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10 시간 전
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | February 1, 2025
• Following futures positions of non-commercials are as of January 28, 2025.
WTI crude oil: Currently net long 263.2k, down 53.5k.
Since a shooting star week three weeks ago, which showed up after rallying for three straight weeks, West Texas Intermediate crude has been under pressure the last two weeks, with this week down 2.9 percent to $72.53/barrel.
The crude went vertical from $69.33 on December 26 to $79.33 on the 15th last month. Previously, WTI for months went back and forth between $71-$72 and $81-$82 before dropping out of the range last September. The range was recaptured as soon as 2025 began. Sellers showed up mid-January just under the range top.
The bottom of the range is once again in play. This time around, the range support also approximates the 50-day moving average at $71.63.
In the meantime, US crude production in the week to January 24 decreased 237,000 barrels per day week-over-week to 13.24 million b/d; output has come under pressure since registering a record 13.631 mb/d in the week to December 6. Crude imports, too, dropped 297,000 b/d to 6.4 mb/d. As did distillate inventory which fell five million barrels to 124 million barrels. Stocks of crude and gasoline, on the other hand, went the other way – respectively up 3.5 million barrels and three million barrels to 415.1 million barrels and 248.9 million barrels. Refinery utilization shrank 2.4 percentage points to 83.5 percent.
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11 시간 전
NY Crude Oil Futures (CL) »» Weekly Summary Analysis
By: Marty Armstrong | February 1, 2025
NY Crude Oil Futures closed today at 7253 and is trading up about 1.12% for the year from last year's settlement of 7172. Caution is required for this market is starting to suggest it may now decline on the MONTHLY level. Up to now, this market has been rising for 4 months going into February suggesting that this has been a bull market trend on the monthly time level.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last 2 years. 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. Pay attention to the Monthly level for any serious change in long-term trend ahead.
The perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bearish position at this time with the overhead resistance beginning at 7293 and support forming below at 7156. The market is trading closer to the resistance level at this time.
On the weekly level, the last important high was established the week of January 13th at 7939, which was up 8 weeks from the low made back during the week of November 18th. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed beneath that low which was 7401. This was a very bearish technical indicator warning that we have a shift in the immediate trend. We are trading below the Weekly Momentum Indicators warning that the decline is very significant and we need to pay attention to the timing and reversals. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 7939 made 2 weeks ago. Still, this market is within our trading envelope which spans between 5773 and 8539. Immediately, this decline from the last high established the week of January 13th has been important, closing sharply lower as well. Before, this recent rally exceeded the previous high of 7288 made back during the week of November 4th. Nonetheless, that high was actually lower than the previous high made the week of October 7th suggesting this market has really been running out of sustainable buying for right now. This immediate decline has thus far held the previous low formed at 6653 made the week of November 18th. Only a break of that low would signal a technical reversal of fortune and of course we must watch the Bearish Reversals. Right now, the market is below momentum on our weekly models casting a bearish cloud over the price action as well as trend, long-term trend, and cyclical strength. Looking at this from a wider perspective, this market has been trading up for the past 10 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2024. 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.
Interestingly, the NY Crude Oil Futures has been in a bullish phase for the past 4 months since the low established back in September 2024.
Some caution is necessary since the last high 7939 was important given we did obtain one sell signal from that event established during January. That high was still lower than the previous high established at 8767 back during April 2024. Critical support still underlies this market at 7230 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible.
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1 일 전
Decision Time. The Energy Report
By: Phil Flynn | January 31, 2025
It’s all about the oil heavy oil that is. While President Trump seems determined to put tariffs on Canada in Mexico tomorrow morning, he may be having second thoughts about putting tariffs on Canadian oil.
President Trump yesterday said that he’s going to decide on oil last night and the global oil market is going to await his decision.
Considering a pause on the tariff on Canadian oil is probably a recognition that the world is in short supply of heavy oil, the heavy oil that our US refiners need.
President Trump doesn’t want to risk a spike in diesel prices because that could impact businesses across the board.
At the same time though he doesn’t want to send a message to our trading partners that he is going to be determined to clean the borders and stop the drug trade from impacting the lives of ordinary Americans.
Chevron’s earnings missed today but they made some interesting comments regarding their business with heavy oil producer Venezuela.
Chevron said that they are already engaged with the Trump administration on Venezuela.
The FT Reports that Chevron is lobbying the White House to keep Venezuelan oil licensee. They are warning that the US could be vulnerable to Chinese, Russian influence if it is forced to abandon operations there.
It’s very clear that President Trump wants to put more pressure on the Maduro regime in Venezuela.
President Trump doesn’t really view Maduro as a legitimate leader of the country he sees Maduro as a dictator.
He would love to put maximum pressure on the country. Of course, Venezuela’s heavy oil is in demand and if we tariff Canadian oil prices will higher.
So, President Trump when it comes to oil may have to pick his battles maybe put the pressure on Venezuela but go easier on Canada.
Russia is another country that produces a lot of heavy oil President Trump obviously wants to end the war between Russia and Ukraine and I think he would like to see Russian oil back on the global market.
Yet the fighting between Russia and Ukraine continues And as you know energy especially oil is a major chess piece in this war. Russia has the oil and gas Ukraine has the pipelines and Russia has the heavy oil.
Today reports say that Ukrainian drones attacked an oil refinery owned by Lukoil, one of Russia’s largest oil producers, in Volgograd Oblast overnight on Jan. 31, the General Staff of Ukraine’s Armed Forces reported.
“This refinery is one of the 10 largest oil refineries in Russia in terms of design capacity and is involved in supplying the Russian occupation army,” the General Staff said in a statement.
The Lukoil-Volgogradneftepererabotka refinery was targeted in a joint operation of the Unmanned Systems Forces and Ukraine’s military intelligence agency (HUR). It lies around 500 kilometers (300 miles) from the front line in Ukraine. This was reported by Kiev Independent.
Because of more sanctions on Russia reports were saying that their oil exports had gone down but their oil product exports have gone up so Ukraine is trying to hurt Russia by attacking the refineries because that should reduce the income that they’re getting more easily.
Reuters did report that “ – Traders have resumed offers of Russian crude cargoes to Indian refiners at narrower discounts after a delay triggered by recently imposed U.S. sanctions that have pushed up trading costs, Indian refining sources said on Friday. Washington earlier this month imposed sweeping sanctions targeting Russian producers and tankers, disrupting supply from the world’s No. 2 producer and tightening ship availability.
Regardless, the diesel market seems to be the strongest in the sector the last couple of days.
Not only are we dealing with a spat of record-breaking demand because of the cold, but we are also seeing the concerns about the tariffs on heavy oil.
That is why it’s likely that oil will be spared from the trump tariffs but if not look to ride the oil and products.
We saw an increase in gasoline crack spreads .
The seasonality is for oil are very attractive as there are for many petroleum spreads.
And while there’s been a lot of focus on oil as far as tariff goes, we should also be focusing on natural gas.
Natural Gas Intelligence reminds us that President Trump’s threat to impose 25% tariffs on all imports from Canada and Mexico on Feb. 1 looms large and could have an immediate impact on the supply and cost of various goods traversing North America, including natural gas.
Yet the market isn’t so focused on the tariffs as much as they are in the weather.
Despite a very bullish withdrawal from inventory yesterday the market is feeling a little bit more comfortable that they’re going to be able to get through the winter without sharply higher prices.
Sill if you look at Europe the prices to refill storage going into next year are very high and it could happen here in the US if the weather starts to turn cold. To keep an eye on that download of the Fox Weather app. The EIA said that working gas in storage was 2,571 Bcf as of Friday, January 24, 2025, according to EIA estimates.
This represents a net decrease of 321 Bcf from the previous week. Stocks were 144 Bcf less than last year at this time and 111 Bcf below the five-year average of 2,682 Bcf. At 2,571 Bcf, total working gas is within the five-year historical range.
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1 일 전
Natural Gas Tests Key Support, Eyes Bullish Reversal Above 3.12
By: Bruce Powers | January 31, 2025
• Natural gas tested key support at 2.99, with potential for a bullish reversal if it breaks above 3.12, targeting resistance levels at 3.36, 3.51, and 3.71.
Natural gas further tested a potential support zone on Friday with a drop to a new retracement low price of 2.99. Support for the day was seen at a rising trendline and within the area of the 61.8% Fibonacci retracement. The support zone also includes a prior swing high at 3.02.
A breakout above that swing high in November triggered a breakout of a large symmetrical triangle consolidation pattern. Given the subsequent bullish reaction, the market seemed to recognize that breakout. Friday’s high was 3.12 and natural gas continues to trade in the top half of the day’s price range and above the prior retracement low at 3.035, at the time of this writing.
Breakout Above Friday’s High is a Sign of Strength
Depending on where it closes the day, today’s price action might result in a bullish hammer candlestick pattern. If it does, a breakout above Friday’s high of 3.12 will show strength and a one-day bullish reversal from a key long-term support zone. Whether strength continues from there remains to be seen.
Further testing of the support zone may also occur before bullish follow through. Upside price targets for a bullish reversal, if it is sustained, start with the completion of a gap at a daily low of 3.36 and a prior swing high at 3.39. Notice that there are two metrics pointing to a similar price area thereby increasing the potential significance of that price zone.
Key Upside Target Around 50-Day MA
Since the 50-Day MA was busted on the way down earlier this week, it seems likely to be tested as resistance on the way back up. And the 50-Day line is joined by the 38.2% Fibonacci retracement. Together, they identify a potential resistance zone around 3.51. Next up, there is a potentially more significance resistance zone from 3.64 to 3.71.
The range begins with a prior swing high and top of the symmetrical triangle bottom at 3.64. Included within the range is the 50% retracement at 3.67. Finally, it ends with the 20-Day MA, which is currently at 3.71. Note that the 20-Day line is falling and getting closer to the 50% retracement. A declining trendline showing dynamic resistance of the current bearish correction has been added to the chart as a guide.
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2 일 전
Crude Oil Drops to New Low, Key Support Levels Eyed
By: Bruce Powers | January 30, 2025
• Oil prices dipped below trendline support, signaling short-term weakness. Key levels at $72.32 and $70.03 could determine the next move.
Crude oil fell to a new retracement low of $72.77 on Thursday before an intraday rebound. The decline triggered a breakdown of a rising trendline and a drop below the interim swing high from early November at 73.27. This shows continued short-term weakness and indicates that lower prices may be tested before the bearish correction may be complete. Certainly, it is getting closer to a sustainable low.
Bear Trend Continuation
Although a drop below the trendline is short-term bearish (short line), the next potential support zone is a little lower around 72.32. That price level will complete a 61.8% Fibonacci retracement, and it is confirmed by the 50-Day MA, which converged with the line as of today. Moreover, the 20-Week MA (not shown) shows a price of 72.03, very close to the next lower price range.
When two indicators point to a similar price support level it can tend to have a greater chance of being tested as support, particularly if the one support level just above it fails to hold as support. That is what happened today. If the 50-Day line fails as support, then the next lower target looks to be the 78.6% retracement at 70.03.
January Shows Weakness
Since January is about to end, the one-month chart (not shown) should be considered once the month ends, on Friday. Today, the monthly pattern is bearish. It shows a large topping tail and a narrow open to close range at the bottom of the month’s trading range. Unless there is a strong advance on Friday, it will likely end the month in the lower third of the month’s price range.
Given the price range to date, the lower third of the range starts at 74.21, and below. Although the month may end with a bearish monthly candle, it is not valid until triggered. That would happen on a drop below the month’s low, which is currently at 72.03. Nonetheless, if support for the retracement is found above the January low, and it leads to bullish reversal, the month’s range provides plenty of room for a strong rally.
Bullish Reversal Heads Up into Resistance Zone
Nonetheless, a bullish reversal would be rising into a potential consolidation zone, even if only considering trendlines and moving average lines. The 200-Day MA is at 75.10 and the 20-Day MA is at 76.02. Also, there are two weekly resistance levels to consider. This week’s high is at 76.03 and the prior week’s high was 78.82.
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2 일 전
Natural Gas Reaches Key Support, Bearish Momentum Builds
By: Bruce Powers | January 30, 2025
• Natural gas extended its decline, completing a 61.8% retracement at $3.03. A bearish engulfing pattern suggests the possibility of further downside toward a lower level at $2.82 or lower.
Natural gas continued its bearish retracement on Thursday, completing a 61.8% Fibonacci retracement at 3.03, and finding support at a low of 3.035 for the day. Thursday is on track to end as a bearish engulfing pattern and it may close weak, below Wednesday’s low of 3.06. This is a bearish one-day pattern that shows sellers remaining in control heading into Friday’s trading session. At the time of this writing, natural gas is set to end the day in a weak position, indicating that further testing of a support zone that starts at the 61.8% level is likely.
61.8% Fibonacci Retracement Completed
A support zone is indicated around the 61.8% retracement level as a prior interim swing high was at 3.02 and an internal uptrend line is close by. However, if that price zone fails to show support, the next lower level to consider is around a trendline at approximately 2.82. That line is the top boundary line of a large symmetrical triangle pattern. Further down is a potentially more significant support zone identified by both the 200-Day MA at 2.68 and the 78.6% retracement at 2.67. When two or more indicators point to a similar price area, it is one way that the market provides clues.
200-Day MA is Most Significant
Although the 200-Day line was successfully tested as support initially following a reclaim of the line on September 11, the current retracement is at a larger scale of the trend structure. Nonetheless, it would be expected to hold as support if tested given its long-term significance as a trend indicator. It is also interesting to note that the triangle apex crosses right at the 78.6% retracement level.
One way to identify a possibly failure of a bull breakout from a symmetrical triangle is the center line of the pattern (where boundary lines cross). The idea being that if the bulls remained in charge overall following a bull breakout of the pattern, the price would not be able to fall back below the midpoint, as it shows relative weakness that is getting worse.
