4Q23.” They cite, “A sharp drop in China underpinned an 830 kb/d decline in global oil demand to 102.1 mb/d in the last quarter of 2023. The pace of expansion is set to decelerate further to 1.2 mb/d in 2024, compared with 2.3 mb/d last year. China, India, and Brazil will continue to dominate gains.” Yet if demand is so bad, is it not the least bit disturbing to the IEA that supply is so tight? In their own report, they write that “Global observed oil stocks plummeted by about 60 mb in January, preliminary data indicate, with on-land inventories falling to their lowest level since at least 2016. “World oil supply in January posted a sharp decline of 1.4 mb/d m-o-m after an Arctic blast shut in production in North America and as OPEC+ deepened output cuts.” Yet they justify that by writing that, “Record output from the US, Brazil, Guyana and Canada will nevertheless help boost non-OPEC+ supply by 1.6 mb/d this year compared to 2.4 mb/d in 2023, when total global oil supply rose by 2 mb/d to an average 102.1 mb/d.”
The IEA also says that, “Refinery throughputs are set to accelerate from a seasonal low of 81.5 mb/d in February. Atlantic Basin activity will recover from US weather-related disruptions that cut runs by up to 1.7 mb/d, despite a pickup in planned maintenance and as new capacity comes online in the non-OECD. For 2024 as a whole, refinery crude runs are forecast to rise by 1 mb/d to 83.3 mb/d, as a 330 kb/d decline in the OECD mitigates non-OECD gains.” They also point out the sharp increase in refinery margins. The IEA says that refining margins recovered from early-January weakness in the Atlantic Basin, led by the US Gulf Coast following the mid-month winter freeze. Although Singapore margins posted a narrow m-o-m gain, the $4.50/bbl increase on average in USGC margins was driven by the late-month rally in cracks that pushed Atlantic Basin margins to their highest level since late September.
Refining activity in the United States dropped to the lowest level since 2020 in yesterday’s Energy Information Administration (EIA) report. That sharp drop in refining runs led to an incredible 12 million barrel plus increase in crude supplies but because the products did not fall as much as they did in the American Petroleum Institute report, the market pulled back a little bit even though the supplies the product are too tight to be comfortable. A big part in the drop in refining activity was due to the shutdown at the BP Whiting IN refinery. A power outage that led to flaring has kept that refinery down longer than anyone had anticipated we have seen a big spike in gasoline prices in the Midwest and jobbers are getting smaller allocations keeping supplies very tight.
That explained why U.S. crude oil refinery inputs averaged just 14.5 million barrels which was 297 thousand barrels per day less than the previous week’s average. Refineries operated at only 80.6% of their operable capacity last week. Gasoline production increased last week, averaging 9.2 million barrels per day. Distillate fuel production decreased last week, averaging 4.1 million barrels per day. That put U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) up 12.0 million barrels from the previous week. At 439.5 million barrels, U.S. crude oil inventories are about 2% below the five-year average for this time of year. Total motor gasoline inventories decreased by 3.7 million barrels from last week and are about 2% below the five-year average for this time of year but they did not fall as hard as the API Reported. Distillate fuel inventories also decreased by 1.9 million barrels last week and are about 7% below the five-year average for this time of year.
The people I am talking to in the natural gas industry are calling it the Saint Valentine’s Day natural gas massacre. Reuters pointed out that U.S. natural gas prices have fallen to the lowest level for more than 30 years after adjusting for inflation as the market is hit by persistent over-production. Ultra-low prices are sending the strongest possible signal to reduce drilling as well as maximize gas-fired power generation according to Reuters and that is being echoed by people I am talking to in the industry. This recent price crash when adjusted for inflation is going to be a crisis for small producers as well as a problem for banks that lent them money. That is happening now as many companies have to adjust to the natural gas massacre.
Seeking Alpha wrote that, “Comstock Resources, Inc. has suspended its dividend and is going from seven rigs to five rigs. This helps reduce its projected 2024 cash burn, but it still may end up with close to $200 million in cash burn at current strip prices. Comstock appears to be able to manage through weak 2024 natural gas prices but will want significantly improved 2025 natural gas prices.
Comstock will be the first of many. While the cutbacks and rigs should at some point reduce production and put in a bottom on natural gas because we know that always low prices eventually cure low prices, it may take longer than it did the last time. Many producers can produce oil and use gas as basically a waste product if they’re making enough money on crude the associated gas can be basically given away. Of course, many producers cannot just give it away. Last time we saw a price crash we saw prices recover pretty dramatically in just 12 months we went from below $2.00 to above $6 down the road that could happen again but it may take longer this time because of that associated gas production.
