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1 day ago
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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1 day ago
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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2 days ago
XLE (SPDR Energy Sector) Weekly Analysis
By: TrendSpider | January 17, 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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2 days ago
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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2 days ago
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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2 days ago
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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3 days ago
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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3 days ago
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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4 days ago
Crude Inventories Decline By 2 Million Barrels; WTI Oil Trades Near Session Highs
By: Vladimir Zernov | January 15, 2025
Key Points:
• Strategic Petroleum Reserve increased from 393.8 million barrels to 394.3 million barrels.
• Domestic oil production declined from 13.563 million bpd to 13.481 million bpd.
• WTI oil settled near the $81.00 level as traders reacted to the EIA report.
On January 15, 2025, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories declined by 2 million barrels from the previous week, compared to analyst consensus of -1.6 million barrels. At current levels, crude inventories are about 6% below the five-year average for this time of the year.
More information in our economic calendar
Total motor gasoline inventories increased by 5.9 million barrels from last week, compared to analyst forecast of +2.6 million barrels. Distillate fuel inventories grew by 3.1 million barrels.
Crude oil imports declined by 304,000 bpd, averaging 6.1 million bpd. Over the past four weeks, crude oil imports averaged 6.5 million bpd.
Strategic Petroleum Reserve increased from 393.8 million barrels to 394.3 million barrels as U.S. continued to buy oil for strategic reserves. Domestic oil production declined from 13.563 million bpd to 13.481 million bpd.
WTI oil settled near the $79.00 level as traders reacted to the EIA report. Falling domestic oil production may provide some support to oil markets, but traders may also focus on rising gasoline inventories. From a big picture point of view, traders continue to react to recent sanctions on the Russian oil industry, which have provided material support to oil markets.
Brent oil trades near the $81.00 level after the release of the EIA report.
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4 days ago
Where’s the Glut. The Energy Report
By: Phil Flynn | January 15, 2025
Where’s the glut? I think we were promised an oil glut, but it isn’t happening. In the latest Energy Information Administration (EIA) Short Term Energy outlook they reported that global oil demand is hitting records coming in at a whopping 104.65 million barrels of oil a day last month while global oil supplied was 103.25 million barrels a day. So, while I might not be a math major, I believe we can see that the bearish oil narratives that hurt oil prices after Labor Day, turned out not to be so!
Yet the EIA still says that US oil demand will remain steady at 20.5 million barrels per day (bpd) in 2025 and 2026, with domestic oil output rising to 13.55 million bpd, an increase from the previous forecast of 13.52 million bpd. I predict that the EIA will have to again raise their demand forecast. Not surprisingly the International Energy Agency (IEA) had to raise their oil demand growth forecast by 100.000 barrels a day to 940,000 barrels a day.
I think the key takeaway and the reason why oil has hit the highest levels since August is that the market is tight. And with the coming and current arctic weather it is more than likely to get tighter. This comes as the world wants to get tough on Russia. The Biden administration sanctioned two Russian oil companies this week, Gazprom Neft and Surgutneftegas, as well as 183 vessels in the Russian “shadow fleet”. They also accused the Eagle S Tanker, allegedly part of the Russian Shadow fleet, of sabotage damaging a Baltic Sea power cable that runs between Finland and Estonia.
Now Reuters reported that, “Six European Union countries on Monday called on the European Commission to lower the $60 per barrel price cap put on Russian oil by G7 countries, arguing it would reduce Moscow’s revenues to continue the war in Ukraine while not causing a market shock.” I think the real shock is that the EU thought that the price cap worked. Russian oil export revenues rose by $0.41 bn to $15.1 bn as product prices improved. On 10 January, the US government issued new sanctions intended to reduce revenues from the Russian oil sector.
Do you want a real shock? No risk of oil shocks. Saudi Energy Minister Abdulaziz bin Salman Al Saud seems to believe the world has moved beyond the risk of an oil shock! I know! He said that, “Today oil no longer poses an energy security challenge due to available storage, development of infrastructure, maturing supply chain, and more prolific production.” In other words he is saying that this time is different, the most dangerous phrase in all of economics.
First it was gas prices, then higher prices for electricity to charge your electric car, now they are coming for my natural gas car. The EIA reported that after a decade of nearly flat prices from 2011 to 2021, inflation-adjusted fuel prices for natural gas vehicles increased in 37 states from 2021 to 2023, according to new estimates in our State Energy Data System (SEDS). Real U.S. natural gas prices for vehicle fuel remained 25% below their peak in 2008.
Oil is still on a breakout mode it seems to be consolidating at the higher end of the range. We believe that we should target above $80.00 but keep in mind that we have to roll over to the March contract.
We saw a big surge again in the heating oil normal crack. And we saw reverse to upside on the volatile gasoline crack on reports that Colonial Pipeline had to shut down a line to investigate a leak. This comes as the IEA reported that, “Prices also got a boost as traders considered multiple supply risks. Near-term, weather-related shut-ins in North America could have a significant impact, with Cushing crude inventories at decade lows. Last winter, oil production in the United States and Canada plunged by more than 1.8 mb/d from December to January due to an Arctic cold snap. A smaller seasonal drop in supply is expected this year, as the prolific Permian Basin has so far been spared major weather impacts.
The IEA also warms that, “at the same time, there is heightened speculation that the incoming US administration will take a tougher stance on Iran’s oil exports, compounding the impact of US Treasury sanctions on Tehran. On 19 December, the US expanded sanctions on vessels transporting Iranian crude. The new sanctions on Iran’s shadow fleet now cover vessels that transported an average of over 500 kb/d of Iranian crude in 2024, nearly one-third of the country’s crude exports. While it is too early to fully quantify the potential impact from these new measures, some operators have reportedly already started to pull back from Iranian and Russian oil.