Month of January Likely Ends Very Bearish
As noted previously, with one trading day remaining till the end of January, the developing monthly candlestick pattern (not shown) is likely to end in a bearish position. Today’s decline dropped the low for the month of January to 3.04, which increasing the chance that natural gas will end the month in a very bearish position on the monthly chart.
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2 일 전
Stop the Flow. The Energy Report
By: Phil Flynn | January 30, 2025
Maybe there is a way to avoid oil sanctions on Canadian and Mexico and other goods. Stop the flow of fentanyl! Commerce Secretary Howard Lutnick said that for Canada and Mexico to avoid the 25% tariffs – they must stop the flow of fentanyl. Those words caused a drop in oil that had already been trying to shake off a cold weather impacted oil inventory report from the Energy Information Administration (EIA) and there seems to be a sense by traders that somehow these tariffs are going to be avoided. Whether there are right may be the catalyst for the next oil move that seems to be back in a trading range with a slight downside bias.
Yet if the Trump Administration can get Canada and Mexico to join the US and stop the flow of fentanyl, that would save lives and at the same time does not impede the flow of oil and make it more expensive. Mr. Lonick said that, “So this is a separate tariff to create action from Mexico and action from Canada,” Lutnick said of the 25% duty threat. “And as far as I know, they are acting swiftly, and if they execute it, there will be no tariff.”
The tariffs on Canada would hurt US refiners that need Canada’s heavy crude. It also is going to hurt California because they chose to reduce oil production and instead become more dependent on Canadian oil. Besides, with the expected clampdown on Venezuela by the Trump Administration we could see diesel supplies really tighten. It’s going to be to everybody’s advantage if Canada Mexico takes reasonable steps to try to stop the flow of illegal drugs into the United States. It will be a win for everyone. The US will combine less oil from Venezuela and buy more oil from OPEC and Canada.
Yep, this threat of sanctions has Alberta Canada looking at ways to diversify their economy from being so reliant on oil. Bloomberg reports that “– Canada’s top oil-producing province of Alberta plans to boost its wealth fund roughly tenfold to C$250 billion ($173 billion) by 2050 in a bid to wean itself off volatile natural resource’s revenue. The government formed a corporation to oversee the C$24.3 billion Heritage Savings Trust Fund and seek opportunities to raise returns to 9% annually from about 7% now, it announced Wednesday. It also passed legislation that requires the fund to reinvest its returns rather than distribute them to the province. I guess that means they don’t give you a check when you move to Alberta.
In the meantime oil demand is rocking around the clock. Cold weather and a strong US economy have led to increased demand for petroleum, gasoline, distillate fuel, and jet fuel, with significant year-over-year growth in consumption. The EIA put demand over the last week on average at 20.3 million barrels a day, up by 2.5% from the same period last year. Gasoline demand averaged 8.3 million barrels a day, up by 1.8 % from the same period last year. Maybe the strength and gasoline demand were partly due to electric cars getting frozen in the snow or maybe they couldn’t hold their charge. Who knows
Distillate fuel demand averaged 3.9 million barrels a day over the past four weeks, up by 6.9% from the same period last year. The jet fuel supplied was up 4.5% compared with the same four-week period last year.
Freeze off cut U.S. oil production last week following by 237,000 barrels a day from 13.477 million barrels down to 13.2400 million barrels per day. I used to think I was the only person that questioned some of the crazy assumptions of the International Energy Agency (IEA). as I’ve been writing for many years. I think the International Energy Agency lost their way. I think it became a political organization not so much geared into trying to secure energy security but promote a green energy agenda to satisfy global elites. When I first started writing about this many people felt it was just sour grapes, but the reality is I could see that the IEA’s agenda didn’t match up with the actual data that they were providing. In other words, they seemed to secure the data to fit a political agenda and that is very dangerous
In fact, a new report from the National Center for energy analytics, is saying exactly that same thing. They are warning that the IEA’s flawed assumptions lead to dangerous ‘forecasts’. The National Center for Energy Analytics wrote that, “For decades, the International Energy Agency (IEA) was the world’s gold standard for energy information and credible analyses. Following the commitment of its member governments to the 2015 Paris Agreement climate accords, the agency radically changed its mission to become a promoter of an energy transition. In 2022, the IEA’s governing board reinforced its mission to “guide countries as they build net-zero emission energy systems to comply with internationally agreed climate goals.”
The IEA’s current preoccupation with promoting an energy transition has resulted in its signature annual report, the World Energy Outlook (WEO), offering policymakers a view of future possibilities that are, at best, distorted and, at worst, dangerously wrong. They highlighted 23 problematic, flawed assumptions that are relevant specifically to the International Energy Agency report the World Energy Outlook. WEO’s oil scenarios and the widely reported “forecast” that the world will see peak oil demand by the early 2030s. While other scenarios about other energy sources are critical as well, oil remains a geopolitical touchstone and the single biggest source of global energy—10-fold greater than wind and solar combined.
At the very least, this analysis points to the need for real-world scenarios in general and, in the case of oil, the much higher probability that demand continues to grow in the foreseeable future and, possibly, quite significantly. I agree.
Natural gas is going to be impacted by the cold. Anthony Harrup at the Wall Street Journal wrote that, “U.S. natural gas inventories likely fell sharply last week, turning from a surplus to a deficit as bitter cold weather across much of the U.S. boosted demand for heating and froze in some production.
Natural gas in underground storage is expected to have decreased by 317 billion cubic feet to 2,575 Bcf in the week ended Jan. 24, according to the average estimate of 11 analysts, brokers and traders surveyed by the Wall Street Journal. Estimates range from a withdrawal of 310 Bcf to a withdrawal of 332 Bcf. The storage reduction would be larger than the five-year average withdrawal for the week of 189 Bcf, putting inventories 107 Bcf or 4% below the 2020-2024 average and 140 Bcf below their year-earlier level. The U.S. Energy Information Administration is scheduled to release weekly storage data on Thursday at 10:30 a.m. EST. Natural gas storage is typically drawn down during the months of November through March and replenished during the summer. The exceptionally mild 2023-2024 winter had left inventories around 40% above average at the end of the withdrawal season last year.
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3 일 전
Natural Gas Struggles at Support – Will Bulls Hold the Line?
By: Bruce Powers | January 29, 2025
Natural gas fell to a new retracement low of 3.06 on Wednesday before bouncing. It got close to testing support around the prior symmetrical triangle breakout level at the prior swing high of 3.02. Nonetheless, today could have been the test depending on what happens next. That price area is further identified by the 61.8% Fibonacci retracement at 3.03. At the time of this writing, natural gas reached a high of 3.19 and it continues to trade near the highs of the day.
If 3.02 Fails, 2.67 Looks Possible
line of a large symmetrical triangle becomes a potential target, and further down is the 78.6% retracement at 2.67. Currently the 200-Day MA has converged with the retracement level and is identifying the same price. Nonetheless, the 200-Day MA marks a key potential support level for the larger bull trend.
Large Rising Parallel Trend Channel
A key point to consider is the presence of a large rising parallel trend channel on the chart. Notice that during the recent rally there was a failed attempt to break out above the top channel line before a high was established at 4.37. Given the subsequent bearish decline follow through the possibility of an eventual test of support at or near the lows of the channel are a possibility. Once there is a clear reversal from one side of the channel, there is the possibility of reaching the other side of the channel.
20-Week MA Tested as Support
Further to the above analysis, the weekly chart may provide an additional clue. Today’s low reached a seven-week low and there is also a monthly low from December at 2.98. The decline also tested support around 20-Week MA, which is at 3.11. The 20-week line has marked trend support on the weekly chart since it was reclaimed in October.
This seems to increase the chance that today’s low could hold as support and complete the correction. It also indicates that a decisive decline below the 20-Week MA will provide bearish confirmation and increase the chance for natural gas to eventually test lower prices before the correction is complete.
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4 일 전
Not Just Blustering. The Energy Report
By: Phil Flynn | January 29, 2025
The drifting and listless oil futures market reversed course yesterday and rallied back above $75 after a report that President Trump is not “just blustering” on tariffs. I think that means he serious and that is what Canadian politician Chrystia Freeland, who wants to replace Canadian Prime Minister Justin Trudeau is saying as some of my Canadian friends are taking offense at President Donald Trump’s real and impending tariffs on Canadian goods. Christian is raising the put Canada first spirt, raising the Patrick spirt ire of Canadians by telling Canadians they need to stand up against President Trump.
Ms. Freeland said that “ I would say for President Trump, weakness is a provocation. I think capitulation is not a negotiating strategy with him.” She said that Canada should place counter tariffs on US imports and proposed to have an international summit of countries targeted by President Trump.
Bloomberg News reported that “Freeland said she believes Trump is very smart, has a clear world view, and is threatening to impose huge tariffs on Canada, Mexico and other allies in part to pave the way for tougher policies on China.
“He has come to the conclusion that if he can show the rest of the world how mean and tough he can be with his closest partners and allies — how much he’s prepared to beat up on those really nice Canadians, who throughout history have been great partners for the U.S. — how do you think that’s going to make the Chinese feel?” she said in an interview with Bloomberg News.
Wait! WHO said Canadians were nice?? Just kidding! Canadian are very nice, Most of them anyway. Besides Canada make it almost impossible for US commodity Brokerages to deal with Canadian Clients. They have protectionism built in to favor Canadian brokerages. I have many Canadian followers that want to open an account with me but can’t because of the protectionist measure by the Canadian government. Free Canada from America brokerage suppression! Do you hear the people sing?
And there is no doubt that the emotions of Canadians are being riled up by these sanctions’ threats. Just read this letter I received from one of my former loyal Canadian readers.
He wrote “Canada has 1/10th the US population yet almost buys as many goods as possible from the US that the US buys from Canada. That means the average Canadian buys 10 times the amount of American goods that an American buys of Canadian goods, yet your nation is trying to squash mine.
How do average Americans sleep at night with this type of aggression against friends? I will be unsubscribing to your commentary after more than 10 years of reading it. Good luck, I hope your presidents moves domt push everyone to a decision to reduce their reliance on the USD to limit the power of America when they try to finance their debts and let the house of cards start to collapse. Thx for the commentary but I cannot support anything American anymore. “
Wow after a decade of reading mt report. I know I shouldn’t feel this way, but I kind of feel honored to be you thought highly enough to be boycotted by some Canadians.
But regardless of The Energy Report boycott by this one Canadian I will continue to call it as I see it! Free Canada!
February 2nd is TT-Day (Trump Tarif Day) and the Trump Administration is saying that sanctions will go through and unless there is a last-minute deal get ready to pay a little bit more for oil.
In the meantime, it’s going to be about the Federal Reserve today.
Yesterday the oil inventories according to the American Petroleum Institute were pretty much in line with expectations with a big drawdown in distillate inventories that should not be a surprise after the cold temperatures.
The API reported that crude supplies rose by 2.86 million barrels last week. We saw a slight drop in Cushing OK of 144,000 barrels.
Gasoline inventories increased 1.89 million barrels probably because people stayed home, and I don’t blame them and distillates down 3.75 million barrels.
The International Energy Agency made a comment about the “DeepSeek” threat exposes guesswork on AI power demand.
The key things of course about this technology could change the long-term outlook for power demand and maybe reduce some of the expectations.
That we’re going to have to build more nuclear power plants and coal to power these data centers and while it’s still too early to figure out the impact there’s no doubt that the markets starting to make some adjustments, but one energy major is moving ahead with plans.
Reuters is reporting that Chevron (CVX.N), signed an agreement with investment firm Engine No. 1 and GE Vernova (GEV.N), opens new tab to build natural gas-based power plants to run co-located data centers in the U.S. The announcement comes just a week after U.S. President Donald Trump revealed a private sector investment of up to $500 billion to fund infrastructure for artificial intelligence, aiming to outpace rival nations in the critical technology.”
Reuters also is reporting that U.S. officials are looking at the national security implications of the Chinese artificial intelligence app DeepSeek, White House press secretary Karoline Leavitt said on Tuesday, while President Donald Trump’s crypto czar said it was possible that intellectual property theft could have been at play. The National Security Council is reviewing the app’s implications, Leavitt said. “This is a wake-up call to the American AI industry,” she added, echoing Trump’s comments from a day earlier while also saying the White House was working to “ensure American AI dominance.”
As we said yesterday will is going to be in a bit of a trading range anything in the $70.00 handle definitely should be bought though we see strong support somewhere around 71 resistance is definitely at 75 if we can close above 75 we’re probably headed back up to 80 but in the meantime get ready for home, home on the trading range.
Natural gas backed off as weather reports warmed up the fox weather channel is suggesting that we could see some warm temperatures that in Europe the cold start to the winter is going to make energy more expensive not only this winter but next winter
John Kemp at Kemp Energies reported… EUROPE’s summer-winter gas calendar spread has marched deeper into backwardation as traders anticipate the region will have to pay much higher prices to refill storage in the summer of 2025 than it did in the summers of 2024 and 2023. The winter has been colder and less windy than the two previous winters, resulting in a faster depletion of gas inventories, and leaving the region needing to buy more gas this summer. Futures prices for gas delivered in the summer of 2025 are trading at a premium of more than €5 per megawatt-hour over futures for winter 2025/26, up from less than €1 three months ago.
In the US EBW Analytics reported that natural gas collapsed over the weekend as bearish weather shifts slashed 37 gHDDs and post-Enzo production returned rapidly dashing fundamentally dubious hopes for the February contract to linger above $4.00/MMBtu.
The March contract is off 32.8¢ (-10%) since Friday and could test south of $3.00/MMBtu in coming days. Still, a colossal storage draw Thursday and largest storage deficit to five-year norms since 2022 offer near-term support.