This comes at a time when the US power grid is getting worse because of the Green New Deal. Naureen S Malik from Bloomberg writes that we are seeing the growing risk of unpredictable power surges that threaten not only the US power grid but also maybe the safety of your own home. She wrote the story of her own home that was damaged by fire due to a power surge. She wrote that, “An electric substation, which had been dealing with a rodent infestation, had a sudden, unstable surge in voltage. She warns that, “At least 1 million US homes are at risk because of something most Americans don’t have much knowledge about: dangerous power quality. Malick writes that, ‘When homes experience good, or stable, power quality, it means that the flow of electricity powering lights and appliances is being delivered at an even and predictable pace, ensuring electricity consumption is perfectly matched with supply every minute of the day. But she says that It’s the sudden surges or sags of voltage that can lead to disaster.
Malik said that, “Typically, utilities, municipalities, and regulators lack the technology and reporting mechanisms for finding and disclosing that connection. In some ways, the lack of knowledge and public reporting around this threat makes it appear more menacing. Interviews with more than two dozen experts, along with exclusive data, public reports, and regulatory filings, paint the picture of a country dealing with power quality that’s rapidly worsening, with potentially deadly consequences.
These issues have existed for decades, with grid operators responsible for minimizing and controlling the danger. But as the US grid comes under increasing stress, the problems are getting much worse.
She quotes Eversource which has been involved in two incidents put out emailed statement that said, “Stress on the nation’s electric grids is accelerating at an unprecedented clip. Demand is climbing just as aging infrastructure strains under the massive overhaul needed to adapt to renewable energy. This convergence is making it harder to maintain safe, reliable power quality, and some regulators and utilities aren’t tracking the problem. It’s an issue that has a potential national price tag of hundreds of millions of dollars, if not more.
Malick said that, “Fire departments responded to an average 46,700 home fires a year involving electrical failure or malfunction in 2015-2019, according to the National Fire Protection Association. These blazes caused about $1.5 billion annually in property damage along with being responsible for 390 civilian deaths and more than 1,300 injuries, She says that, “Stress on the nation’s electric grids is accelerating at an unprecedented clip. Demand is climbing just as aging infrastructure strains under the massive overhaul needed to adapt to renewable energy. This convergence is making it harder to maintain safe, reliable power quality, and some regulators and utilities aren’t tracking the problem.
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Natural Gas Price Forecast: What’s Next for Traders?
By: Bruce Powers | February 14, 2024
• Natural gas prices continue a 7-day decline, with potential for further drops to lower support zone of 1.52-1.44.
Wednesday is the seventh day in a row that the price of natural gas will end in the red with a lower daily high and lower low. Support was seen off the day’s low of 1.59 leading to a stall in the decline with only a minor intraday bounce. Nothing convincing to indicate the selloff may be over. Regardless, the decline is closer to the end than the beginning. A previously identified support zone at 1.60/1.61 has stopped the decline so far. Yet, the minor bounce and likely weak close shows no letup in selling pressure. At the time of this writing, natural gas is looking like it will close within the bottom 25% of the day’s range.
Sellers Remain in Control
Selling momentum accelerated last week as weekly support at 2.02 failed to stop prices from falling further. This week, the potential 1.80 support zone was breached with little hesitation and prices have now fallen to the 1.59/1.61 price zone. That zone was a significant swing low back in March 2016, and it was support several times in the first half of 2020. Today’s low completed a 56.4% decline off the October 3.64 peak. Given the minor rejection of price from this support area and a weak close natural gas remains in a bearish position with a continuation lower the next most likely scenario unless evidence shows up to the contrary.
If Today’s Low is Broken, Natural Gas Targets 1.52
Lower price targets start at 1.52 and go down to 1.44. A classic 127.2% extended retracement target is at 1.49. That retracement of the recent 32-week rising trend channel is generally considered to be a minimum extended trend target from Fibonacci ratio analysis. Meaning, it generally has a good chance of being reached once the continuation of the trend is confirmed with a closing price.