If decreases in supply from weather impacts, sanctions or other developments become substantial, oil stocks can quickly be drawn to meet operational requirements in the near term. Moreover, non-OPEC+ producers are expected to add another 1.5 mb/d of supply in 2025, the same as in 2024, led by the United States, Brazil, Guyana, Canada and Argentina. OPEC+ members have also been looking to unwind extra voluntary production cuts and could ramp up if needed. Those additions should cover both potential supply disruptions and expected demand growth.
Natural gas could be ready for another price spike. EBW Analytics says that, “critical weather shift for natural gas altered the character of January cold, with durable and long-lasting chilly anomalies flipping to an acute Arctic blast and January 20-21st forecast colder than Winter Storm Uri, Elliott or Heather.
Skyrocketing heating demand and deep freeze-offs could send Henry Hub spot prices shooting higher towards double digits. Traders racing to hedge near-term exposure are driving breathtaking immediate-term price volatility.
Eventually, the most-likely scenario suggests that sufficient storage, moderating weather, and rebuilding production could offer downside for gas.
Extreme conditions offer the potential for lasting ruptures, however—and traders may struggle to look past historic cold until evidence of moderating weather and returning production emerges. With freeze-offs possible into late January, confidence in softer prices is higher for the March contract than February.
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5 days ago
Crude Oil Breaks Resistance and Retains Strength
By: Bruce Powers | January 14, 2025
• Crude oil surged to 79.38, breaking resistance and confirming strength, but overbought signals suggest a possible pullback or consolidation before further gains.
Crude oil further tested resistance on Tuesday around the top boundary line of a large symmetrical triangle formation and the most recent swing high at 79.09. An upside breakout of that line triggered yesterday on the way to a new trend high of 79.38. Strength was then confirmed by a daily close above the line.
Today’s price action is likely to complete an inside day that was largely expressed above support of the line. It could be surmised that a daily close below the line is a little weaker than a close above it, but the trendline is only one guide and horizontal price levels can generally be more reliable as guides to supply and demand.
Gone Too Far, Too Fast?
Certainly, there is an argument to be made that the rally in crude oil has gone to far too fast and that it is extended and due for a price correction. The relative strength indicator (RSI) momentum oscillator has turned down following its highest overbought reading since the April peak last year. Nonetheless, there remain signs of short-term strength that could lead to a test of the next higher target at 80.30 before a bearish correction. That price completes a measured move as marked with rising purple arrows.
Drop Below 77.51 is Bearish
A decisive drop below today’s low of 77.51 shows weakness that could lead to a decline below Monday’s low of 77.30. A test of support around the 200-Day MA, currently at 75.61, would not be surprising at that point. Also, watch the prior high of 75.47 along with the 200-Day line.
Given the sharp advance recently in crude oil, a pullback or consolidation could be coming at any time. Potential support around the 20-Day MA is way down at 72.60. The fact that the price of crude is so far above the 20-Day line is another factor weighing on the possibility of higher prices in the near-term.
Watch 200-Day MA
A pullback to test support around the 200-Day line or another significant prior resistance area could help set the stage for a continuation of the developing bull run. Possibly, the advance continues following a relatively short rest as recent price action shows strong demand.
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5 days ago
Natural Gas Finds Support Amid Rising Trend Channels
By: Bruce Powers | January 14, 2025
• After finding support near 3.74, natural gas remains in a rising trend, with pivotal resistance and support levels shaping near-term price direction.
Natural gas pulled back to a low of 3.74 on Tuesday before finding support that was followed by an intraday rally. The highest traded price for the day was 4.06, which was a successful test of resistance around a top channel line (dashed) for a rising trend channel. The respective channel is the smaller of the two rising channels that are marked on the chart.
Key Support Shows at 3.67 to 3.64
A key support zone starts is indicated around the confluence of several indicators. It starts with the 50% retracement at 3.67 and includes the 20-Day MA around 3.66. However, the more significant price level is 3.64. That was the peak in 2023, and it created a lower swing high for the downtrend and subsequently led to a decline to the 2024 trend low of 1.52.
If natural gas can continue to trade above the bottom of the range at 3.64 it looks to have a good chance of retaining the near-term rising trend structure. Otherwise, a sustained decline below 3.64 heads to test support of the 50-Day MA at 3.29. If that level fails to lead to a bullish reversal, then 3.02 becomes a target, followed by the top boundary line for a large symmetrical triangle formation.
Bearish Candle on Monday
Both Monday’s rally and the prior swing high at 4.20 from December 30 found resistance around the top line of the larger trend channel (solid blue). Therefore, that top line continues to mark areas where resistance may be seen if natural gas is able to again strengthen and test recent highs. There is a pattern like a bearish wedge when considering the rising lower solid trendline that coincides with the January 3 swing low at 3.33. The top line of the wedge would be the dashed blue line connecting the 3.02 swing high.
Hit ABCD Target
It is interesting to note that Monday’s advance completed a rising ABCD pattern (purple) at 4.33 before strong resistance was encountered following the 4.37 high. A quick bearish intraday reversal and weak daily close followed. The ABCD pattern is measuring price symmetry of the two upswings in the pattern. The AB leg is the first leg up and the CD leg is the second. Once the two swings show the same appreciation in price, the potential for a pivot, resistance in this case, may improve.
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5 days ago
Tariff Wiggle Room. The Energy Report
By: Phil Flynn | January 14, 2025
As President Trump seems committed to putting tariffs on our trade partners, could there be some tariff wiggle room? Stocks are higher and oil is lower as there may be some tariff relief on the horizons or at least a slower process of enforcement.
Alberta Premier Danielle Smith said after meeting with President Trump they will be prepared for tariffs because she saw no sign that President Trump would backdown. Now comes a Bloomberg report that suggests that while that may be true, there may be a measured approach to enforcement.
Bloomberg reported that, ”Members of President-elect Donald Trump’s incoming economic team are discussing slowly ramping up tariffs month by month, a gradual approach aimed at boosting negotiating leverage while helping avoid a spike in inflation, according to people familiar with the matter.