While the acute re-pricing of NYMEX futures pulls prices into better alignment with underlying fundamentals, medium-term declines remain favored. Nearly half of winter is still ahead. Still, record seasonal production and soft spring demand may offer a deeper test of support over the next 60-90 days. The longer-term outlook into summer 2025 and beyond is supportive, however.
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4 일 전
Natural Gas Targets are Lower Amid Aggressive Selling Pressure
By: Bruce Powers | January 28, 2025
• Aggressive selling drove natural gas to 15-day lows, breaking 50-Day MA support and targeting critical levels like 3.27 and 3.02 for potential stabilization.
Natural gas continued its bearish correction on Tuesday with a new retracement low of 3.38, at the time of this writing. It continues to trade near the lows of the day and could hit lower prices before the end of the day’s session. Notably, the 50-Day MA at 3.50 failed to halt the decline and natural gas looks well on its way to testing lower target zones.
Bearish Behavior
Today’s candlestick pattern is a wide range red pattern with an open near the top of the range and a likely close near the lows. This shows aggressive selling that further confirms weakness from the 50-Day MA breakdown. Notice that similar candle patterns occurred on the day of the trend high at 4.37, and at the second swing high that followed. Consider future similar indications of selling pressure that could occur in natural gas or other instruments.
Prior Swing Low at Risk
There is a potential support area at 3.39, which was a prior swing high that helped construct a large symmetrical triangle bottom pattern. But given the downside momentum seen today, it could easily be broken. A little lower is a price range from 3.30 to 3.27, with the lower level possibly having greater significance as it is the 78.6% retracement level.
Sharp Drop Points to Lower Prices
Nonetheless, given the sharp drop being witnessed today, lower prices remain targets. The bigger pattern unfolding is a pullback following the long-term breakout of a large symmetrical triangle formation. A decisive breakout triggered on November 21, which eventually led to the recent 4.37 swing high. There was an initial pullback to test the breakout area as support and it was successful.
However, the current retracement could provide a similar function but on a larger scale. That would be a test of the 3.02 price zone or thereabouts. Regardless of whether it is reached, it does provide evidence for a deeper correction than what has been seen so far post triangle breakout. Below the 3.27 area is another prior swing high and now potential support from June of last year at 3.16.
Lowest Closing Price in 15 Days
Moreover, Tuesday will likely end with natural gas closing at its lowest price in 15 days and a prior swing low is only a little lower at 3.33. Therefore, a drop below that price level further reverses the bull trend that began from the August swing low at 1.88.
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4 일 전
Crude Oil Tests Key Support, Eyes Bullish Reversal Potential
By: Bruce Powers | January 28, 2025
• Crude oil finds support at 73.23, with potential for a bullish reversal above 75.15, though resistance looms at 75.92–76.20 and risks remain below 73.23.
Crude oil remains in a bearish correction following a 13.65 point or 20.3% advance that ended with a high of 80.76 on January 15. However, it did reach a potential support zone on Monday with a low of 73.23. Today, Tuesday, crude oil traded inside day and had a successful test of resistance around the 200-Day MA (blue) with the day’s high of 75.14. The 200-Day line is at 75.20 and it previously marked a potential support zone
9.3% Bearish Correction
As of Monday’s low, crude was down by 9.3% from the recent swing high of 80.76. Support was seen around a prior key resistance level at 73.27. The decline completed a 50% retracement at 73.93 on the way down. Confirmation of support was also indicated by an internal uptrend line that marked a similar price zone as the November 7 minor swing high and top of a price range. In other words, crude has reached a support zone that could lead to a bullish reversal. Continue to watch price behavior around the 73.23 low.
Inside Day Bull Breakout Potential
If there is a rally above todays inside day high of 75.15 and considering the 200-Day line at 75.20, crude could complete a bullish reversal that could lead to an advance. There are several potential barriers that would then need to be considered on the way up as resistance could be seen. The 20-Day MA is at 75.92 and it is a little shy of a trendline that could present resistance. Tuesday’s high at 76.03 could also be considered. Together, these price levels present a potential resistance zone from 75.92 to 76.20 (Friday’s high).
Downside Risk Remains
On the downside, a drop below 73.23 provides a bearish continuation signal and increases the chance that the next lower potential support area is reached. The lower price support zone looks to be around 72.32 to 72.15. That range includes the 61.8% Fibonacci retracement level and the 50-Day MA, respectively. The 50-Day line is key as it was recently reclaimed on December 24, a couple day’s before a sharp rally began. This decline would be the first test of support at the 50-Day line since then. A daily close below it would be bearish and could indicate further selling pressure.
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5 일 전
Power Struggle. The Energy Report
By: Phil Flynn | January 28, 2025
Because of a potential breakthrough in artificial intelligence there is a power struggle going on. Not only a power struggle between the US and China to find out who’s going to dominate artificial intelligence in the future, but also a power struggle as the market must adjust its expectation for rapid increases in power demand to drive data centers which was expected to be an incredible growth sector for global markets.
Global stock markets and energy markets are trying to recover after the Chinese artificial intelligence Deep Seek drop raises significant questions about the future for power demand. Perhaps artificial intelligence is going to find a way to use some of the same applications with less cost and less investment in power.
The ongoing assumption continues to be the fact that power demand is going to have to rise significantly to meet the demand for the computing power that we’re going to need to power artificial intelligence.
That demand expectation ignited the power markets and even a report today seems to suggest that those demand expectations continue to be strong even though perhaps it’s clear that in some corners we were overestimating power demand growth.
Bloomberg reported that, “For much of the past two-plus years since ChatGPT kicked off the global AI frenzy, the industry has bet that the path to better AI depends largely on spending heavily on more advanced chips from companies like Nvidia Corp. and increasingly massive data centers to house them.”
Today a report from the Oxford Institute for Energy pointed out that, “Data centers and AI applications are emerging as major drivers of electricity demand growth, despite currently constituting a small portion of global electricity demand. The growth of data centers is so rapid that it outpaces the technical efficiency improvements in cooling and IT hardware, leading to a substantial increase in electricity demand.
Projections suggest that data centers could account for up to 10% of total electricity demand globally by 2030, albeit still lower than demand growth driven by sectors like electric vehicles and space cooling. However, the spatial concentration of data centers in specific regions poses challenges for local grids”.
And while it’s way too early to say that this is going to be a death knell for the chip sector or even the power sector, what is clear is that this technology has the ability to rapidly change our assumptions. It also means that if we’re going to lead the world in artificial intelligence, we have to stay a step ahead. The assumption that the United States was just going to lead on this technology has been challenged and so we need to step up to the plate with our best and brightest.
The Wall Street Journal explained, “Why are investors worried about DeepSeek? The conventional thinking was that AI companies needed expensive, leading-edge computer chips—such as those made by Nvidia—to train the best systems. That has justified huge spending by the biggest U.S. tech companies, such as Alphabet and Meta Platforms, which are sometimes known as hyperscalers. The Wall Street Journal also asked, “What makes DeepSeek work well?
In a paper published last week, the Chinese researchers behind DeepSeek said their new model would sometimes suddenly stop and realize it should re-evaluate its initial approach to a problem, and allocate more thinking time to do so. They described the behavior as the model having an “Aha!” moment. “Rather than explicitly teaching the model on how to solve a problem, we simply provide it with the right incentives, and it autonomously develops advanced problem-solving strategies,” the researchers wrote.
Is DeepSeek a disaster for AI stocks asks the Journal? “Not everyone thinks DeepSeek has upended the AI-infrastructure industry. While DeepSeek might have found a way to cut AI training costs, AI demand keeps surging, and tech companies still need more computing power, wrote Stacy Rasgon, a Bernstein semiconductor analyst. “Is DeepSeek doomsday for AI buildouts?” Rasgon and his colleagues wrote in a report on Monday. “We don’t think so.”
Perhaps not but it is a wakeup call. And as I expected the selling in the NASDAQ and the concerns about power hip energy prices across the board and copper those markets seem to be bouncing back. There was some technical damage done to the crude oil market when it went below are $73.00. This now means that we need to recover to continue to stay in an uptrend. If not there is the possibility we could be testing the old support lows near $70.00.
That brings us back is inventories. Tonight we get the American Petroleum Institute (API) report and we would expect to see significant draws in crude oil again and a significant drop in distillate inventories gasoline may see another increase because of the lack of movement because of the cold weather.
Also, more signs that Russian sanctions are starting to bite. Bloomberg reported that, “The rush to buy replacement cargoes for sanctioned Russian oil has pushed Middle Eastern crude prices to an unusual premium to the global benchmark. In normal times, oil in Dubai and the surrounding region trades at a discount to Brent as it’s more costly for refiners to process and turn into useful products such as gasoline and diesel. But buyers in India and China have been clamoring for Middle Eastern supplies to such an extent that they’ve pushed prices to exorbitantly high levels , according to Bloomberg.
Bank of America just came out with a report that they were expecting a surplus in oil at the end of the year but because of the Russian sanctions now they are expecting a deficit. I believe that we were seeing a deficit before the Russian sanctions came into place but that’s a story for another day.
Natural gas prices plummeted on warm temperatures and now we’re going to gauge the forecast to see if we can rebound going into the weekend. Reuters is reporting that Russia would like to see a resumption in the transit of gas via Ukraine, the Kremlin said on Tuesday, after the European Commission issued a statement saying it planned to continue talks with Kyiv on natural gas supplies to Europe. Russian gas supplies via Ukraine stopped on Jan. 1 after its transit contract expired and Kyiv declined to discuss renewing it, citing Moscow’s war against it. Slovakia and Hungary have since been pushing the EU to step in to restore the flow of gas to them through what is a major pipeline.
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5 일 전
Natural Gas Selling Pressure Increases as Trend Support Fails
By: Bruce Powers | January 27, 2025
• Natural gas triggered a bearish breakdown Monday, breaching key trendlines and support levels, with potential for deeper corrections toward the 50-Day MA and beyond.
Natural gas triggered a breakdown of the rising trend on Monday as both the 20-Day MA (3.81) and an uptrend line were broken to the downside, along with last week’s low. A low of 3.61 was reached for the day and at the time of this writing natural gas continues to trade near the lows of the day. So, it looks like there is a good chance that the close for the day will be weak, in the lower third of the day’s trading range and below last week’s low of 3.71. Of course, it would also close below both the 20-Day line and trendline.
Bearish Trend Breakdown
There was a potential support zone identified from 3.70 to 3.64. The drop today exceeded the low of the range but the close could be within it. Nevertheless, although there is a chance that the support zone may hold and lead to a bounce, it looks like lower trend support levels may be tested before the retracement is complete. Today may be the beginning of a realignment of the angle of ascent that natural gas has been on since last August’s swing low.
If there is bearish follow-through then the price area around the 50-Day MA looks likely to be hit. The 50-Day line is currently at 3.49 and it is part of the price range from 3.52 to 3.49. The 61.8% Fibonacci retracement level is at 3.51 and there is an 127.2% extended target for a falling ABCD pattern at 3.52.
Double Top with Two Bearish Reversal Days
It looks like the two wide range red candles near the two recent highs on January 13 and 17 were sending a warning for an interim top. Together they formed a double top pattern with a confirmed breakdown triggered today. The pattern is not perfect given the short rally from last Wednesday’s low. However, it provides another piece of bearish technical evidence for a deeper correction given today’s break below trend support.
Below 50-Day MA Could See 3.38 Area
Nonetheless, if support fails to hold at or above the 50-Day MA, lower potential support levels may be tested. There is a prior swing high at 3.39, and the 78.6% retracement level is at 3.28. Also, an internal trendline showing potential dynamic support would need to be considered as well. The above bearish scenario might start to shift if natural gas can reclaim the 20-Day line and today’s high at 3.83 and then stay there.
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6 일 전
AI Sinks AI. The Energy Report
By: Phil Flynn | January 27, 2025
One of the problems with artificial intelligence is that it is going to take an incredible amount of energy to make it work. I’ve often thought if artificial intelligence had the ability to figure out how to do things like cure cancer and disease and transform every business on the planet, then perhaps it could find a way to use this technology with less energy. That may be one of the reasons why the stock market is falling after the market was shocked that China may have this figured out.
Bloomberg News reported that, “DeepSeek, a Chinese AI startup that’s just over a year old, has stirred awe and consternation in Silicon Valley after demonstrating breakthrough artificial intelligence models that offer comparable performance to the world’s best chatbots at seemingly a fraction of the cost. DeepSeek’s emergence may offer a counterpoint to the widespread belief that the future of AI will require ever-increasing amounts of power and energy to develop. Global technology stocks tumbled in late January as hype around DeepSeek’s innovation snowballed, and investors began to digest the implications for its US-based rivals and their hardware suppliers.”
Now why this stock market had an epiphany on Sunday night and all of a sudden became worried about this technology remains to be seen but until the market gets a handle on this, it could change the long-term outlook for the demand for a lot of commodities. Some of the concerns of course have been the desire by major companies to build up their energy infrastructure to meet the demand for artificial intelligence and data centers. If there is a way to do this with a lot less energy consumption it could be a game changer for some of these stocks. That’s not to say that these stocks couldn’t do very well anyway, but it does alter the longer-term outlook if indeed this technology can be taken to the next level with less energy consumption.
Oil prices were also impacted by the tip for tap sanctions on Columbia. President Trump immediately put tariffs on Columbia after they refused to take in migrants that they previously agreed to take in. Those sanctions on Colombia of course are very disturbing to me because I’ve already been hoarding coffee supplies because I’m concerned about record-breaking coffee prices and tight supplies and when it comes to oil you don’t think much about Columbia but you should.
Reuters reported that he U.S. swiftly reversed plans to impose sanctions and tariffs on Colombia after the South American nation agreed to accept deported migrants from the United States, the White House said late on Sunday. Colombia last year sent about 41% of its seaborne crude exports to the U.S., data from analytics firm Kpler shows.