Strength Indicated on Rally Above Today’s 1.69 High
At some point a tradable bounce will come. Certainly, if the 1.52 price zone is hit, the chance for a bullish reversal will increase. If instead today’s low holds and leads to at least a temporary bottom, the first sign of strengthening is given on an advance above today’s high of 1.69. Previous support levels should then be tested as resistance, starting with a price range from 1.95 to 1.98.
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$Oil $WTIC #Energy - Update. Tried to pop the Inv Bull Plot but smacked down with timely surge in US crude inventories...
By: Sahara | February 14, 2024
• $Oil $WTIC #Energy - Update.
Tried to pop the Inv Bull Plot but smacked down with timely surge in US crude inventories...
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Crude Inventories Increased By 12.0 Million Barrels
By: Vladimir Zernov | February 14, 2024
• Oil markets pulled back from session highs as traders reacted to the EIA report.
On February 14, 2024, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories increased by 12.0 million barrels from the previous week, compared to analyst consensus of +2.56 million.
Total motor gasoline inventories declined by 3.7 million barrels, while analysts expected that they would drop by 1.16 million barrels. Distillate fuel inventories decreased by 1.9 million barrels. Crude oil imports declined by 437,000 bpd, averaging 6.5 million bpd.
Strategic Petroleum Reserve increased from 358 million barrels to 358.8 million barrels as U.S. continued to buy oil for reserves. Domestic oil production remained unchanged at 13.3 million bpd.
WTI oil pulled back below the $78 level as traders reacted to the EIA report. The headline number triggered a wave of profit-taking. While traders stay focused on rising tensions in the Middle East, the significant increase in crude inventories is a material bearish catalyst for oil markets. The decline in gasoline inventories did not provide any support to oil prices.
Brent oil moved towards the $82.00 level after an unsuccessful attempt to settle above $83.50. Brent oil has been moving higher for six consecutive trading sessions, so traders may use today’s report as an excuse to take some profits off the table.
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Today's Futures Heat Map • Weakest: Natural Gas, Wheat, Coffee, Hard Red Wheat
By: Barchart | February 14, 2024
• Today's Futures Heat Map
Strongest: Palladium, Bitcoin, Lean Hogs, Platinum
Weakest: Natural Gas, Wheat, Coffee, Hard Red Wheat
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Inflation Proof. The Energy Report
By: Phil Flynn | February 14, 2024
Somehow oil and petroleum products become Inflation-Proof when the supply side starts to drain. The consumer price index came in hotter than expected at 3.1% in January. The core rate came in at 3.9%, excluding food and energy also came in hotter than expected. That caused a surge in the dollar as traders readjusted their bets on an interest rate cut. That caused many commodities to fall but it seemed like oil for the moment oil was inflation-proof. This market action should be bad news for the Biden administration that is running out of options to subdue prices and that will become a major issue in the presidential election.
While the upward surge in oil may have slowed a bit after the report, it held up better than commodities like gold and silver and the stocks tanked supply-side reality. In the recent past, hot inflation data moved oil lower as the perception was that the Fed would be forced to slow the economy and slow the oil demand. Yet now with oil demand on track to break records and time-spreads suggesting tightening global oil supply, there is a shortage of oil.
Not only did we see product supply plunge in yesterday’s American Petroleum Institute (API) report, we are also seeing signs of tightness in global oil markets based on the pricing structure. The API showed that crude oil supply jumped by 8.52 million barrels as the Whitting Indiana refinery outage and exports impacted that build. Yet the massive 7.23 million barrel drop in gasoline supply is becoming an issue. We also saw distillate fall by 4.016 million barrels.
John Kemp at Reuters pointed out that the WTI oil futures calendar spread for March-April 2024 surged into a backwardation of 31 cents per barrel on February 13, the highest for more than three months. Traders are looking past the temporary shutdown of BP’s Whiting refinery and anticipate inventories around the NYMEX delivery point at Cushing will start depleting again causing a renewed squeeze on deliverable supplies.
Donald Trump can’t stop the energy transition, John Kerry told the International Energy Agency that on Tuesday. He claimed that even when President Trump was there for four years, 75% of our electricity came from renewable new electricity because we had in 37 states that required the deployments of renewables. So whatever happens, that’s not going to change the direction we’re moving in Kerry said adding that the green revolution was happening notwithstanding the hiccup of the farmer strike or the President of the country who wants to pull out of the Paris agreement.