One idea involves a schedule of graduated tariffs increasing by about 2% to 5% a month and would rely on executive authorities under the International Emergency Economic Powers Act. The proposal is in its early stages and has not yet been presented to Trump, the people said — a sign that a monthly stepped approach is early in the deliberation process.
Regardless of the tariff situation, Canada and Alberta are very excited that Donald Trump is in office. In fact they are looking at a new golden age of Canadian oil. Canadian oil companies are looking at plans to build pipelines. But even here in the US because of the expected increase in U.S. oil production, companies are getting excited.
Last week Bloomberg reported that Enbridge Inc. is devising plans to rapidly boost capacity on its US oil pipeline system if the incoming Trump administration succeeds in kicking off a drilling boom. The company sees an opportunity to move “several hundred thousand” more barrels of oil a day within the US in the next two to three years, largely through optimizing its existing system with techniques like looped sections and drag-reducing agents, Chief Executive Officer Greg Ebel said in an interview Friday.
At least someone at the New York Fed believes in the Trump ‘Drill baby Drill’ philosophy. The New York Fed is predicting that the December year-ahead expected gas price down to the lowest since September 2022.
The incoming Trump administration has also given us a peace dividend. The Wall Street Journal reports that, “Israel and Hamas are finalizing the terms of a cease-fire deal that could be announced as soon as Tuesday, Arab and Israeli officials said, raising hopes of an agreement that would at least pause the fighting in the Gaza Strip and free some of the hostages held there. Negotiators—including Steve Witkoff, President-elect Donald Trump’s designated Middle East envoy, along with officials from the U.S., Israel and Arab countries—were meeting midday in Doha, Qatar, to finalize a draft of a deal, said the Arab officials, who are helping to mediate the talks. The parties have agreed to the bigger points of the deal but were still working on some of the language, the Arab and Israeli officials said. Talks could fall apart as they have before reaching the finish line in previous rounds of negotiations, both sides warned according to the Journal.
Yet while ‘drill baby drill’ gives us a bright energy future in the short term, we still must deal with the short sightedness of the energy transition shortages.
Supply tightness here in the US and a possible squeeze play because of the lower inventories at the Cushing, OK delivery point are giving a very bullish market setup. The supply squeeze is becoming more apparent as The Energy Report has been warning for months that the prediction of a supply surplus in the oil market was wishful thinking. The International Energy Agency (IEA) continues to double down on this potential supply surplus but instead we have a supply deficit.
Today we’ll get the Short-Term Energy Outlook from the Energy Information Administration (EIA) at 11am Central. We will see if they adjust their numbers to catch up with the current realities.
Tougher sanctions on Russia by the Biden administration is also causing a scramble for supplies overseas. Biden now sees rising oil prices as Trump’s problem.
Energy Intelligence reports that the sanctions announced on Friday by Washington look damaging to India, the biggest buyer of seaborne Russian crude oil. Measures by the outgoing US Biden administration may affect up to half of India’s recent imports from Russia.
These averaged 1.67 million barrels per day in the three months to December, data from the analytical firm Kpler shows. The sanctions will also affect some 70 tankers that have delivered Russian oil to India. In addition, sanctions on two key Russian insurers, which cover nearly all Russian oil flowing to India today, have left refiners scrambling for options, according to highly placed refining sources and ship tracking data.
Combined, the measures could see Indian refiners incur additional costs of $6-$10 per barrel by tapping Mideast Gulf crude, refining officials say. The sanctions variously take effect after unwinding periods to Feb. 27 and Mar. 12.
Yet across the globe there are more signs that energy transition failures are becoming apparent to some of the top oil executives and gas executives and even to politicians. The green energy transition fantasy is not good for business. This experiment in politically driven decisions and energy are coming to an end and that’s going to be good news for the poor and middle class that bear the burden of this energy transition fiasco.
Jvier Blass at Bloomberg warns that, “Germany is going to weather (no pun intended) a week-long Dunkelflaute, with wind generation expected to drop below 10 GW for several days. It’s going to force the country to rely more heavily on fossil fuel fired power stations (coal, gas, and even oil) plus imports.”
Natural gas had a huge surge in the cold weather but came back down. Natural gas is going to be up and down on the waves. As we get different waves of Arctic blasts in the coming weeks the swings will be dramatic, but we do expect to see a big upsurge of natural gas when we get closer to the weather event and potentially see major natural gas withdrawals over the next three weeks, close to 200 and 300 BCF’s consecutively.
Still, because of the potential for a warmup before the next Arctic blast, there’s going to be some high volatility.
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6 days ago
Natural Gas Failed Breakout Signals Bearish Shift
By: Bruce Powers | January 13, 2025
• Despite a bullish breakout above 4.20, natural gas faced strong resistance and sellers regained control, indicating potential for further downside towards the 2023 swing high at 3.64.
Natural gas hit a new trend high of 4.37 on Monday before sellers took back control and drove it lower. A rise above 4.20 triggered a bull breakout and showed strength. But, at the time of this writing, sellers remain in control with trading continuing near the lows of the day, which was 3.845.
This puts natural gas in a position to possibly close the day below the 4.20 level and indicate a bearish reversal day and likely failure of the bullish breakout. Therefore, it could lead to a deeper pullback or consolidation. In addition, the day looks likely to end in a weak position, in the lower third of the day’s price range.
Bearish Reaction May Continue
Certainly, today’s bearish reaction to new highs seems to lower the chance for a new trend high in the short term. At least until after there is a test of lower support levels. There are a few things to be aware of. Notice that resistance was seen around the confluence of several technical price targets, beginning with 4.33. A rising ABCD pattern (purple) reached its initial target from the pattern and therefore identified a possible pivot level. So far, the market reaction confirms this.
Upside Target Reached
In addition, to completing a target for the ABCD pattern today, a breakout above the top trendline of a rising channel also triggered on the way to 4.37. Resistance was seen around that line on the most recent swing high of 4.20. So, today’s price action shows a failed breakout of the channel. Once a failure occurs, the possibility of a swing in the other direction increases. That is what is being shown so far.