And despite the call to drill baby drill all the US rig count continues to plummet. Part of the reason is uncertainty about the future but mainly because of the damage that was done under the previous administration. The anti-fossil fuel agenda by Biden took its toll and only now it’s starting to show up in falling drilling rig counts.
Reuters reported that U.S. energy firms this week cut the number of oil and natural gas rigs operating for a third week in a row to the lowest since December 2021, energy services firm Baker Hughes (BKR.O), opens new tab said in its closely followed report on Friday. The oil and gas rig count, an early indicator of future output, fell by four to 576 in the week to Jan. 24. Baker Hughes said this week’s decline puts the total rig count down 45, or 7% below this time last year.
Yet when it comes to oil in products today the biggest threat I think is the stock market. If we continue this major meltdown we could see some risk off buying in the crude oil. Sometimes when the stock market really gets hit we see that risk off selling in oil and gas the stock market stabilizes though look for all the oil and products that bounce back pretty sharply. The key thing is that supplies are going to be tightening in this week’s inventory report and that should give us some underlying support. The markets are also waiting to see if OPEC is going to rise to the occasion and increase oil production in deference to President Trump. In the meantime we have to look at how the sanctions are going to impact Iran and Russia. Things are just starting to get fun.
Natural gas pulled back dramatically as forecasting trend warmer over the weekend. The potential for a warmup will put the focus back on prolific U.S. oil and gas production this comes even as the Energy Information Administration raised their forecasts for the price of natural gas next year by a dollar. Still the weather’s going to be the key for this market. If the weather trends colder we could get back into another price spike. But we’re getting late in the winter at this point. January, believe it or not is almost over. Think about Spring!
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6 일 전
Oil slips as Trump repeats call for OPEC to reduce prices
By: Investing | January 26, 2025
SINGAPORE (Reuters) - Oil prices fell more than 1% on Monday after U.S. President Trump called on OPEC to reduce prices following the announcement of wide-ranging measures to boost U.S. oil and gas output in his first week in office.
Brent crude futures dropped 87 cents, or 1.11%, to $77.63 a barrel by 0043 GMT after settling up 21 cents on Friday.
U.S. West Texas Intermediate crude was at $73.77 a barrel, down 89 cents, or 1.19%.
Trump on Friday reiterated his call for the Organization of the Petroleum Exporting Countries to cut oil prices to hurt oil-rich Russia's finances and help bring an end to the war in Ukraine.
"One way to stop it quickly is for OPEC to stop making so much money and drop the price of oil ... That war will stop right away," Trump said.
Trump has also threatened to hit Russia "and other participating countries" with taxes, tariffs and sanctions if a deal to end the war in Ukraine is not struck soon.
Russian President Vladimir Putin said on Friday that he and Trump should meet to talk about the Ukraine war and energy prices.
However, OPEC and its allies including Russia has yet to react to Trump's call, with OPEC+ delegates pointing to a plan already in place to start raising oil output from April.
Both benchmarks posted their first decline in five weeks last week as concerns eased about sanctions on Russia disrupting supplies.
Goldman Sachs analysts said they do not expect a big hit to Russian production as higher freight rates have incentivized higher supply of non-sanctioned ships to move Russian oil while the deepening in the discount on the affected Russian ESPO grade attracts price-sensitive buyers to keep purchasing the oil.
"As the ultimate goal of sanctions is to reduce Russian oil revenues, we assume that Western policymakers will prioritize maximizing discounts on Russian barrels over reducing Russian volumes," the analysts said in a note.
Still, JP Morgan analysts said some risk premium is justified given that nearly 20% of the global Aframax fleet currently faces sanctions.
"The application of sanctions on the Russian energy sector as leverage in future negotiations could go either way, indicating that a zero risk premium is not appropriate," they added in a note.
More trade disruption is expected after Trump announced on Sunday he will impose sweeping retaliatory measures on Colombia, including tariffs and sanctions, after the country turned away two U.S. military aircraft with migrants being deported.
The U.S. is the largest buyer of Colombia's seaborne crude exports at 183,000 barrels per day (bpd) in 2024, or 41% of Colombia's total, data from analytics firm Kpler showed.
Data from Energy Information Administration showed the U.S. imported 228,000 barrels per day of crude and products from Colombia in 2023.
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1 주 전
WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | January 25, 2025
• Following futures positions of non-commercials are as of January 21, 2025.
WTI crude oil: Currently net long 316.7k, down 244.
Last week, after rallying for three straight weeks – and in four out of five – a shooting star appeared on the weekly. This week, West Texas Intermediate crude gave back 2.2 percent to $74.66/barrel.
The crude went vertical from $69.33 hit on December 26 to $79.33 on the 15th this month. For months, WTI was rangebound between $71-$72 and $81-$82 before dropping out of it last September. The range was recaptured as soon as 2025 began. Sellers are showing up just under the range top.
Oil bears are probably eyeing at least $72 in the near term.
In the meantime, US crude production in the week to January 17 decreased 4,000 barrels per day week-over-week to 13.477 million b/d; output has come under pressure since registering a record 13.631 mb/d in the week to December 6. Crude imports increased 621,000 b/d to 6.7 mb/d. As did gasoline inventory which rose 2.3 million barrels to 245.9 million barrels. Stocks of crude and distillates, on the other hand, went the other way – respectively down one million barrels and 3.1 million barrels to 411.7 million barrels and 128.9 million barrels. Refinery utilization shrank 5.8 percentage points to 85.9 percent.
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NY Crude Oil Futures (CL) »» Weekly Summary Analysis
By: Marty Armstrong | January 25, 2025
NY Crude Oil Futures closed today at 7466 and is trading up about 4.09% for the year from last year's settlement of 7172. This price action here in January is reflecting that this has been still a bearish reactionary trend on the monthly level. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 7939 intraday and is still trading above that high of 7202.
Up to now, we still have only a 2 month reaction decline from the high established during October 2024. 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 2 years. 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. Pay attention to the Monthly level for any serious change in long-term trend ahead.
From a perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bearish position at this time with the overhead resistance beginning at 7505 and support forming below at 7316. The market is trading closer to the resistance level at this time.
On the weekly level, the last important high was established the week of January 13th at 7939, which was up 8 weeks from the low made back during the week of November 18th. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed beneath that low which was 7567. This was a very bearish technical indicator warning that we have a shift in the immediate trend. We are still trading above the Weekly Momentum Indicators so we have not undermined critical support as of yet. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 7939 made 1 week ago. Still, this market is within our trading envelope which spans between 5754 and 8512. Immediately, this decline from the last high established the week of January 13th has been important, closing sharply lower as well. Before, this recent rally exceeded the previous high of 7288 made back during the week of November 4th. Nonetheless, that high was actually lower than the previous high made the week of October 7th suggesting this market has really been running out of sustainable buying for right now. This immediate decline has thus far held the previous low formed at 6653 made the week of November 18th. Only a break of that low would signal a technical reversal of fortune and of course we must watch the Bearish Reversals.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend. Looking at this from a wider perspective, this market has been trading up for the past 9 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2024. 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 October 2024 at 7846. After a one month rally from the previous low of 6633, it made last high in October. Since this last high, the market has corrected for one months. However, this market is weak retesting important support last month. So far here in January, this market has held above last month's low of 6698 reaching 7179.
Some caution is necessary since the last high 7846 was important given we did obtain four sell signals from that event established during October 2024. That high was still lower than the previous high established at 8767 back during April 2024. This warns that the trend is weak moving forward. Nevertheless, at this time, the market is still holding and is trading above last month's high.
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Natural Gas Bullish Momentum Improves Following Retest of Key Support Levels
By: Bruce Powers | January 24, 2025
• Natural gas remains bullish after holding support at 3.81, but sustained strength depends on breaking 4.05, with potential resistance ahead at Fibonacci retracement levels.
Natural gas retested trend support on Friday at the 20-Day MA with the day’s low of 3.81. Support was seen from the low and it was followed by an intraday rally that is set to close strong, near the highs of the day. A bullish one-bar bullish momentum hammer candlestick pattern looks likely to be completed today. That would provide a near-term setup heading into next week as a rally above the high would show continued strength.
At the time of this writing natural gas continues to trade near the highs of the day and has reached a high of 3.98 so far. If the day ends with a bullish hammer, then a breakout above today’s high will indicate strength that could result in a rally above yesterday’s high, which is also an interim lower swing high, at 4.05.
Short-term Series of Lower Swing Highs
Yesterday’s high was the second lower swing high that has occurred since a bearish reversal followed the 4.37 trend high from last week. The day ended down and today’s drop below yesterday’s low of 3.86 earlier in the trading session marked it has a swing high.
There is a possibility that the lower swing high is retained and the developing small downtrend (countertrend decline) of lower swing highs may be setting the stage for a deeper correction. However, today’s bullish price action following a successful test of support at the 20-Day line and possibility of a strong close, leaves open the prospect of a continuation of Wednesday’s bounce off support at the 20-Day MA
Bullish Above 4.05
On the upside, a breakout above the 4.05 swing high will trigger a continuation of the bull advance from Wednesday’s low of 3.71. That low was also a higher swing low and now part of the price structure of the uptrend, which is also near support represented by the uptrend line.
The 61.8% Fibonacci retracement, where resistance might be seen, is at 4.09 and it is followed by the 78.6% retracement at 4.20. Moreover, there are two additional potential resistance areas. There is also a monthly high at 4.20, which provides confirmation for that price level as it matches the Fibonacci level.
Bearish Below 3.71
Outlook turns bearish if there is a drop below this week’s low at 3.71 as it is key trend support of a higher swing low. However, there is an identified potential support zone from around 3.70 and 3.64, which could either hold and lead to a bullish reversal, or natural gas breaks down through the zone and heads lower towards 3.53 or so.
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A Revolution of Common Sense. The Energy Report
By: Phil Flynn | January 24, 2025
President Trump took down the global elites at Davos and oil prices at the same time. The President put OPEC and on oil on notice when he said he was going to ask Saudi Arabia and OPEC to bring down the cost of oil but at the same time fed into the animal spirits of global bankers by signaling a new golden age to invest in America. President Trump started the talk about removing some of the ridiculous regulations that Biden put into place and reducing the cost of doing business with major tax cuts and fast-tracking projects. And the President realizes it’s going to come back down to American energy and American energy dominance.
Trump said, “I declared a national energy emergency—and it’s so important, a national energy emergency—to unlock the liquid gold under our feet and pave the way for rapid approvals of new energy infrastructure. The United States has the largest amount of oil and gas of any country on Earth, and we’re going to use it. Not only will this reduce the cost of virtually all goods and services, but it will also make the United States a manufacturing superpower and the world capital of artificial intelligence and crypto.”
Trump signaled to the business leaders of the world and the bankers that if they don’t get on board they are going to be left out. Trump said, “My message to every business in the world is very simple: Come make your product in America, and we will give you among the lowest taxes of any nation on Earth. We’re bringing them down very substantially, even from the original Trump tax cuts. But if you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff—differing amounts, but a tariff—which will direct hundreds of billions, and even trillions, of dollars into our Treasury to strengthen our economy and pay down debt.
Under the Trump administration, there will be no better place on Earth to create jobs, build factories, or grow a company than right here in the good old USA.”
He also put OPEC on notice. The crude oil market should respect that because during his last presidency, President Trump had a lot of influence over OPEC. As I said before, I used to think President Trump couldn’t tweet oil out of the ground but he did it anyway. Yep, President Trump also is making the point that he realizes that while inflation is being driven mainly by government spending he also realizes that lower oil prices can have a direct impact on the ability of the Federal Reserve and central banks around the globe to raise or lower interest rates.
Trump said, “it’s also reported today in the papers that Saudi Arabia will be investing at least $600 billion in America, but I’ll be asking the Crown Prince—who’s a fantastic guy—to round it out to around $1 trillion. I think they’ll do that because we’ve been very good to them. I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil. You’ve got to bring it down, which, frankly, I’m surprised they didn’t do before the election. That didn’t show a lot of love by them not doing it. I was a little surprised by that. If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue. You’ve got to bring down the oil price—you could end that war. They should have done it long ago. They’re very responsible to a certain extent, for what’s taking place. Millions of lives are being lost.
With oil prices going down, I’ll demand that interest rates drop immediately—and likewise, they should be dropping all over the world. Interest rates should follow us.
I think there’s little doubt that this is probably going to be one of the most memorable speeches in Davos history if not in global history. It will be truly a golden age in America if President Trump can fulfill this vision that cannot be blocked by those who want to resist.
The truth of the matter is that everything that President Trump is saying generally is based on common sense. If you were a leader of America, you want America to be the leader in energy technology, artificial intelligence. You want to have jobs and prosperity for your own people you want to have safety in the streets. It is common sense. This is probably the most amount of common sense we have heard since Thomas Paine wrote ‘Common Sense’ in 1775–1776 when he advocated independence from Great Britain to people of the Thirteen Colonies.
Still in the short term before we can get a commitment by OPEC to raise production and until we get more of a clear vision as to how President Trump is going to enforce sanctions on Iran, Venezuela and Russia the global and US oil market is very tight.
Even though we saw an increase in Cushing, OK oil supplies from the Energy Information Administration (EIA) last week, they’re still near historic lows for this time of year. And we continue to see the US supply of petroleum below average and demand higher than a year ago.
The EIA reported that, “U.S. commercial crude oil inventories fell by 1.0 million barrels from the previous week. At 411.7 million barrels, U.S. crude oil inventories are about 6% below the five year average for this time of year. Gasoline inventories increased by 2.3 million barrels from last week and are 1% below the five-year average for this time of year. Distillate fuel inventories decreased by 3.1 million barrels last week and are about 6% below the five-year average for this time of year. Total commercial petroleum inventories decreased by 4.1 million barrels last week.