Natural gas continues to plummet. EBW Analytics wrote that, “Deteriorating bullish hopes for late February cold are exposing NYMEX futures to steep fundamental downside. The entirety of recent losses is justified on a medium-to-long term basis-and natural gas may still have further to fall. The NYMEX front-month at $1.689 reached historically cheap levels seen only twice in the past 25 years. On an inflation-adjusted basis, it is possible that prices could even fall below pandemic-era lows before the end of the week. A growing speculator’s short position may represent ammunition for prices to skyrocket if bullish catalysts emerge. The more likely outcome, though, is for prices to grind lower as storage surpluses add 150 Bcf in the next two weeks.
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Heavily Shorted Energy Stock Peabody Energy (BTU) Poised to Surge
By: Schaeffer's Investment Research | February 13, 2024
• This bullish signal has never failed Peabody Energy stock
• A sentiment shift in the options pits could also generate tailwinds
The shares of Peabody Energy Corp (NYSE:BTU) are down 1.4% at $24.78 at last check, but sport a 16.4% nine-month lead, despite struggling with a ceiling at the $27.50 level for much of the past year. The equity is today on track for its third consecutive daily loss, but this pullback may soon have bullish implications, as it has placed BTU near a trendline that has served as a catapult before.
Digging deeper, Peabody Energy stock is within one standard deviation of its 50-day trendline. Per Schaeffer's Senior Quantitative Analyst Rocky White's data, shares saw five similar signals in the past three years, defined for this study as having traded north of this trendline 80% of the time over the last two months, and in eight of the past 10 trading days.
The equity moved higher one month later after each of those instances, with an average 5.4% gain. A comparable move from its current perch would place BTU just below $26.
A short squeeze could power up those gains to set Peabody Energy stock above that aforementioned ceiling. Short interest rose 22.2% in the most recent reporting period, and the 19.55 million shares sold short account for 15% of the equity's available float.
Puts have been more popular than usual, suggesting a sentiment shift in the options pits could bode well for BTU, too. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 2.14 stands higher than 96% of readings from the past year.
Options are affordably priced at the moment, making now an excellent time to weigh in on Peabody Energy stock's next moves. This is per its Schaeffer's Volatility Index (SVI) of 34% that sits higher than 8% of annual readings, indicating traders are now pricing relatively low volatility expectations.
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Today's Futures Heat Map • Weakest: Natural Gas, Palladium, Russell 2000 E-Mini, Bitcoin
By: Barchart | February 13, 2024
• Today's Futures Heat Map
Strongest: Cocoa, Gasoline, Crude Oil, Cotton
Weakest: Natural Gas, Palladium, Russell 2000 E-Mini, Bitcoin
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Energy Daily Market Movers (% Price Change)
By: Marty Armstrong | February 13, 2024
• Top Movers
NSW Baseload Electricity Continuous 2.38 %
NYMEX RBOB Gasoline Futures 1.19 %
AU - Queensland Base-Load Electricity Futures 0.85 %
NY Crude Oil Futures 0.1 %
• Bottom Movers
NY Natural Gas Futures 4.28 %
ICE Newcastle Coal Continuous 1.67 %
NY Heating Oil Futures 1.5 %
London IPE Gas Oil Futures 1.19 %
London IPE Brent Crude Spot 0.23 %
*Close from the last completed Daily
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Not So Comfortable. The Energy Report
By: Phil Flynn | February 13, 2024
As soon as the International Energy Agency (IEA) tells you that they are comfortable with the global oil supply outlook, it is time to worry. Oil prices are rising as the IEA which raised their demand forecast three consecutive times now says that global oil demand will grow by 1.2 to 1.3 million barrels a day which would be another upward revision assuming it comes at the higher end of that range. Yet the IEA director says “This growth is more than enough to meet the global oil demand.. So, in the absence of major geopolitical turmoil or major extreme weather events, we would expect a rather comfortable oil market and moderate oil price evolution throughout 2024” according to to Bloomberg News. Yet as I have written many times before the IEA seems to put a happy face on these predictions, so it does not detract from their green energy agenda. As they tell us to be comfortable and not to worry, we are seeing a surge in global diesel prices and we are seeing a significant drop in the global oil supply.