Key Support Anchored by 20-Day MA
The first lower trend support area is around the 20-Day MA, now at 3.62, along with an internal uptrend line. Moreover, the 20-Day line can be combined with the 50% retracement at 3.67 and the 2023 swing high of 3.64. The 2023 high has some significance and therefore a solid chance of being tested as support during a correction. Having the 20-Day line and 50% retracement nearby increases the chance for signs of support.
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6 days ago
Crude Oil Continues to Show Strength
By: Christopher Lewis | January 13, 2025
• The crude oil markets continue to see buyers on Monday, as we are now pressuring the significant ceiling in the market, and as a result, this is a scenario where I think a pullback might be necessary.
WTI Crude Oil Technical Analysis
The crude oil markets rallied again during the course of the early hours on Monday as the West Texas Intermediate crude oil markets reached the $78.50 level, an area that has been somewhat resistant. When you look at the chart, it does make a certain amount of sense that the bullish traders continue to look at this W pattern as a signal that we might go higher.
Short-term pullbacks are most certainly possible in this area though, as we are a little overstretched, but I look at those pullbacks as buying opportunities and perhaps an attempt to build up the necessary inertia to break out. The 200-day EMA is sitting right around the $74 level and should offer significant support. And that assumes that we can get anywhere near there, which I don’t know that we will.
Brent Crude Oil Technical Analysis
Brent markets have pierced the $80 level and you’ll notice on the chart that I have a line at not only $80, but also $81, because there is a zone of resistance. At this point, we are stretching to try to get through the last vestiges of resistance. And I think a lot of damage has been done to the selling pressure there. But whether or not we’re ready to break out remains to be seen.
This looks like a market that probably pulls back, but that should offer a bit of value. The 200-day EMA is right around the $77.80 level. So, I think that could be a certain amount of dynamic support as well. I’d be looking to buy dips. I do think crude oil is going to be a big story in the first half of 2025, and there’s nothing on this chart that suggests I’m wrong so far.
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6 days ago
Cold Sanctions. The Energy Report
By: Phil Flynn | January 13, 2025
Now suddenly Joe Biden, on his way out the door, wants to put sanctions on Russia and enforce them. The timeline of this does seem to want to create more difficulties for incoming President Trump. The U.S. Treasury on Friday imposed sanctions on Russian oil producers Gazprom Neft (SIBN.MM), opens new tab and Surgutneftegaz, as well as on 183 vessels that have shipped Russian oil. Buyers of oil in China and India are scrambling to secure supply ahead of sanctions. And it is leading to the possibility of economically damaging energy price spikes that could have been avoided.
Bloomberg is warning that, “The world is bracing for a fight for natural gas supplies this year, prolonging the pain of higher bills for consumers and factories in energy-hungry Europe and putting poorer emerging countries from Asia to South America at risk of getting priced out of the market.
This comes as the United States is facing a major Arctic blast hitting the country at a time where supplies are below average in every category. Crude oil is down, 6% below the five-year average, gasoline 1% below the five year and distillate 4% below the five-year average for this time of year.
Add to that the energy crisis in California and the heartbreaking and avoidable losses that we are seeing along Los Angeles Add to that a depleted Strategic Petroleum Reserve (SPR) that is going to create a situation that is going to make it very difficult for President Trump to keep prices low as he heads into office.
According to reports an Indian government official believes that OPEC may tap into some of their spare capacity to help keep prices down.
Natural gas prices are also surging on the cold weather. It’s not just here in the US but around the globe. Bloomberg is warning that, “The world is bracing for a fight for natural gas supplies this year, prolonging the pain of higher bills for consumers and factories in energy-hungry Europe and putting poorer emerging countries from Asia to South America at risk of getting priced out of the market.”
Again, the result of the energy transition fantasy is that the poor countries get priced out of energy and food. The energy transition is a scam that has been inflationary and it has hurt the poor and the middle class.
In California Reuters Reported that – Pipeline operator Kinder Morgan Inc (KMI.N), said that two of its fuel pipelines in Los Angeles have been shut since Jan. 8 due to power outages, as the most destructive wildfires in the city’s history continued to burn uncontained on Thursday. The company said the 515-mile (828.8 km) SFPP West pipeline and 566-mile CALNEV pipelines are not directly impacted by the fires, and it expects them to resume service once power has been restored.
With all these factors at play we’re going to see some extreme volatility over the next couple of days. That is one of the reasons that we continue to warn people to be hedged going into this winter even as prices plummeted after Labor Day, we felt that the long term outlook was extremely bullish eventually supply and demand start to rule the day and the computers stand by the wayside.
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1 week ago
NY Crude Oil Futures (CL) »» Weekly Summary Analysis
By: Marty Armstrong | January 11, 2025
NY Crude Oil Futures closed today at 7657 and is trading up about 6.76% 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 7786 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.
Focusing on our perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains moderately bullish currently with underlying support beginning at 7453.
On the weekly level, the last important high was established the week of January 6th at 7786, which was up 7 weeks from the low made back during the week of November 18th. So far, this week is trading within last week's range of 7786 to 7284. Nevertheless, the market is still trading upward more toward resistance than support. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 7786 made 0 week ago. Still, this market is within our trading envelope which spans between 6372 and 7716. The broader perspective, this current rally into the week of January 6th reaching 7786 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 7 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.
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1 week ago
Natural Gas Eyes Highest Weekly Closing Price in 25 Months
By: Bruce Powers | January 10, 2025
• With a potential highest weekly close since 2022, natural gas maintains a bullish trajectory supported by strong price structures and broader trend patterns. Nonetheless, potential resistance is close by.
Natural gas continued to strengthen on Friday following the breakout above the recent trend high of 3.74 (B). It established a new higher daily high of 4.02 and a higher low of 3.69. The day looks likely to end above the 3.74 high and in a bullish position in the top third of the day’s price range. If demand remains strong into the close, natural gas may end at its highest weekly closing price since December 2022. That would be a bullish sign.