Oil demand on the four-week moving average averaged 19.7 million barrels a day, up by 0.7% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.3 million barrels a day, up by 1.9% from the same period last year. Distillate fuel product supplied averaged 3.6 million barrels a day over the past four weeks, up by 6.2% from the same period last year. Jet fuel products supplied was up 8.9% compared with the same four-week period last year.
The bottom line here is that if you look at the market it’s extremely tight and the fundamentals are very bullish but we also have to remember that President Donald Trump can change the fundamentals with a Truth Social post or a speech. While we think that breaks should be bought, we are going to see some extreme volatility so get ready to change positions on a dime. Traders should buy calls on brakes, but traders are going to have a lot of fun trying to ride what should be some very fun volatility.
A report says that, “A massive fire broke out at a crude oil processing facility in the Rumaila oil field in Basra Governorate, Iraq.”
India of course doesn’t seem like they want to stop buying Russian oil despite new sanctions. Reports are saying that India’s oil minister will be happy to buy Russian crude if it is at a very good discount. Because that means he’s putting India first.
Natural gas lost a little momentum because of the EIA report that showed that the inventory drawing was not as big as one might have expected with the record cold temperatures. Still, it’ll probably be next week when we feel the full impact of the Arctic blast on the nation and the inventory reports. The EIA reported that the cost of keeping your home with natural gas will also go up.
The EIA reported that in their January Short-Term Energy Outlook (STEO),they forecast the U.S. benchmark Henry Hub natural gas spot price to increase in 2025 to average $3.10 per million British thermal units (MMBtu) and in 2026 to average $4.00/MMBtu from the record low set in 2024. The EIA reported that working gas in storage was 2,892 Bcf as of Friday, January 17, 2025, according to EIA estimates. This represents a net decrease of 223 Bcf from the previous week. Stocks were 57 Bcf less than last year at this time and 21 Bcf above the five-year average of 2,871 Bcf. At 2,892 Bcf, total working gas is within the five-year historical range.
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Crude Oil Tests Key Support Levels Amid Bearish Correction
By: Bruce Powers | January 23, 2025
• Crude oil approaches first key support zone at $75.31–$75.54 as selling pressure intensifies, signaling potential for either reversal or deeper bearish correction.
Crude oil continued to retrace its prior advance on Thursday and tested key potential price support levels. At the time of this writing, the low for the day was 75.31 and trading continues to be bearish, taking place near the lows of the day. It looks like crude will end the day weak, in the lower third of the day’s trading range. Nonetheless, it has reached a potential support confluence zone. When there is confluence of indicators pointing to a similar price level those levels have the potential to be more significant than price levels without multiple confirmation.
Sitting at Potential Support Zone Till 75.31
The support zone goes from around 75.54 to 75.31. It begins with the 38.2% Fibonacci retracement level and ends with the 20-Day MA (purple). Moreover, the 200-Day MA, a long-term trend indicator, is marking a similar price area at 75.32. Although this price area is not yet showing signs of support it looks likely that it will be the low of Thursday’s trading session.
There will remain the possibility of a bullish reversal from that support zone unless there is a decisive decline below the 20-Day line. If so, the next lower target is a 50% retracement level at 73.73. Further down is a prior support and resistance area marked with a black horizontal line on the chart. The 61.8% Fibonacci retracement is a little lower at 72.32.
More Significant Potential Support Around 73.27
Either of those price levels could halt a bearish correction and lead to a bullish reversal. However, the more significant price support zone should be the 73.27 area, which was previously resistance and marked the top of a 10-Week falling consolidation range. Crude oil had a strong run recently and completed a measured move (purple) around the recent swing high at 80.76.
The prior measured move was the September 2024 upswing. Once there is symmetry in the price change a potential pivot level or resistance is identified. Further, a 78.6% retracement also completed near the recent high and marks potential resistance as well.
Sellers in Control
Certainly, sellers have taken back control since crude oil reached that high. Given that crude is showing six consecutive red candles indicates strong selling. Therefore, a deeper correction than what has been seen so far makes sense if crude is eventually going to take another shot at trending higher.
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Natural Gas Rest Day as Rising Trend Retained
By: Bruce Powers | January 23, 2025
• Natural gas maintains its rising trend but faces resistance near $4.09 and $4.33, signaling potential challenges for bullish continuation amid consolidation.
Natural gas rose slightly above Wednesday’s high of 4.01 on Thursday, reaching 4.05 before sellers took back control and prices dropped. Although a continuation of yesterday’s rally was triggered today there was little upside follow through and the day is likely to end with a decline and a close below yesterday’s high.
However, natural gas remains in a rising trend channel that showed renewed strength yesterday on a successful retest of support around the 20-Day MA. That advance completed a 50% retracement at 4.02. The day ended with a bullish reversal day and a strong close at 4.00, essentially at the high. Those short-term signs of improving demand have a good chance of continuing, at least for a few days.
Rising into Consolidation
Trading remains within a rough two-week trading range reflecting some degree of consolidation near trend highs. Therefore, volatility may stay muted and choppy for the time being. Today could be a rest day following the bounce yesterday from the 20-Day MA (3.80) support zone that includes the day’s low at 3.71, now a higher swing low. That low is now part of the price structure of higher swing highs and higher swing lows pertaining to the rising trend.
Above 4.05 Shows Strength
A rally above today’s high of 4.05 will signal strength and the possibility of testing higher resistance levels. The 61.8% retracement of the most recent downswing is at 4.09, while a monthly high from December is at 4.20. There is confirmation of the monthly high at the 78.6% retracement, also at 4.20. Resistance could be seen around either of those price areas.
Higher up is a significant price level, a lower swing high and double top at 4.33. That swing high was a little shy of the recent trend high at 4.37. An advance above 4.33 would be needed before there was a clear bullish continuation signal for the trend. Until then the expectation is for resistance to be seen and further fluctuations within a range.
Key Support at 3.71
Nonetheless, a sign of weakening would first be indicated on a drop below this week’s low at 3.71. There is subsequently an identified potential support zone down to 3.64. Consequently, the 3.64 should provide a more significant price level as a drop below it looks like it leads to a lower potential support zone from 3.52 to 3.51. The lower price level is the 61.8% Fibonacci retracement.
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EIA Natural Gas Storage Draw Of -223 Bcf Misses Expectations
By: Vladimir Zernov | January 23, 2025
Key Points:
• Working gas in storage decreased by -233 Bcf from the previous week.
• At current levels, stocks are +21 Bcf above the five-year average for this time of the year.
• Current demand for natural gas is high, but forecasts point to warmer weather in early February.
On January 23, 2025, EIA released its Weekly Natural Gas Storage Report. The report indicated that working gas in storage declined by -223 Bcf from the previous week, compared to analyst forecast of -244 Bcf. In the previous week, working gas in storage declined by -258 Bcf.
More information in our economic calendar
At current levels, stocks are -57 Bcf less than last year and +21 Bcf above the five-year average for this time of the year. The difference between natural gas stocks and the five-year average has been trending down in recent weeks, which served as an additional positive catalyst for natural gas markets.
Natural gas moved away from session highs as traders reacted to the report. The storage draw missed analyst estimates, so some traders may decide to take profits off the table after yesterday’s strong rebound.
The current demand for natural gas is high due to cold weather. However, traders will also focus on forecasts, which show that weather would be warmer in early February.
From the technical point of view, natural gas is trying to settle above the resistance at $3.95 – $4.00. In case this attempt is successful, natural gas will move towards the next resistance level at $4.25 – $4.30. On the support side, a move below the $3.90 level will open the way to the test of the support at $3.55 – $3.60.
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A Trump Peace Dividend. The Energy Report
By: Phil Flynn | January 23, 2025
Oil prices sold off yesterday after President Trump made a proposal to Russia to either make a deal in the war in Ukraine that lets face it is a quagmire, or he will have no other choice but to put more sanctions on Russia.
President Trump on Truth Social said that, “ I’m not looking to hurt Russia. I love the Russian people, and always had a very good relationship with President Putin – and this despite the Radical Left’s Russia, Russia, Russia HOAX. We must never forget that Russia helped us win the Second World War, losing almost 60,000,000 lives in the process.
All of that being said, I’m going to do Russia, whose Economy is failing, and President Putin, a very big FAVOR. Settle now and STOP this ridiculous War! IT’S ONLY GOING TO GET WORSE.
If we don’t make a “deal,” and soon, I have no other choice but to put high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States, and various other participating countries. Let’s get this war, which never would have started if I were President, over with! We can do it the easy way, or the hard way – and the easy way is always better. It’s time to “MAKE A DEAL.” NO MORE LIVES SHOULD BE LOST!!!?”
New sanctions on Russia are causing super tanker freight rates to explode as the Russian dark fleet is now under scrutiny. Right now, no one wants to touch Russian oil and so these tankers are going to be floating around somewhere.
Bloomberg reported that “Oil refiners in India are reaching for all available options in the rush to make up for Russian flows hit by Washington’s latest round of sanctions, turning to the spot market while simultaneously seeking more long-term supplies from Middle Eastern producers.
State-owned processors have issued a slew of spot tenders in recent weeks, snapping up oil from all corners of the world including Middle East, Africa and the US. Some cargoes are scheduled to load as early as February, indicating the urgency of replacements for the Russian flows India has become reliant on.
There are more reports that Russian President Vladimir Putin is growing more concerned about the impact of the Russian Ukraine war on his economy and is probably open to making a deal and let’s face it, Ukraine’s President Volodymyr Zelenskyy was open to a deal back in 2022, but the Biden administration told them not to make a deal. Now Newsweek is reporting that Ukraine’s first vice prime minister has signaled that Kyiv would be open to engaging in peace negotiations with Russian President Vladimir Putin.
It also appears that sanctions on Iranian crude are starting to kick in apparently you can see that most clearly by the so-called drop in “ Iraqi oil” exports. S&P global reported that Iraqi crude oil exports hit a four-month low of 3.15 million barrels a day in December. Export volumes totaled 3.15 million b/d in the last month of 2024, down 9.7% from August, with China and India taking the bulk of Iraqi crude. In 2024, Iraq was the fourth largest supplier of crude to China, behind Russia, Saudi Arabia and Malaysia, which market sources told Commodity Insights was predominantly disguised Iranian crude.
Iranian oil sanctions are probably going to kill Malaysian oil export numbers as well. Malaysia was exporting twice the amount of oil that they produced during the day. That’s amazing. There is nothing like a ship-to-ship transfer of Iranian oil to improve your export numbers.
The larger point is that if President Trump is successful in bringing an end to the conflict between Russia and Ukraine it’s going to solve a lot of problems for the global economy and be a major factor in bringing down the global energy costs. Not to mention it’s going to save the US taxpayers billions of dollars because we won’t have to be writing a check to Ukraine every month. It will also mean that we could soon find a home for those poor Russian barrels of oil lost at sea.
It also is going to allow us to put tougher sanctions on Iran. Already Ayatollah Khomeini in Iran is offering an olive branch according to Newsweek’s saying that he will stop his nuclear program. They reported, “Iranian Supreme Leader Ayatollah Ali Khamenei has reportedly prohibited the development of nuclear weapons, in a move that some are perceiving as an attempt to initiate talks with the Trump administration about easing sanctions. The head of Iran’s “Armed Forces Judiciary” made the announcement on January 21, according to Iran International. That was just one day after Trump’s inauguration, but the possible olive branch does not necessarily mean that nuclear activity will stop.” So, what’s the point then?
Elizabeth McDonald, host of the Fox Business Network’s the Evening Edit, tweeted this morning that, “The new controversy of Biden’s Energy Secretary Jennifer Granholm at the last minute on Thursday sending more than $15B in Biden’s green energy loans to utilities in her home state of Michigan is a major wake up call to the significant taxpayer abuses in the Biden White House. Many of them are her donors to her gubernatorial campaign. Granholm approved a massive $22.9B in these 11-hour green loans, sending nearly 70% of that to Michigan, the Beacon reports, either feathering her political nest or her future in the private sector.
Democrats hammered President Trump when he campaigned on draining the swamp in 2016. Nancy Pelosi and Democrats pushed back hard to impeach him on one of 85 targets they launched. This also defies the energy department Inspector General who told Granholm to stop the conflicts of interest in these $400B slush funds. This highlights to a government abuse of power sending hundreds of billions of dollars in taxpayer money out the door that gets recycled as campaign donations. This is one of the most underreported stories out there. Whose back is getting scratched and for how much?” As long as she has that extra money, she should get some dance lessons for here next climate change video.
Yet if we don’t get a deal, the global oil market is going to be extremely tight as the world is already in a deficit. Even Citibank is seemingly acknowledging the reality that the market is in a deficit. Reuters reported that Citi on Wednesday raised its oil price outlook for 2025 due to geopolitical risks centered on Russia and Iran, but noted prices were likely to ease through the second half of the year. “The oil outlook could see heightened, sustained geopolitical risks in Iran/Russia-Ukraine potentially wipe out the 2025 oil balance surplus, but the Trump administration appears intent on dealmaking,” the bank said in a note.
This morning the market seems to be shaking off a bearish American Petroleum Institute (API) supply report. API reported a surprising increase of 1 million barrels in crude supplies. The market was expecting a draw. We also saw another week where Cushing, OK supply levels increased coming off tank bottoms. Cushing, OK increased supplies by 500,000 barrels last week.
The API also reported an increase in gasoline supplies of 3.2 million barrels. Also higher than the market was looking for and we also saw an increase of 1.9 million barrels in distillate inventories. Next week because of the winter storm we’re going to see import and export numbers impacted because of the shutting down of operations due to the cold and the snow.
Natural gas is back to facing the cold hard realities after selling off hard. In expectations of a warm up the realities that we have seen record demand for natural gas in the last couple of days, it’s going to give the market a bit of a boost while the market tries to adjust over the next few days to the cold. The ultimate fate of this market will be how cold the month of February is. If it’s warmer than normal, then look for natural gas prices to settle back. If not get ready for a squeeze something like we haven’t seen for a few years.