Kpler Commodity Intelligence showed that global oil inventories have fallen by 81 million barrels, in contrast to a year ago when global oil inventories became bloated by 40 million barrels enhanced with releases from Joe Biden’s Strategic Petroleum Reserve release. Now the IEA may be riding a sense of a false sense of security as global oil inventories according to Kpler at the lowest level since at least 2017 since they have been tracking global inventories. Executive Director Fatih Birolm told Bloomberg that he believes that the pace of demand growth will be significantly weaker than a year ago but that will be easily matched by swelling production from the Americas, predominantly the US, Canada, Brazil and Guyana. But are they going to raise output as much as the loss of the SPER barrels from a year ago.
Birol reiterated the IEA’s forecast that global oil demand will hit a plateau before the end of this decade as the world shifts away from fossil fuels to limit climate change. Saudi Arabia announced last week it won’t proceed with plans to expand oil production capacity over the next few years, and on Monday the kingdom’s energy minister acknowledged the decision was linked to the energy transition. Renewable energy is becoming increasingly prevalent in power generation, and electric vehicles are “booming” around the world, Birol said. “Clean energy is moving fast — faster than people realize” according to Bloomberg.
Yet with the IEA track record so far should I be impressed? For years I have written about the IEA’s loss of mission from being an agency concerned about energy security into a political mouthpiece for the green energy transition madness. I have questioned their prediction as being more politically motivated and now I am not alone…
In Today’s Wall Street Journal op-ed Robert McNally writes “The International Energy Agency once provided solid information. Its reports can no longer be trusted.
He writes “Unfortunately, in recent years, the IEA has succumbed to politicization and strayed from its security mission. In 2020 the IEA bowed to enormous pressure from climate activists and ceased publication of oil and gas demand forecasts that didn’t show demand for those fuels would soon peak because of imaginary future climate policies. Green groups had been angry over IEA baseline forecasts showing what the activists regarded as too much oil and gas demand. This was because these baseline forecasts assumed only the laws currently on the books and didn’t engage in conjecture about future green policies. As a result, IEA’s influential demand forecasts now reflect wishful thinking about the timing and cost of a peak in oil and gas consumption. EIA capitulation to political pressure transcends mere technical debates among energy-forecasting experts. Bullying the world’s respected energy authority to mislead the world into thinking that oil and gas demand will soon peak might align with the preferences of certain governments and activists. But the distortion and politicization of the IEA’s once-respected forecasts pose significant risks.”
I agree with Mr. McNally because of risks of bad data have forced many countries to make bad decisions as far as fossil fuel investments because of the International Energy agency’s political push and their bad forecast it’s going to sleepwalk the globe into another global energy crisis the IEA has admitted that their data has been wrong they have lost millions of barrels of oil and they have consistently under-reported demand and overestimated supply. This is in the name of making the green energy transition look plausible to world leaders who are gullible to this green energy agenda.
This type of misinformation also leads to the belief that we can replace all of our natural gas appliances or ban LNG exports without it leading to a much more unstable energy market in a much more unstable world.
OPEC just came out raised its 2024 world economic growth forecast to 2.7% (previous 2.6%) and its 2025 world economic growth forecast to 2.9% (previous 2.8%) They said that “ Further economic growth upside potential could materialize in all major OECD and non-OECD economies.” OPEC also showed that their crude production fell by 350,000 bpd to 26.34 million bpd in January as a new round of voluntary OPEC+ cuts took effect. The global oil demand growth forecast for 2024 remains unchanged from last month’s assessment at 2.2 mb/d.
A slight upward adjustment to the US forecast has been made given the improving expectation for the US economy, which will have a positive impact on oil demand. This offsets the downward revision made in OECD Europe. The OECD is projected to expand by around 0.3 mb/d and the non-OECD by about 2.0 mb/d this year. In 2025, global oil demand is expected to see a robust growth of 1.8 mb/d, y-o-y, unchanged from the last month’s assessment. The OECD is forecast to grow by 0.1 mb/d, while demand in the non-OECD is forecast to increase by 1.7 million barrels a day.
This week oil supplies may rise due to seasonal factors, but the trend is lower. With crack spreads rising and supplies tightening, that is why we continue to warn about upside price risk.
Natural gas is plummeting to a level where many providers may be put out of business. We think the bloodletting should be coming to an end but a drop in temperatures could help basil some producers out.
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Crude Oil Continues to Look Bullish
By: Christopher Lewis | February 13, 2024
• The crude oil market rallied a bit from the lows of the early part of the Tuesday session, to show how bullish the market is. This should continue to be a situation where value hunters continue to return.