Strong Weekly Performance
Nevertheless, the current rally is occurring inside last week’s price range. It shows a long red candle with a weak close near the lows of the week. This week’s bullish price action counters some of last week’s bearish price action and shows strength. But since an inside week is a form of consolidation on that time scale, trading could proceed in a choppy fashion for a while longer. At least that seems to be a risk. A new weekly high closing price this week will go a long way towards further confirming bullish daily signals.
4.20 High May be Challenged
The price structure of higher swing highs and higher swing lows remains intact for the bull trend. Recent bullish signals indicate a possible challenge to resistance around the current trend high of 4.20. If upward momentum can be maintained, then the 4.20 high could be exceeded. A rising parallel trend channel defines the vibration of price in the larger bull trend that began from the 2024 low of 1.55.
The current shorter-term uptrend, that began from the October swing low, defines a smaller internal trend within a large uptrend price pattern. Since support was successfully tested around the internal uptrend line and 20-Day MA, the road may be clear for the larger bullish pattern to exert its influence. However, gold could go to a new trend high yet still find resistance around the top channel line.
Long-Term Patterns are Bullish
In the big picture, gold triggered another bullish reversal of the long-term downtrend on a rally above the October 2023 swing high of 3.64 recently. That breakout followed an earlier bull breakout of a large symmetrical triangle pattern. So, the current short-term advance is supported by the larger bullish price patterns.
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1 week ago
Fire Cold Rebuild. The Energy Report
By: Phil Flynn | January 10, 2025
Oil prices, natural gas prices, as well as other commodities are surging this morning and fundamentals becoming more obviously bullish and the fact that it’s going to take a lot of demand for a lot of commodities to rebuild devastated California. Lumber and copper and other communities are getting prepared for a surge of demand. Oil is worried about meeting record demand against what is going to be the coldest January in 11 years and that is leading to surging heating oil crack spreads as well as a surge in other oil products around the globe. Refiners have to worry about the power outages and pipeline freezing. Producers must worry about ice crystals that can shut down the extraction of hydrocarbons.
Reports of massive buying by India China and other countries ahead of what could be sanctions coming down on both Iran and Russia and Venezuela after the President Trump inauguration. Snow in Texas and concerns about freezing off gas wells in refineries that are trying to prepare for this cold blast or hunkering down as prices surge. Now the markets must face up to the reality of oil supplies that are below average in almost all depositories around the globe.
Bloomberg Reported that this week, two Indian state refiners bought up to 6 million barrels of Oman and Abu Dhabi’s Murban crude for prompt loading in February attributed the purchases to a shortfall of Russian spot cargoes.
Chinese buyers, including state-owned Unipec, as well as private refiners in Shandong, lifted imports of Angolan. Traders also said a local processor picked up prompt supplies of Abu Dhabi oil.
Bloomberg Says that the surge in buying interest from Indian and Chinese buyers has stemmed not only from fewer and pricier offers of Urals, ESPO and Iranian Light crude, but also from fears of more sanctions on tankers used to transport these cargoes and the implications on refiners and others in the supply chain, traders said. The outgoing Biden officials have added to restrictions on tankers and pledged to take a tougher stance on Russia.
President trump of course also is talking tough with Canada saying we don’t have anything that they need except for oil. Reuters reported that U.S. crude oil imports from Canada rose last week to the highest on record, data from the U.S. Energy Information Administration (EIA) showed on Wednesday, ahead of incoming U.S. president Donald Trump’s plans to levy a 25% tariff on Canadian imports.
Many U.S. oil refiners, especially in the Midwest, are geared specifically to run heavier crude oil grades sourced from Canada.
Another sign of strong energy demand came in the form of Ethanol. Quantum Commodity Intelligence, that US ethanol exports rose to a seven-month high in November as flows to Europe more than doubled to a five-month high and the flow to Asia hit a two-and-a-half-year peak, according to the latest customs data. Total exports of denatured and undenatured ethanol were reported at 728,823 cubic meters in November, up 32% from the previous month and 62% higher compared to November 2023.
In remember the surge in prices came after the EIA signaled that they had been underestimating demand and overestimating production. The energy report
We here at the energy report have been warning for some time that we were concerned that the market is too complacent with relatively tight supplies. That’s why we’ve been recommending to be hedged for this type of situation.
Its Algo a-go- go. Let’s give a cheer for the humans! Humans win algo’s loose!
There have been a lot of complaints about algo traders in the crude oil market. Some complain they distort the market or jump in with a massive number of contracts on dubious headlines and some claim they reduce real liquidity.
Far be it be from me to support those complaints, but I must admit I rolled my eyes at some oil moves that seemed to come out of nowhere. I admit I have been frustrated at times with the crazy moves that have been driven by computers and not humans.
Regardless, I have been around long enough to see how many trading systems have come and gone over the year and now perhaps the algo traders may have finally played out their hand.
Instead of printing money like they had for most of the last decade or so, now it seems they are on the losing end. What’s more they are reducing their exposure to the oil market.
Bloomberg News pointed out that algorithmic traders are pulling back from the commodity markets after the second successive years of losses.
Bloomberg citing data from the Bridgeton Research group that provides analytics on computer generated trades. In fact, it seems that humans beat computers for the second year in a row. Go humans!!!
“With losses mounting, some of these firms are already reducing their exposure in crude oil, diminishing their impact on a market in which they had amassed a formidable presence in recent years. This could help traders who focus more on supply and demand balances return to the driver’s seat and normalize daily price moves in the futures market.” (Supply and demand, hmm, an interesting concept for a market)
Bloomberg quoted CIBC saying that “Humans did have more success in 2024 than algos, which is different than the last couple of years,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group.
CTAs are estimated to have reduced the weight of crude in their portfolios to just 2% compared with 4% in July 2024, softening their impact on market movements and reducing their share of open interest, Babin said.
And we’re hearing more talk from other algo traders that are going to reduce their exposure to the crude oil so maybe they will find some other market to pick on. So, beware humans. An algo system may be looking at your market!