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Natural Gas Bull Reversal Off Support and Strong Performance
By: Bruce Powers | January 22, 2025
• With support intact at $3.71, natural gas rallied, confirming a bullish reversal. Resistance near $4.33-$4.41 may challenge continuation of the current uptrend.
Natural gas held trend support around the 20-Day MA on Wednesday with a new pullback low of 3.71 before the buyers took back control. The subsequent intraday rally led to a high of 3.99, at the time of this writing. A one-day bullish reversal and outside day was triggered on a rally above Tuesday’s high of 3.91. Trading continues near the highs of the day and natural gas will likely end strong and positive, in the top third of the day’s trading range.
Also, a daily close above will confirm the one-day reversal. This will leave natural gas in a bullish position to rise further to test resistance levels within a consolidation range that has formed over the past few weeks. Today’s low successfully tested support just above an identified support zone from 3.70 to 3.64.
Bouncing into Resistance Zone
It is notable that last week’s trend high of 4.37 ended with a bearish candlestick pattern and a closing price below the previous trend high of 4.20. This means that if today’s advance continues, and it looks like it will, there is a good size resistance zone to be encountered before a chance at new trend highs.
If correct, the expectation would be for a period of consolidation largely contained with support around the uptrend line and key resistance at the most recent swing high of 4.33. There are a couple of prior weekly price levels that may see resistance. They include 4.02, 4.06, and 4.41. Also, there is a monthly high at 4.20.
Drop Below 3.64 is Bearish
Nonetheless, a decisive decline below the 3.64 price level increases the risk for a deeper correction. In that case, a drop to a price zone from 3.52 to 3.51 looks likely. That zone includes the 127.2% extended target for a descending ABCD pattern and the 61.8% Fibonacci retracement, respectively. A little lower is the 50-Day MA at 3.43. The 50-Day line is joined by the 3.39 prior peak from January 2024. If the 20-Day line fails to mark support, the 50-Day line becomes a target when considering moving average analysis.
Watch End of Month Relative Closing
On a monthly basis (not shown), natural gas has been progressing in a series of higher monthly highs and higher monthly lows for five months. The closing price for the month may provide a clue to the strength of weakness of demand. Currently, the trading range for the month of January is 3.33 to 4.37, which puts the middle at 3.85.
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What? Electric Cars Are Not the Future? The Energy Report
By: Phil Flynn | January 22, 2025
People who thought Biden’s obsession with electric cars was the future of the US economy had better think again. Yesterday the stock market surged after President Donald Trump made a move to assure us that the United States is the top player in the artificial intelligence space. Instead of wasting billions of dollars on charging stations that were never built partly because there was no demand for them and partly because of the diversity equity inclusion rules that had to be fulfilled before you could build them, President Trump announced Project Stargate.
Project Stargate is what the President calls the largest Artificial Intelligence “AI” infrastructure project ‘in history”. It’s a joint venture between Softbank, OpenAI and Oracle worth $500 billion and is an acknowledgement that the future of the global economy is AI. If you want to lead the globe you have to lead with the amazing technology that will transform not only the global economy but perhaps eradicate disease and cure cancers and literally help us reach out to the stars and help us reach the outer limits of our galaxy.
This announcement highlights the stark contrast between President Trump and Biden. Biden’s belief that windmills and electric cars were our future as opposed to President Trump who realizes that artificial intelligence is going to be what transforms the globe over the next century. It reminds me of the old commercial where the guy invested into a boom box instead of investing into his friend’s computer business in the garage. President Trump gets it, Biden did not.
That is why President Trump declared an ‘energy emergency’ in this country. The US energy infrastructure is woefully unprepared to meet the energy demands of artificial intelligence. This transformational technology is going to require all energy sources on the deck to meet the incredible demand that the future is going to command. From an energy viewpoint that means extremely strong demand for everything from oil to natural gas, nuclear and yes, even wind and solar. At the same time there will be strong demand for commodities like copper, zinc, steel, rare earth minerals, oil and gas. And because God shed his grace on America, we have so many of the components at home that we need to power this future that can improve the quality of the lives of almost everyone on the planet. Of course, we must choose to do so.
The billions that the US government is putting in with the people that know AI like SoftBank, Open AI and Oracle is a small down payment and a lot more effective than the $10 billion a year we were paying to the global governments for the Paris climate accords. Fox Business reports that the initial investment for the project will be $100 billion, with plans to expand to $500 billion over the next four years. The first data center built under the initiative will be in Texas, and it will eventually expand to other states.
In fact, investment in artificial intelligence may actually help us find a better way to power the globe and reduce greenhouse gas emissions at the same time. Sometimes you have to think big and not think small.
In oil prices we got our traditional three-day holiday weekend sell off. Almost every holiday weekend such as Thanksgiving or the Martin Luther King holiday we see oil prices pulled down more often than not.
Part of the sell off was due to the fact that President Trump seemed to leave some wiggle room when it came to sanctions on Canada and Mexico. The oil market is very concerned about the possibility that President Trump is going to put a 25% tariff on that cheap, heavy, Canadian crude. The market is also worried because the United States is predominantly a light oil producer. Canada helps our refineries by adding into the mix that coveted heavy oil that our refineries have been built for. Heavy oil produces more diesel. With cold temperatures, it is going to be very much in demand.
We did see oil pull back yesterday even though oil demand is through the roof right now. The expectations that we’re going to see a warmup, perhaps a warmer than expected February, could keep a lid on those prices. On the flip side these weather forecasts have been known to flip flop and if they flip back colder, we could see the market go back up.
At the same time, we live in a world where oil supplies are tightening the Saudi Aramco’s Chief Executive Officer Amin Nasser is suggesting that sanctions on oil tankers is going to reduce supplies and tighten the market significantly. He told Bloomberg TV that, “Those restrictions are already starting to tighten the oil market, Nasser said. But it’s too early to see if the prospect of sanctions obstructing the flow of some 2 million barrels of daily Russian seaborne crude will have a lasting impact, he said.”
Bloomberg also reported Nassar saying that, “China is still driving growth in global oil demand, the head of Saudi Aramco said, dismissing concerns about peaking consumption in the world’s biggest energy user. “We still see good demand coming out of China,” Aramco’s Chief Executive Officer Amin Nasser said in a Bloomberg television interview in Davos. The country, along with India, make up about 40% of the rise in global consumption and, “demand is increasing year on year.””
Nasser expects global oil demand to rise by about 1.3 million barrels a day this year to 106 million a day. That’s slightly higher than the 1.05 million barrel-a-day growth forecast by the International Energy Agency according to Bloomberg.
Sanctions are starting to bite. Bloomberg reported that, “Tankers that used to haul oil from Russia’s western ports are being redeployed to the nation’s east to service a key crude route to China that’s been crippled by sweeping US sanctions. Part of the reason is likely money. Freight rates to transport ESPO crude from the Russian port of Kozmino to China more than tripled after the US imposed sanctions on tankers that utilized the route. Most ships typically used for the trade are Aframaxes, which have capacity of around 750,000 barrels.”
I think the interesting thing here is that the Saudi Aramco CEO didn’t seem like he would be in a hurry to raise oil production. One of the key elements of the success of going tough on Iran and Russia for the Trump administration will be the ability of OPEC plus to increase production to make up for lost supply. President Trump has a pretty good relationship with Saudi Arabia. He definitely has the political capital to pressure them to increase production if needed.
Early returns are saying the market is going to have to get prepared for a world with less oil from what we consider to be bad actors. Less oil from Russia, we will get less oil from Iran, and less oil from Venezuela. The US isn’t going to make up that void right away.
Today with traders getting back to full strength we should try to recover some of the losses that we have seen. We are still going to have to face the oil inventories which should show significant drawdowns in crude supply. From a technical viewpoint we need to build a base and hold today to keep the strong bullish trend alive. The incredible build that we’ve seen in oil products in the last two weeks should start to reverse and we could see some significant draws as the market finds some equilibrium.
I don’t care what anybody says, it’s darn cold. Yet natural gas is already looking ahead to a warmup. While Henry hub futures are down it’s a different story and the physical markets.
EBW analytics reports that, “Physical market fireworks saw the Henry Hub benchmark clear north of $10.00/MMBtu for the long holiday weekend. Spot gas prices from Chicago to the Southeast to the Mid-Atlantic to New England traded into double digits.
NYMEX futures faltered, meanwhile, as the market refocuses on moderating early February forecasts and freeze-offs of 7-9 Bcf/d were less than feared. Speculator short positions neared a four-year low ahead of Enzo—and rebuilding shorts could affect the supply and demand for futures contracts. Ultimately, growing confidence in a moderate February, returning supply, and reentering shorts suggested medium-term declines for March contract.
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Natural Gas Faces Key Support Test Amid Rising Trend
By: Bruce Powers | January 21, 2025
• Testing key support levels, natural gas’s medium-term bullish outlook hinges on holding $3.64 and breaking above $4.37 for trend continuation.
Natural gas held a low of 3.72 on Tuesday as it further tested support around the 20-Day MA. The 20-Day line is currently at 3.78, while the high for the period is 3.91. This puts natural gas in a precarious position as it again tests trend support areas. The near-term uptrend has trend support at the purple 20-Day MA, along with an uptrend line. However, there is a confluence of potential price support levels marked from 3.70 to 3.64. That zone can be included with trend support analysis as it is very close to today’s low and the trendline.
Strengthening Above 3.91
On the upside, a bullish reversal would be indicated on a rally above today’s high of 3.91. Natural gas would then be heading up into a potential resistance zone defined by the prior six days of price history. The bull trend does not continue until there is a rally above the recent trend high of 4.37. In the meantime, natural gas needs to contend with a possible deeper pullback as trend support is being threatened.
Bullish Medium-Term
The medium-term outlook for natural gas remains bullish given the breakout of a large symmetrical pattern in the second half of November. That breakout was accompanied by a bullish trend continuation signal and followed by a trend reversal signal on the advance above the lower swing high of 3.64 on December 20. These are all bullish signals for the medium-term.
In the short term, natural gas could still correct further as a normal component of a bullish trend continuation pattern of an advance followed by profit taking and a pullback. However, until the lower end of the support zone noted above at 3.64 is broken to the downside, the possibility of a continuation higher remains.
Deeper Correction Remains Possible
A continuation of the bearish correction on a decisive drop below 3.64 will put natural gas in a position to test support around a price zone from 3.52 to 3.51. That zone consists of the 127.2% extended target for a small falling ABCD pattern and the 61.8% Fibonacci retracement level, respectively. Moreover, last week’s high of 4.33 generated a lower swing low and possible second top of a double top pattern.
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Crude Oil Faces Pullback Risk After 26-Week Highs
By: Bruce Powers | January 21, 2025
• Crude oil reached a 26-week high last week but faces a bearish reversal after breaking $77.30, with key support and resistance levels defining its next move.
Crude oil completed a bullish measured move (purple arrows) at 80.30 last week on the way to a swing high of 80.86. In addition, a 78.6% Fibonacci retracement completed at 80.65. The week’s advance had previously shown strength by busting out above a top trendline that defines the top boundary of a large symmetrical triangle formation. In addition, the week ended above that line thereby confirming strength.
Last week’s closing was the highest weekly closing price in 26 weeks, and it reflects improving demand for crude oil. However, it looks like three weeks up following a bull flag breakout starting the end of last year maybe the end of the advance before profit taking takes hold, leading to a bearish retracement. The week ended weak, below the halfway point of the week’s trading range.
Bearish Weekly Reversal Triggers
Subsequently, a bearish weekly reversal triggered today, Tuesday, as crude fell below last week’s low of 77.30. This was the first time in seven weeks that a prior weekly low was broken to the downside and reflects the possibility that crude may have topped for now and heading into a correction. Nonetheless, support for the day was seen at 76.15 and it was followed by an intraday bounce. Interesting to see support was seen at the intersection of two trendlines.
Both the longer-term rising line across the bottom of the symmetrical triangle pattern and the more recent rising trendline for the near-term uptrend. Further, the 50-Week MA (not shown) is at 76.37, also in today’s support zone. Crude oil closed above the 50-Week line for the first time since July 2024 two weeks ago. This is the first pullback to test the 50-Week line as support.
Reaches Key Initial Support
It is possible that today’s low completes a pullback before crude is ready to proceed higher. If that is the case, then a decisive breakout above today’s high of 78.32 would provide a daily bullish reversal signal. The first barrier then confronted would be last week’s high of 80.76. If that high can be exceeded and crude stays above it, a breakout above the trendline and triangle formation will be confirmed.
Drop Below 76.15, Short-term Bearish
Otherwise, the expectation is for a deeper pullback first. A decline below today’s low of 76.15 would trigger a bearish continuation of the retracement. Price areas to watch for support on the way down include the 38.2% Fibonacci retracement and 200-Day MA at 75.54 and 75.42, respectively. A little lower is the 20-Day MA at 74.75 and the 50% retracement at 73.93.
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Making Energy Great Again. The Energy Report
By: Phil Flynn | January 21, 2025
It’s Donald Trump 2.0 and the market is adjusting to a world where we’re going to make U.S. oil and gas great again. In what President Trump says is a new Golden Age in America, a declared National Energy Emergency is putting the world and the left on notice.
Trumps order says, “The energy and critical minerals (“energy”) identification, leasing, development, production, transportation, refining, and generation capacity of the United States are all far too inadequate to meet our Nation’s needs. We need a reliable, diversified, and affordable supply of energy to drive our Nation’s manufacturing, transportation, agriculture, and defense industries, and to sustain the basics of modern life and military preparedness. Caused by the harmful and shortsighted policies of the previous administration, our Nation’s inadequate energy supply and infrastructure causes and makes worse the high energy prices that devastate Americans, particularly those living on low-and fixed-incomes. “
This active threat to the American people from high energy prices is exacerbated by our Nation’s diminished capacity to insulate itself from hostile foreign actors. Energy security is an increasingly crucial theater of global competition. In an effort to harm the American people, hostile state and non-state foreign actors have targeted our domestic energy infrastructure, weaponized our reliance on foreign energy, and abused their ability to cause dramatic swings within international commodity markets. An affordable and reliable domestic supply of energy is a fundamental requirement for the national and economic security of any nation.”