WTI Crude Oil Technical Analysis
The WTI crude oil market has rallied a bit to reach the 200 day EMA. The 200 day EMA of course is an area that traders will be paying close attention to as it is a trend defining technical analysis tool. The thought of course, is that if we were to break above it, then it’s possible that we could continue to go much higher. If we do break above it, I think the next stop will be at the $80 level where we have seen a lot of resistance in the past. And of course, it is a large round figure.
If we can break above there, then it’s likely that the market then goes much higher, perhaps to the $88 level. On the other hand, if we pull back from here, the 50 day EMA should come into the picture to offer support, and I do think that a lot of people would be buyers at that juncture.
Brent Crude Oil Technical Analysis
Over here in the Brent market, we have broken above the 200 day EMA, and Brent looks as if it is going to go looking to the $85 level. On the other hand, if we pull back from here, the $80 level is an area that I think a lot of people will be paying attention to not only due to the fact that it is a large round figure, but it is also where the 50-day EMA currently resides. Either way, I think crude oil markets will continue to see a bit of bullish pressure due to the fact that the central banks around the world are almost certainly going to be loosening monetary policy, and therefore demand for energy as the economy starts to heat back up will be the case.
Furthermore, supplies have been dwindling, so everything is coming together for bullish oil markets going forward. With this being the case, I just don’t see much in the idea of shorting this market, as there are so many different reasons for this market going higher overall.
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Today's Futures Heat Map • Weakest: Natural Gas, Orange Juice, Sugar, Cotton
By: Barchart | February 12, 2024
• Today's Futures Heat Map
Strongest: Bitcoin, Palladium, Platinum, Russell 2000 E-Mini
Weakest: Natural Gas, Orange Juice, Sugar, Cotton
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Natural Gas Price Forecast: Key Support Levels in Focus
By: Bruce Powers | February 12, 2024
• Natural gas hits new trend low, falling below potential support at 1.80, with eyes on further downside implications to 1.61.
Natural gas falls to a new trend low of 1.76 on Monday at the time of this writing, and it remains near a potential support zone around 1.80, although below it. That puts natural gas 52% below the October swing high at 3.64 (A). The 1.80 price zone was a significant swing low in September 2020.
Daily Close Below 1.80 Points to a Deeper Decline
If natural gas closes decisively below 1.80, then that price zone is showing signs of failure, which would put natural gas on track to head to the next lower price zone of significance around 1.61. At the time of this writing, it continues to trade near the lows of the day. It was March 2016 when the 1.61 price zone saw a strong bullish reversal off a swing low. And it was recognized as monthly support a couple times after the 2016 low was complete.
Weekly Bearish Continuation Signaled
Today’s decline triggered a weekly bearish trend continuation signal and natural gas is set to close weak, below last week’s low of 1.82. A weekly chart is also included today as reference along with a daily chart. Despite the lower 1.61 price level noted above, as the price of natural gas falls below 1.80 it heads into a prior consolidation range. Support could be seen anywhere within the range going down to the bottom of the range at 1.44. The 1.61 price zone includes a previous swing low and the completion of a falling ABCD pattern that is extended by the 127.2% Fibonacci ratio.
Below 1.60, Targets 1.52
Below the 1.60 price area is a zone from 1.52 to 1.49, consisting of a prior swing low from March 2020, along with an extended retracement of the rally begun in April 2023. The 1.44 low mentioned above was hit in June 2020 and it was quickly followed by a sharp rally. In other words, natural gas didn’t trade that low for long. It was the lowest price for natural gas since 1995. Therefore, it is not currently anticipated to be reached and the more likely scenario is a bullish reversal occurs at or above 1.49. Of course, future price action around potential support levels will be telling as to rising strength or weakness.
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Back Peddling and Mis-Selling. The Energy Report
By: Phil Flynn | February 12, 2024
OPEC says that other agencies are backpedaling on predicting future oil demand while the Financial Times (FT) reports that, “Total Energies Patrick Pouyanné has warned that governments are” mis-selling” the energy transition if they fail to acknowledge the shift to a less-polluting system will lead to higher energy costs.
The green energy movement has been pushed with large inaccuracies about the real costs of the transition and predictions about supply and demand that fit a narrative but do not fit reality. Patrick Pouyanné, as reported by the FT said that, “Policymakers and campaigners were naive, he argued, to think it would be possible to shrink oil and gas production before sufficient renewable energy is available to take its place, given continued growth in global energy demand. “The pace of transition will not be the same everywhere,” he said. “We cannot ask African countries just to avoid developing the resources because we have developed their resources for our own comfort for 20 years.”