Natural gas is surging as well on the cold weather forecast the possibility of a squeeze is real further out February it’s going to be critical for this market if we find out that February repeats January as far as demand, we could see natural gas prices double.
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1 week ago
Crude Prices Surge as Supply Risks Drive Bullish Momentum
By: James Hyerczyk | January 10, 2025
Key Points:
• Crude oil prices rally on 200-day moving average breakout, with traders eyeing targets at $77.36 and $81 for further gains.
• Oil prices rise for a third week, overcoming a stronger dollar as inflation concerns keep crude in demand.
• Harsh winters in the U.S. and Europe drive heating fuel demand, lifting global oil consumption by 1.6M bpd in Q1 2025.
• Biden’s anticipated sanctions on Russia and Iran raise supply risks, focusing on Russia’s vital oil industry.
• Brent’s front-month premium hits multi-month highs, signaling tight supply as weather-driven demand surges.
Crude Oil Prices Surge on Supply Risks and Winter Demand
Daily Light Crude Oil Futures
Crude oil futures posted strong gains on Friday, extending their rally to a third consecutive week. Prices found fresh momentum after crossing the 200-day moving average at $72.34 on January 2, with traders eyeing potential resistance levels at $77.36, $79.61, and $81.33 as bullish sentiment gains traction.
At 11:40 GMT, Light Crude Oil futures are trading $76.15, up $2.23 or +3.02%.
Sanctions on Russia and Iran Drive Supply Concerns
Market attention remains focused on the potential for tighter sanctions targeting Russia and Iran, which could significantly disrupt global oil supply. U.S. President Joe Biden is expected to announce new measures against Russia’s economy, heightening the risk of supply constraints. A primary focus has been on Russia’s oil industry, which has already faced restrictions in response to its involvement in the Ukraine conflict.
Ole Hansen, head of commodity strategy at Saxo Bank, emphasized the significance of sanctions, stating, “Longer term, the market is focused on the prospect of additional sanctions.” With inventories remaining tight, traders are increasingly positioning for further supply pressures.
Cold Weather Spurs Heating Fuel Demand
Harsh winter conditions in the United States and Europe are contributing to increased demand for heating fuels. The U.S. weather bureau has forecast below-average temperatures in central and eastern regions, while Europe continues to experience colder-than-normal conditions.
Analysts at JPMorgan project a global oil demand increase of 1.6 million barrels per day in the first quarter of 2025, driven by heightened consumption of heating oil, kerosene, and LPG. At the same time, the widening premium on front-month Brent contracts over six-month contracts points to tightening supplies, further supporting higher prices.
Rally Persists Despite Stronger U.S. Dollar
Crude prices have defied the strengthening U.S. dollar, which typically weighs on dollar-denominated commodities. The dollar has strengthened for six consecutive weeks, but inflation concerns and the threat of additional tariffs have bolstered oil’s appeal as a hedge against rising prices.
Optimism around China’s economic stimulus measures has also supported the market, with expectations of improved demand from the world’s second-largest oil consumer adding to the bullish sentiment.
Bullish Oil Prices Forecast on Firm Fundamentals
With supply risks intensifying and seasonal demand strengthening, crude oil prices appear positioned for further gains. The combination of geopolitical tensions, tightening inventories, and robust winter fuel demand suggests a bullish outlook in the short term. Key resistance levels at $77.36 and beyond could be tested, underscoring the continued upward momentum in oil markets.
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2 weeks ago
Natural Gas Trendline Support Amid Signs of Weakness
By: Bruce Powers | January 8, 2025
• Despite weakness on Tuesday, natural gas rallied Wednesday, retaining support at 3.43. A decisive move above 3.74 could confirm bullish momentum continuation. Otherwise, the 3.43 is at risk.
Despite signs of weakness recently in natural gas, it managed to retest and hold support around a trendline and the 20-Day MA on Wednesday and rally. The trendline is being watched to identify a dynamic price area where support for the trend might be seen. It is combined with other indicators. On Tuesday, natural gas dropped below the 20-Day MA, which it has done more than a few times during the advance. But then it closed below it, a sign of weakness. The 20-Day MA is currently at 3.54.
Signs of Weakening
That was the second day since the 20-Day MA was reclaimed on October 29 that there has been a daily close below the 20-Day line. The first was three days ago, which generated a higher swing low (B). In addition, Tuesday’s bearish reversal day generated a lower swing high (C). These are signs of weakening that might lead to something or not.
Support at 3.43 and Resistance at 3.74
Support was successfully tested again today around the trendline and the price area showed support. Thereafter, buyers took back control shortly after the opening on Wednesday. Natural gas is on track to close strong, in the upper third of the day’s price range, at the time of this writing. It continues to trade near the high, which was 3.68. The low for the day is 3.43, a match with Tuesday.
Therefore, 3.43 provides a specific price support level to watch, which is needed to confirm price behavior around the trendline. A drop below 3.43 would follow another decline below the 20-Day MA, which is now at 3.54, and the trendline. This leaves 3.43 as a key short-term price level, as a drop below it may lead to a continuation of the bearish trend with a drop below the recent swing low at (B).
Bullish on Rise Above 3.74
On the upside, a lower swing high was generated yesterday following the day’s high of 3.74. Subsequently, sellers took back control, leading to a bearish reversal day and a weak close near the lows of the day and the trendline. Natural gas remains at risk of further downside unless there is a decisive advance above 3.74. That would trigger a bullish trend continuation signal and eliminate the lower swing high.
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2 weeks ago
National Economic Emergency. The Energy Report
By: Phil Flynn | January 8, 2025
Oil prices surged above $75 for the first time since October based on strong supply and demand fundamentals. Not only are we seeing cold weather demand around the globe but also strong US manufacturing data from the ISM is suggesting strong energy demand for manufacturing.
This comes as we are seeing signs of strong compliance by OPEC and Its favorite co-conspirator Russia with production cuts and a potential drop in Iranian oil exports as market players are fearing sanction enforcement by the incoming Trump Administration.