Oil prices are pulling back after President Trump declared a National Energy Emergency and the fact that he is going to delay sanctions on Canadian oil at least until February the 2nd. That gives Canada and Mexico a few days to negotiate, and that reduced some oil tariff premium. Yet even though in the long run President Trump’s policies and desires are to lower energy costs, tariffs on Canadian oil definitely would increase them at least in the short term.
President Trump also pulled out of the Paris Climate Accord. My big question about that is can we get our money back? The US was the largest funder of the Paris climate exchange when we were in it and it was costing American taxpayers $10 billion a year. Of course we didn’t get our money’s worth, China and India continues to expand their greenhouse gas emissions and China will build a record amount of coal plants with coal demand at a record high
The possibility of unleashing U.S. oil and gas as well as streamlining oil and gas projects is getting the market ready for a revamping of the US oil and gas shale revolution and changing the oil dot plot for years to come. Policy shifts that would enable new oil and gas development on federal lands, while directing a rollback of Biden-era climate regulations.
Yet President Trump is suggesting that they are going to top off the US Strategic Petroleum Reserve and stop buying Venezuelan oil and new sanctions on Russia and Iran could lend support to oil as it may be difficult to replace that oil in the short term. India has already been trying to find supplies of new oil. Reuters reported that Chinese and Indian refiners are seeking alternative fuel supplies as they adapt to severe new U.S. sanctions on Russian producers and tankers that are designed to curb the revenues of the world’s second-largest oil exporter.
If President Trump is going to fill the SPR reserve to the top and not just replace the 180 million barrels that Biden squander, it could pave the way for the purchase of somewhere between 350 to 400 million barrels of oil to get it filled up to the maximum capacity.
In an effort to harm the American people, hostile state and non-state foreign actors have targeted our domestic energy infrastructure, weaponized our reliance on foreign energy, and abused their ability to cause dramatic swings within international commodity markets. An affordable and reliable domestic supply of energy is a fundamental requirement for the national and economic security of any nation.
Donald Trump is ending Joe Biden’s war on liquefied natural gas exports as well. Natural gas dipped as we’re in the deep freeze mainly because there is some hope that after this frostiness it won’t be as cold as we originally thought. Still the U.S. industrial and power sector and set a record for natural gas demand yesterday, January 20, 2025, according to reports and we haven’t seen anything yet.
You should stay tuned download the Fox weather app because if the forecast trends colder again the natural gas prices could spike higher.
The U.S. industrial sector set a record for natural gas demand yesterday, January 20, 2025, according to reports and we haven’t seen anything yet. We will break the record again today as the nation far and wide is in a deep freeze.
Fox Weathers winter storm headquarters is reporting that a historic and dangerous winter storm stretching over 1,500 miles is blanketing the southern U.S. with heavy snow, including areas of southeastern Texas and southwestern Louisiana under Blizzard Warnings.
President Trump is talking common sense when it comes to natural gas. President Trump said: “We will end the “Green Deal” with the “liquid gold under our feet”. The Netherlands has €1.000 billion of “liquid gold” natural gas in Groningen. The Rutte government destroyed our gas wells, filled them up with concrete, because they could not compensate 20.000 homes.”
Bloomberg reported that, “Frigid temperatures will ride in behind the snow, potentially shaking oil and natural gas production in the short term, while sending electricity demand soaring. As the freeze gripped West Texas Monday morning, temperatures in Odessa — the middle of the oil-rich Permian basin — had only reached 19F (-7.2C) and are set to drop to 15F overnight. Cold can disrupt oil and gas output by causing water in wells and pipelines to freeze. The Texas grid has a weather watch in place for Monday and Tuesday — an early alert that extreme cold driving up heating needs may strain supplies. Peak electricity demand will climb the next two days, hitting 77.5 gigawatts on Tuesday morning, according a recent forecast by the Electric Reliability Council of Texas, the grid operator. Electricity prices in Dallas will rise to $174 a megawatt-hour at the morning peak, more than double Monday’s high, according to the state grid operator.
Ercot’s projections have been volatile and at times have shown demand may test the winter record of 78.3 gigawatts set last January, though the grid operator said it expects to have enough supply to meet demand. Plunging temperatures have also triggered grid warnings outside of Texas. PJM Interconnection, which operates the largest US grid from Washington DC to Illinois, on Sunday issued a “low voltage alert” that extends through Thursday. PJM said demand may climb to 144 gigawatts Tuesday morning, which would topple the decade-long record of nearly 143.3 gigawatts.
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Oil News: Trump’s Energy Plans Push Crude Prices Toward $75.47 Pivot
By: James Hyerczyk | January 21, 2025
Key Points:
• Crude oil prices slide as Trump pledges to increase U.S. energy output, testing critical support at $75.47.
• U.S. tariff delays on Canada and Mexico imports spark market fears, with potential 25% tariffs looming in February.
• Crude oil markets brace for downside risks as $71.00 emerges as a critical target if selling pressure accelerates.
• China's Russian oil imports hit a record 2.17M bpd in 2024, outpacing Saudi Arabia as refiners seek cheaper barrels.
• Rising sanctions on Russian oil tankers disrupt global supply chains, driving up freight rates to new highs.
Crude Oil Prices Decline as Rally Stalls at Key Resistance Levels
Light crude oil futures are under pressure, marking the third consecutive day of losses as selling intensifies. Prices peaked at $79.44 last week, encountering stiff resistance near long-term tops at $78.28 and $80.00. The market is now testing its pivotal support level at $75.47, with the next downside target at the 200-day moving average of $71.00 if selling accelerates.
At 11:07 GMT, Light Crude Oil futures are trading $75.56, down $1.83 or -2.36%.
Trump’s Tariff Delays Weigh on Oil Prices
Oil prices fell on Tuesday following U.S. President Donald Trump’s announcement to delay new tariffs on imports from Canada and Mexico until February. Initial relief from the delay turned to concern as traders digested the implications of potential 25% tariffs on Canadian and Mexican imports, which could disrupt North American energy trade. The strong U.S. dollar added to downward pressure, making oil more expensive for international buyers.
Market analyst Tamas Varga of PVM noted that Trump’s tariff plans and a stronger dollar are driving the current weakness in oil markets. Meanwhile, Trump’s pledge to increase U.S. oil and gas production adds a bearish undertone as the administration aims to expedite energy permitting.
China’s Russian Oil Imports Reach Record Highs
China, the world’s largest crude importer, increased its purchases of discounted Russian oil by 1% in 2024, reaching a record 2.17 million barrels per day (bpd). However, total crude imports into China fell by 1.9% last year, reflecting weaker economic growth and reduced demand. Russian supplies outpaced imports from Saudi Arabia, which fell by 9% as refiners favored cheaper barrels amid tight margins.
Shipments from other sanctioned sources like Iran and Venezuela remained limited. While no Iranian oil imports were officially recorded for 2024, volumes from Malaysia, often a hub for trans-shipping sanctioned oil, surged 28%, ranking it as China’s third-largest supplier.
Sanctions and Supply Concerns Loom Large
Rising U.S. sanctions on Russian oil producers and tankers are another factor influencing crude markets. These measures, targeting over 180 vessels, are expected to tighten global supply by making Russian crude harder to transport. Analysts predict higher shipping costs and supply chain disruptions will underpin oil prices in the medium term.
In response to the sanctions, major importers like China and India may seek alternative suppliers, potentially driving up premiums for Middle Eastern and African crude. Freight rates for shipments from Russia to Asia have already spiked, adding further bullish elements to the market outlook.
Market Forecast: Downside Risks as Prices Test Support
Daily Light Crude Oil Futures
Crude oil is currently testing its near-term pivot at $75.47, with buyers potentially stepping in at this level. However, a decisive break could lead to accelerated losses, targeting the 200-day moving average at $71.00. Upside potential remains capped by resistance at $79.44, with a stronger dollar and geopolitical developments likely to shape price action. Traders should monitor U.S. inventory reports and further developments in tariff and sanction policies for near-term cues.
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Natural Gas Tests 20-Day MA Support Amid Mixed Signals
By: Bruce Powers | January 20, 2025
• Rising trendline supports natural gas uptrend, but signs of a short-term top suggest bearish risks toward 3.39 and beyond if key levels fail.
Natural gas opened lower at the start of the week as it tested support around the 20-Day MA. Support for the day was seen at 3.76, at the time of this writing, while the high for the day was 3.86. The 20-Day MA is at 3.78. Although the area around the 20-Day line has been successfully tested as support more than a few times in the past month or more, natural gas fell below it on multiple occasions during that time before ending the day back above the 20-Day line. Be aware that the Martin Luther King Jr. holiday is being celebrated in the United States today and some futures trading hours are shortened.
Uptrend Remains Intact
The uptrend in natural gas remains intact with a rising trendline providing guidance for dynamic support below the 20-Day line. It is currently near a possible support zone from 3.67 to 3.64 or so. Notice how the trendline rises through that price zone is looking directly below today’s price action on the chart. A decisive drop below 3.64 could lead to still lower prices.
That would trigger a breakdown below the trendline and a daily close below the line would be needed to confirm the bearish implications. If this occurs, then there are two lower price levels that identify potential support. The first is the completion of a 61.8% Fibonacci retracement at 3.51.
50-Day MA Marks Lower Support
Nonetheless, it looks like there is a potentially more significant price level around the prior swing high of 3.39 as two indicators point to that price area. Notice that the 50-Day MA has just recaptured the 3.39 price level to arrive at 3.40. If the price area around the 50-Day line fails to provide support that leads to a bullish reversal, lower levels may be tested. Certainly, a full retracement back to the breakout area of a large symmetrical triangle at 3.02 looks possible if the bears take back control.
Bounce Looks Possible
A decisive breakout above today’s high will signal strength after buyers took back control following the low of 3.76. Regardless, a continuation of that strength might be difficult given recent signs of a short-term top. Last week a new trend high of 4.37 was met with a reversal day and a weak close. A second high was then generated last Thursday at 4.33. That sets up a potential falling ABCD pattern (not shown) with an initial target at 3.70. Notice that is very close to the 50% retracement.
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Crude Oil Pulls Back During Holiday Trading
By: Christopher Lewis | January 20, 2025
• The crude oil markets continue to be noisy, but at this point in time, the market also had to deal with the idea of there being less volume, and of course shorter hours in the futures markets.
WTI Crude Oil Technical Analysis
The Light Sweet Crude or West Texas Intermediate crude oil market fell fairly significantly in the early hours of Monday, but keep in mind that it’s also Martin Luther King Jr. holiday. So, it does make a certain amount of sense that the markets might be sluggish because they are only open for part of the day and of course, a lot of volume is missing, especially in the United States. So, with that being said, a little bit of a pullback makes a certain amount of sense.
And it’s possible that we could see this market drop towards the 200 day EMA right around the $74 level. The 50 day EMA is racing towards that area as well. So, it does suggest that we could get a little bit of a golden cross, but really at this point in time, I think we probably bounce before we get anywhere near any of that. After all, inflation is picking up and we are looking at more demand coming from around the world, but we may have gotten a bit ahead of ourselves.
Brent Crude Oil Technical Analysis
Brent markets look very much the same as they are hanging around and looking to perhaps break down below the $80 level. With that being the case, the market reaching down to the 200 day EMA is a very real possibility near the $78 level. All things being equal, this is a market that I think you continue to be a bit of a buyer, finding value on these dips as it looks like we are trying to do everything we can to pick up the pressure to break above the $82 level. I think we will eventually, but it also would not surprise me at all if we needed to pull back a little bit in order to find some type of traction. Ultimately, I have no interest in shorting crude oil at this point, and that goes for both the CL and BZ contracts.
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XLE Energy stocks are surging, with XLE up 8% YTD...
By: TrendSpider | January 19, 2025
• Energy stocks are surging, with XLE up 8% YTD—leading all sectors after a tough 2024. Seasonality trends suggest more strength ahead, with win rates and mean returns accelerating in the coming months before peaking in April. As Trump takes office Monday, his tariff threat against Canadian imports adds focus to U.S. reliance on Canadian energy. Exxon, Chevron, and ConocoPhillips making up nearly 50% of XLE, are key names to watch.
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WTI Crude Oil CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | January 18, 2025
• Following futures positions of non-commercials are as of January 14, 2025.
WTI crude oil: Currently net long 316.9k, up 9.1k.
Having just about gone parabolic post-Christmas, with an intraday tag of $69.33 on December 26, West Texas Intermediate crude ran out of steam this Wednesday ticking $79.39. It still managed to rise 1.1 percent this week to $77.39/barrel. This was the fourth consecutive weekly increase.
The daily is itching to head lower. For months, the crude was rangebound between $71-$72 and $81-$82 before dropping out of it last September. The range was recaptured as soon as 2025 began. Now, the range top is drawing sellers.
The 200-day moving average, which was reclaimed six sessions ago after remaining under it for five months, lies at $75.19.
In the meantime, US crude production in the week to January 10 decreased 82,000 barrels per day week-over-week to 13.481 million b/d; output has come under pressure since registering a record 13.631 mb/d in the week to December 6. Crude imports, too, decreased 304,000 b/d to 6.1 mb/d. As did crude inventory which fell two million barrels to 412.7 million barrels. Stocks of gasoline and distillates, on the other hand, went the other way – respectively up 5.9 million barrels and 3.1 million barrels to 243.6 million barrels and 132 million barrels. Refinery utilization shrank 1.6 percentage points to 91.7 percent.