OPEC also has been warning about the energy transition that is being built on false assumptions that seem to justify green energy pointing out that politicians and agencies like the International Energy Agency have been selling us a fake green energy bill of goods. Amena Bakr pointed out that the Saudi energy minister Abdulaziz bin Salman Al Saud says, “he’s not a fortune teller when it comes to predicting future demand, but noted that OPEC’s numbers have been consistently accurate while others keep “back peddling”. Bakr said that the OPEC demand growth number this year is 2.2 million bpd and it’s expected to pick up during the 2nd half of the year. “We at the ministry look at all the numbers,” said Prince Abdulaziz and said that they are ready to tweak supply up or down as required by the market.
Crude oil prices this morning are down a bit but the trend for oil has turned decisively higher. Product tightness is going to keep the diesel market and the crack spread strong. Gasoline demand is expected to pick up in the coming weeks. The market is heading into refinery maintenance season and that’s going to create some strange movement and spreads but ultimately the demand globally for oil will continue to be strong.
The investment in the value of many energy stocks is creating movement on the merger and acquisition front. The Wall Street Journal reports, “Two Permian rivals, Diamondback Energy and Endeavor
Energy Resources, are finalizing a merger that would create an oil-and-gas behemoth worth more than $50 billion. Diamondback could announce a deal with the closely held Endeavor as soon as Monday, according to people familiar with the matter, assuming the talks don’t hit a last-minute snag. Endeavor, founded by wildcatter Autry Stephens, has long been one of the most prized businesses in the consolidating Permian Basin, the largest U.S. oil patch that straddles West Texas and New Mexico. In striking a deal for Endeavor, Diamondback fended off competition from other parties including ConocoPhillips, some said. The stock-and-cash deal would value Endeavor at around $25 billion, and Diamondback shareholders would own the majority of the combined company after it closes, they said. Diamondback, based in Midland, Texas, has a market value of around $27 billion.
Natural gas futures hit a 3 1/2-year low, the market is seeking signs of winter. EBW Analytics wrote that the forward curve continued to erode lower as the market increasingly internalized the extent of extremely mild near-term weather. Another pair of sub-100 Bcf injections are on the way. On a longer-term basis, the market remains oversupplied by 1.0 Bcf/d. Further, bullish hopes for a cold end to February and early March appear largely dashed in recent days. Although a spurt of chillier temperatures may occur in the 6-10 day window, any cooling appears to be fleeting—suggesting another leg lower for natural gas.
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$WTI - Crude oil is headed higher into the next 22-24 week cycle high that is due in late February to mid March. The minimal upside target is the 50% retracement of the September to December decline at 81.66. A breakout above 81.66 will take it to the 62% retracement at 84.93.
By: CyclesFan | February 10, 2024
• $WTI - Crude oil is headed higher into the next 22-24 week cycle high that is due in late February to mid March. The minimal upside target is the 50% retracement of the September to December decline at 81.66. A breakout above 81.66 will take it to the 62% retracement at 84.93.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | February 10, 2024
• Following futures positions of non-commercials are as of February 6, 2024.
WTI crude oil: Currently net long 191.8k, down 48.2k.
In Monday’s long-legged doji session, West Texas Intermediate crude tagged $71.41 intraday to reverse to end at $72.78, up slightly. This was a successful test of the lower bound of a 14-month range between $71-$72 and $81-$82. By Friday, the 200-day moving average ($77.34) was tested with the crude rising to $77.29 intraday and closing at $76.84, up 6.4 percent for the week.
There is room for the crude to continue higher on the daily. If the 200-day gets taken out and oil bulls manage to also reclaim 80, where the crude has struggled the past three months, the door opens up to at least the upper bound of the range.
In the meantime, as per the EIA, US crude production in the week to February 2nd increased 300,000 barrels per day week-over-week to 13.3 million b/d. This level was first hit in the week to December 15th, then a couple of more times after that in that month and in January. Crude imports increased 1.3 mb/d to 6.9 mb/d. Crude stocks also rose, up 5.5 million barrels to 427.4 million barrels. Gasoline and distillate inventory, on the other hand, declined 3.1 million barrels and 3.2 million barrels respectively to 251 million barrels and 127.6 million barrels. Refinery utilization dropped five-tenths of a percentage point to 82.4 percent.
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