Yet oil pulled back from the $75 area as reports surfaced that President Trump is considering a national economic emergency declaration to allow for new tariff program.And what we found after the discredited Washington Post story that President Trump was going to go easy on sanctions that sanctions are be bullish for the dollar.
This report came from CNN and caused the dollar to surge and caused a backdrop of the oil, but oil might not be able to ignore the bullish fundamentals even with the rising dollar.
Still. President Trump’s quest to reduce energy prices may come with the help of a stronger dollar. In fact if it weren’t for the dollar oil it would probably be trading at $85 instead of $75.
The American Petroleum Institute (API) seemed to slow down the momentum a little bit for a product after reporting big builds and diesel and gasoline but a big drawdown in oil. API reported that Crude oil inventory fell by 4.022 led by a huge 3.115 million barrels drop in the Cushing Oklahoma delivery point.
Yet there was a massive 7.331 million barrels increase in gasoline supply and a 3.201 increase in distillate inventories raised eyebrows.
The gasoline crack spread fell apart in part because of the API report but it also concerns that this coming Arctic blast and snowstorm will reduce the demand for gasoline as people get snowed in. Yet the heating oil crack is staying strong as the demand to stay warm is going to be incredible.
Reuters reported that OPEC oil production likely fell in December, based on a survey that suggested the UAE saw the largest decline in output due to field maintenance.
That reduced the country’s output by some 90,000 bpd, contributing to an OPEC-wide monthly decline of 50,000 bpd, as it offset production gains elsewhere. Iran’s output also fell, the survey suggested, by 70,000 bpd. Russia, meanwhile, also reported lower production numbers for December, with the daily average at 8.971 million barrels daily, which was below the level agreed with OPECs + as part of the production control deal.
Reuters also reported that Iran is pushing to recoup 25 million barrels of oil from China that has been stuck for six years in Chinese ports due to sanctions imposed by then-U.S. President Donald Trump, three Iranian and one Chinese source familiar with the matter said. Trump is returning to power on Jan. 20, and analysts say he is expected to tighten sanctions again on Iranian oil exports to limit Tehran’s income, as he did during his first term as president.
Natural gas after a big surge yesterday pulled back and traders tried to assess the weather forecasts.
At first many forecasters were saying that after the cold waves in January that we would see some relief in February.
Yet some forecasters know they are flipping those forecasts from warmer to colder in February. That came as natural gas bounced off support that should signal a retest of recent highs.
A real old-fashioned winter means that complacency and the natural gas that we have seen over recent years can disappear quite quickly.
As we have seen many times in commodity markets when we think that supplies are insurmountable then all of a sudden record demand changes the equation low prices can cure low prices but in the natural gas market low prices record demand and the potential for one of the coldest winters that we’ve seen in years is creating this situation that could cause a potential major price spike in natural gas.
EBW Analytics says that “the February natural gas contract volatility remains elevated with price moves of at least 24.5¢/MMBtu in each of the past three trading sessions.
EBW says that while very cold weather is durable and production freeze-offs on the high end of expectations, January physical market strength may not translate to February risk premiums. Thay say that natural gas production freeze-offs near 6 Bcf/d may still deepen further as the Marcellus flirts with single-digit temperatures Thursday. Repeated, enormous weekly withdrawals can still drive January towards a record monthly storage draw.
EBW says that ll, weather appears likely to shift into a milder pattern into early February—depriving the NYMEX front-month contract of the high demand/supply freeze-off combination necessary to drive contract deliverability premiums higher. Eventually, while steep January cold may lop off long-term storage surpluses, spring NYMEX contracts may see downside over the next 30-45 days as supply strength overshadows demand to suggest bearish leanings into spring.
Yet not so fast. Accu weather is saying that according to their latest forecasts that February temperatures will stay below normal.
If that the case, you may need to start buying later dated options as well.
Oil Price Is reporting that the state of Alaska is suing the Biden Administration over the federal government’s decision to severely restrict acreage in an upcoming oil and gas lease sale, seen as a violation of a Congress mandate.
The state argues in a complaint that the Biden Administration’s decision to offer the minimum possible amount of land in the mandatory lease sale for the Arctic National Wildlife Refuge violates Congress’ express call for oil and gas leasing and development on the Coastal Plain.
Moreover, Alaska’s Department of Law says that the new severe restrictions on surface use and occupancy “likely make any development economically and practically impossible.”
We are praying for California.
Fox Weather is reporting that A state of emergency has been declared in Southern California as fierce wildfires fueled by powerful Santa Ana winds continue to rage. Thousands of residents have been forced to evacuate their homes as flames tear through coastal communities, including Santa Monica and Malibu. Three major wildfires – Palisades, Eaton and Hurst fires – are currently burning out of control, driven by one of the strongest Santa Ana wind events in over a decade..
Weather is driving energy markets.
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2 weeks ago
Crude Oil Strengthens as Buyers Challenge Key Resistance Levels
By: Bruce Powers | January 7, 2025
• Crude oil builds bullish momentum, challenging resistance near 76.47 as strong demand drives prices higher, but resistance at the 200-Day MA may limit gains.
Crude oil showed strength on Tuesday as it continued to challenge a resistance zone that includes an internal downtrend line. This follows a bearish candlestick pattern from Monday, including a close near the lows of the day. Following a quick drop below yesterday’s low early in today’s session, buyers stepped up and pushed crude higher to 74.70, at the time of this writing.
It is on track to close strong, near the top third of the day’s range, and possibly at the highest daily closing price for the current advance. Despite Monday’s bearish candle, today’s price action shows demand remains strong for crude oil. Whether that translates into higher prices remains to be seen.
Strength Returns
A continuation of the rally will be signaled on a move above yesterday’s high of 75.19. However, there is another potential resistance zone a little higher from around 75.78 to 76.47. It is important to recognize that the potential resistance zone is a confluence zone that includes the 200-Day MA at 75.85 and the 78.6% retracement level at 76.57.