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NY Crude Oil Futures (CL) »» Weekly Summary Analysis
By: Marty Armstrong | January 18, 2025
NY Crude Oil Futures closed today at 7739 and is trading up about 7.90% for the year from last year's settlement of 7172. This price action here in January is reflecting that this has been still a bearish reactionary trend on the monthly level. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 7939 intraday and is still trading above that high of 7202.
Up to now, we still have only a 2 month reaction decline from the high established during October 2024. 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 2 years. 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. Pay attention to the Monthly level for any serious change in long-term trend ahead.
From a perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 7620 and overhead resistance forming above at 7751. The market is trading closer to the resistance level at this time.
On the weekly level, the last important high was established the week of January 13th at 7939, which was up 8 weeks from the low made back during the week of November 18th. So far, this week is trading within last week's range of 7939 to 7567. Nevertheless, the market is still trading downward more toward support than resistance. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 7939 made 0 week ago. Still, this market is within our trading envelope which spans between 6432 and 7790. The broader perspective, this current rally into the week of January 13th reaching 7939 has exceeded the previous high of 7288 made back during the week of November 4th.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend. Looking at this from a wider perspective, this market has been trading up for the past 8 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2024. 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 October 2024 at 7846. After a one month rally from the previous low of 6633, it made last high in October. Since this last high, the market has corrected for one months. However, this market is weak retesting important support last month. So far here in January, this market has held above last month's low of 6698 reaching 7179.
Some caution is necessary since the last high 7846 was important given we did obtain four sell signals from that event established during October 2024. That high was still lower than the previous high established at 8767 back during April 2024. This warns that the trend is weak moving forward. Nevertheless, at this time, the market is still holding and is trading above last month's high.
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Crude Oil Continues to See Choppiness
By: Christopher Lewis | January 17, 2025
• The crude oil market are a bit lower in the early hours of Friday, as we are a bit overextended at the moment in both the CL and the BZ contracts. However, I am still bullish of these markets and believe that the dips should continue to be bought.
WTI Crude Oil Technical Analysis
The Light Sweet Crude, or West Texas Intermediate Crude Oil Market has initially tried to rally during the Friday session, but it continues to see a little bit of noise around the $78.50 level. Quite frankly, this is a market that I think continues to see a lot of upward pressure, but a pullback is possible. I have two base case scenarios right now, one of which is that we fall a bit towards the $75 level where we’ll find more buyers.
The second one, of course, is that we just simply go sideways and work off some of this excess momentum. Either way, I have no interest in shorting the contract, and I do think that it is probably only a matter of time before we break out a bit higher. I expect choppy volatility, but I’m more or less in the camp of those willing to buy the dips for short-term opportunities.
Brent Crude Oil Technical Analysis
Brent markets look very much the same, although a little bit sloppier. The $82 level is a significant barrier that must be watched. The market breaking down below the $79.75 level could open up and move all the way down to $78, where I’d be really interested in buying some type of bounce. On the other hand, if we break out to the upside, we could go as high as $88 before it’s all said and done. We are a little overdone, but it is worth noting that the volume has picked up quite significantly in both of these contracts over the last week or so, showing real interest in crude oil. I am bullish. I just don’t want to pay at extremely high levels when pullbacks are offered.
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Get Blasted. The Energy Report
By: Phil Flynn | January 17, 2025
Are you going to get blasted? As America gets ready to celebrate the legacy of Martin Luther King Jr. and the inauguration of President J, Trump, most of America will get blasted! Of course I mean the potential for a dangerous arctic blast that is already driving the energy markets as they try to assess the risks of what will most likely be record breaking demand for heating fuels and also the potential risks of weather-related shortages.
How cold will it be and will it impact you? Fox Weather says that, ‘There’s no escaping this’. The FOX Forecast Center said temperatures will plummet as much as 45 degrees below average in spots, leading to below-zero temperatures across at least 20 states, from the Plains to the Great Lakes and interior Northeast. The potentially life-threatening cold is due to a disrupted polar vortex. The FOX Forecast Center said a lobe of the polar vortex will dip to the south and move into the U.S. this weekend and into next week. “These are the types of weather systems that even bring cold air to Florida,” Merwin said. “You know, there’s only maybe one or two times a year where we get a chunk of arctic air that really invades the country and gets all the way down to the Gulf Coast. This is one of those. So, if you’re a snowbird, you like to escape down to the South – there’s no escaping this. Everyone will feel it.”
Everyone will also feel the pain of higher heating bills. Not only are prices going higher but the amount you use in the month of January may be the most you have used since the 1970s.
Yet one place you might not get blasted is in the Red Sea. Why? The Trump Peace dividend. Trump’s warning to Hamas saying that there will be ‘hell to pay’ if Israeli hostages are not released by the time he returns to office on Jan. 20. Now it is reported at the Yemen-based Houthis signaled a pause in their months-long attacks on commercial ships following a ceasefire deal between Israel and Hamas. Thanks President Trump! Welcome back to the White House.
Still sanctions on Russia are causing tightness of supply in Europe, India and China as they scramble for supply. Biden’s has sanctions on 155 tankers active in the Russia crude trade.
Elizabeth MacDonald, host of the Evening Edit on the Fox Business Network, reported that, “LA firefighters are still battling an out of control an exceedingly dangerous, fire that broke out yesterday in Monterey County California at a lithium-ion battery storage facility needed for green technology, one of the largest lithium battery storage plants in the world. Evacuations ordered due to heavy, toxic metal smoke is pouring through the area.
Against this backdrop that crude oil setup looks very strong. As the February contract goes off the board, it’s very likely that the March contract will trade above $80.00 a barrel very shortly.
Natural gas has the potential to make an explosive move over the weekend. One of the things that we’ve seen ahead of these polar vortexes is that the market spikes up high when it reopens on Sunday night and backs off. We would expect this pattern to happen again assuming that the weather forecast do not change to warmer.
Yet as I have said before the key for the natural gas market may not be this polar vortex but what comes in February. If we are colder in February, the natural gas has only begun to get moving.
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Crude Oil Futures Backwardation Spike
By: Tom McClellan | January 16, 2025
Crude oil prices are showing at least a short term topping condition now, based on seeing the near month (February 2025) contract price well above that of January 2026. This produces the big spread that you see in this week's chart., which says that prices have become stretched to the upside.
Any futures contract represents 2 positions simultaneously, one long and one short, each held by different people. The short position holder is obligated to "deliver" the specified amount of the subject commodity at a time and place identified in the futures contract. For crude oil the delivery site is the giant oil storage facility in Cushing, Oklahoma. If the short position holder does not want to have to make delivery of the product there, then he has to find someone else to purchase that contract before it reaches the expiration date. The holder of the long side of that contract is similarly obligated to accept delivery at the specified location, or sell that contract before expiration to get out of that obligation.
In soft commodities like energy or grains (as opposed to gold or silver, for example), there can arise supply constraints affecting pricing of the near month contract in ways that we do not see in the more distant month contracts' pricing. Crude oil futures famously traded below zero in April 2020, as the Covid Crash and associated economic shutdown led to a sudden drop in oil consumption, and Cushing ended up filled to capacity. So the traders who were long crude oil and who could not find a place to store the oil that they had to take delivery of were suddenly in big trouble. That negative pricing did not extend to the other contracts, just the expiring one in April 2020.
That is not the condition we see now, as the current near month (Feb25) contract is priced at $78.77/barrel, but the Jan26 contract is at 69.73. There is a minor shortage of deliverable oil right now, and thus traders are scrambling to line up supplies they need to feed oil refineries. That makes the price of the near month contract go up, while these momentary supply issues do not have much of an impact on the farther out contracts.
This type of spread is known as "backwardation" because it is backwards from the normal circumstance of having farther out contracts priced higher. When that condition is in effect, it is referred to as "contango". If contango ever gets really large, the speculators can make money by purchasing crude oil in the spot market and arranging to store it somewhere, while selling distant futures contracts for a higher price. They get to profit from that difference in pricing, as long as it is big enough to cover the storage costs. At truly wild contango extremes, traders have even rented oil tankers and stored their oil at sea.
In the current condition, though, nobody is renting oil storage to sell their oil later, since the price is higher now than for the later contracts. The supply squeeze pushes up the near month price. When that push extends too far, you see an extreme like we have now, where the near month price is really far from the more distant months' contract prices. These episodes pretty reliably mark at least short term tops for oil prices, because they reveal an extreme which cannot continue itself very long. Whether it turns into a larger price top is not something that this spread alone will tell us; for that we have to turn to other factors. But this should produce at least a momentary top in oil prices.
For more on the topic of contango vs. backwardation, see this article from our web site's Learning Center:
https://www.mcoscillator.com/learning_center/kb/economic_relationships/contango_backwardation_in_oil_and_gold/
Tom McClellan
Editor, The McClellan Market Report
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EIA Natural Gas Storage Draw Of -258 Bcf Exceeds Estimates
By: Vladimir Zernov | January 16, 2025
Key Points:
• Working gas in storage decreased by -258 Bcf from the previous week.
• At current levels, stocks are 77 Bcf above the five-year average for this time of the year.
• The market continues to prepare for Arctic Blast, which will boost demand next week.
On January 16, 2025, EIA released its Weekly Natural Gas Storage Report. The report indicated that working gas in storage declined by -258 Bcf from the previous week, compared to analyst consensus of -255 Bcf. In the previous week, working gas in storage decreased by -40 Bcf.
More information in our economic calendar
At current levels, stocks are 111 Bcf less than last year and 77 Bcf above the five-year average for this time of the year.
Natural gas prices moved away from session highs as traders reacted to the report. The report indicated that cold weather boosted demand, and natural gas storage draw has mostly met analyst estimates.
As natural gas prices rallied in recent trading sessions, some traders bet on a larger inventory draw, so they may have been disappointed by the EIA data. Overall, the report was rather bullish as natural gas stocks declined well below the levels seen in the previous year. However, it should be noted that stocks stay above the five-year average for this time of the year.
Traders will also stay focused on weather forecasts as the market prepares for the Arctic Blast, which would boost demand for energy next week.
From the technical point of view, natural gas needs to settle above the $4.15 level to gain additional upside momentum in the near term. A move above $4.15 will push natural gas towards the resistance at $4.25 – $4.30.
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Seize the Day or Tanker Oil at $80.00. The Energy Report
By: Phil Flynn | January 16, 2025
Oil hits $80.00! The highest level since August as supplies tighten and CPI eases.
It also appears that the toughening of sanctions is starting to take a bite especially because Germany seizes a tanker that is allegedly part of the notorious ‘shadow fleet’ that helps the Russians avoid oil sanctions and those pesky price caps. Ok, now Germany says that they only rescued this illicit tanker because it was floating at low speeds in the Baltic Sea. It was a rescue of this poor distressed black-market ship. An act of mercy if you will.
Or maybe the Germans are saying it is a rescue to try to avoid further angering Vladimir Putin, who is already upset as Joe Biden finally got the guts to try to enforce energy sanctions on Russia The problem is that he is doing it on his way out the door and won’t have to weather the political fallout from the spike in global energy prices. What a guy. I know it’s hard to think of stuff like that when your busy trying to grab credit for a potential cease-fire agreement between Israel and Hamas but to his credit, he has the courage to let Donald Trump take the heat for the energy mess he left him.
President Trump doesn’t have the comfort of a robust Strategic Petroleum Reserve to back him up. Biden, as you know, not only depleted the reserve but also failed to live up to his empty promise to fill it back up Yet President Trump may have a plan to buy back better. Chris Wright, Donald Trump’s nominee for Energy Secretary, told Bloomberg the US is “quite likely” to refill the depleted Strategic Petroleum Reserve under the incoming administration.”
That means that the US will be in the market for about 160 million barrels of oil in the coming years and is another supportive factor for oil that is already facing an undersupplied market. A situation that was acknowledged by OPEC as they predicted that the global oil demand growth forecast for 2025 at 1.4 million barrels a day but the growth in oil production is only going to be 1.1 million barrels a day. And as I mentioned yesterday, there were a lot of people that were predicting that we would have an oil supply glut. Now the market is waking up to the reality that we have just the opposite.
We have been warning for months that the market has been too complacent about inventories that were too low and globally for products below the 10 year average. The market continued to bet that supplies were going to magically show up in the future. Now it is obvious that it never happened.
The market was also overestimating the demand drop in China. China continued to buy oil on the black market and even though their growth may have been disappointing, they were still consuming a lot of oil.
In India demand has shattered records and the growth in Indian demand it’s only going to get stronger in the next couple of months and years.
Now in the US we are seeing a heavy oil supply squeeze because of Biden’s sanctions. Bloomberg writes that, “Concerns that oil sanctions will curtail supplies from Russia and Iran are upending the oil market’s usual price patterns in the US Gulf Coast market, home to the country’s largest oil refining hub. The price of low-quality heavy oil, which usually trades at a discount to lighter Permian crude, is strengthening on fears of new sanctions.
Bloomberg is reporting that, “The price squeeze is so steep, Gulf Coast fuel makers make move to buy more light crude, according to market participants.”
While Bloomberg mentions Iran and that is partially true, the reality is that the heavy oil comes from Russia not Iran. Today it is being reported that the Trump team is making ready a sanctions plan for Russia deal & Iran squeeze.
Reports also say that India and China are looking for more Saudi crude oil after Russia sanctions.
Now add to the mix of wintry cold weather. It doesn’t appear that weather forecasters are backing off their predictions of a major Arctic cold blast and the key thing for this market may not be what happens during the Martin Luther King day holiday where temperatures are supposed to be the coldest in over a decade but what comes after that mixed weather forecasts about the month of February. It’s keeping the market on edge. If indeed we see the Arctic winter extended into February it will be a game changer for not only oil but natural gas. The potential for extreme upward movements in both oil and gas are very possible. This is what we’ve been talking about for a while. We hope that you put on your hedges.
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