Further, the 200-Day line has recently converged with the bottom boundary line of a large symmetrical triangle pattern. It is interesting that the rising trendline and 200-Day line have converged now that crude is approaching that price zone. This could represent more significant resistance than what has been seen so far during the rally since the lines have lined up.
Strong Momentum
Momentum, as shown in the relative strength index (RSI) oscillator can also be considered. Note that the indicator has reached its highest reading since April last year and it has not yet gone into overbought territory, above 70. This shows strength in demand and provides supporting evidence for further strengthening. A rise above a 70 reading will put the indicator into overbought territory as the price of crude oil is approaching the next higher resistance zone. Notice that that last overbought readings were in April 2024.
Support at Day’s Low of 73.29
Despite the above potential bullish short-term thesis, resistance may continue to stop the ascent near current prices and lead to a pullback. In that scenario a decline below today’s low of 73.29 is a sign of weakness. Key price levels to watch for support would then include the interim swing high at 71.79 and the 20-Day MA, now at 70.94.
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2 weeks ago
Natural Gas Declines Below Key Levels, Bears Regain Control
By: Bruce Powers | January 7, 2025
• Natural gas reverses Monday’s gains, dropping below the 20-Day MA and signaling bearish momentum with critical support levels at risk of breaking.
Natural gas failed to progress higher on Tuesday following Monday’s gains and a daily bullish reversal signal. Instead, it retreated following a brief minor advance to 3.74 before encountering resistance. Sellers then took back control and drove the price down. The subsequent decline took natural gas below Monday’s low and the 20-Day MA, now at 3.52. At the time of this writing, it continues to trade below the 20-Day line and near the lows of the day. The low for the day currently was 3.43. That is right around potential support as represented by the internal rising trend line. However, it is showing signs of breaking.
Bearish Reversal Triggers
The decline today triggered a bearish daily reversal on a drop below yesterday’s low of 3.50. And it sets up a potential continuation move to the downside as today’s high generated a lower swing high. Of course, follow through will be key. Note that natural gas may end the day below the 20-Day MA for only the second time since the 20-Day line was reclaimed in October. The first time was Friday. That information combined with today’s bearish reversal shows declining demand for natural gas and sellers getting more aggressive.
Between 3.74 and 3.33
The two key near-term price levels for natural gas are today’s high at 3.74, also a swing high, and last Friday’s low at 3.33, also a swing low. A rise above the 3.74 swing high would trigger a bullish reversal and show strength that may grow. Until then it looks like price behavior may be signaling a deeper correction. A drop below today’s low signals a weakness, with a bearish trend continuation signal generated on a drop below last week’s low of 3.33.
Deeper Correction Possible
Having said that, the recent trend high of 4.20 did reach a potential target zone that included the top channel line of a rising trend. Sellers clearly took back control from there leading to the first leg down (AB) from the top. It was followed by a two-day advance (BC) that likely ended today. This puts natural gas in prime position to keep falling. However, support levels noted above need to be broken first. As of today, the bearish correction has moved into the second leg down in a declining ABCD pattern.
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2 weeks ago
Crude Oil Continues to Look Upward
By: Christopher Lewis | January 7, 2025
• The oil markets are both rallying in the early hours of Tuesday, as we continue to hang about the 200 Day EMA. At this point, it looks like the oil markets continue to see a lot of bullish behavior.
WTI Crude Oil Technical Analysis
The West Texas Intermediate Crude Oil Market rallied just a bit during the early hours on Tuesday as we continued to dance around the 200-day EMA. If we can take out the shooting star from the Monday session, I think that’s a very bullish sign. I do think we will eventually break higher than that, but we may have a little work to do right around this area, just above the $72.50 level as we head into the jobs number.
Remember, oil started rallying at the end of last year, and I think this is a reaction to inflationary pressures and the potential for some kind of resurgence of the U.S. economy, because quite frankly, the West Texas Intermediate Crude Oil Market is pretty much U.S. based. If we do drop from here, I think there’s support all the way down to the 50-day EMA. If we break out to the upside, I believe we’re going to see $80 sometime between now and the end of spring.
Brent Crude Oil Technical Analysis
The Brent Market, of course, has done very much the same thing. It is currently below the 200-day EMA and testing it. Brent is going to be a little bit different in the sense that it is more of an international market. So, I do think that it lags West Texas crude oil, but it should move in the same direction. Eventually, I do think we will get to the $80 level, maybe $82 after that.
Underneath, we have quite a bit of support near the $74 level with a 50 day EMA hanging around there as well. Again, both of these oil grades, if you’ve been watching my videos, recently have tested the massive floor in the last two years of trading and now are bouncing from there. So, it shouldn’t be a huge surprise that this is going on.
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2 weeks ago
Hemispheric Blowback. The Energy Report
By: Phil Flynn | January 7, 2025
Remember President George W. Bush’s “Hemispheric Energy” Dream? The Dream is not dead! Not only is President Trump going to make American Energy great again, but apparently the resignation of Canadian Prime Minister Justin Trudeau and the people in Canada are pushing back against radical oil and gas policies that have fed inflation and has done nothing to really help the environment.
Amena Bakr Senior Research Analyst Energy Intel points out that within hours after Trudeau’s announcement, the government of Alberta, Canada’s largest oil-producing province, and midstream giant Enbridge announced plans to explore ways to rapidly increase the country’s pipeline capacity, “in pursuit of its goal to double crude oil production and increase exports to the United States.”
Of course, that means that Canada will need more pipelines into the US and the US may need to stary streaming more projects to increase refining capacity. Or dare I say, fast track approvals to build a new refineries? There are projects on drawing boards that might start moving it to the next level. More Jobs!
Fox News is reporting that President-elect Donald Trump said he plans to immediately reverse Biden’s new ban on offshore drilling along most of the U.S. coastline, but he faces major roadblocks under a 70-year, irrevocable law. Throughout his 2024 presidential campaign, Trump vowed that, if elected, he would expand oil and gas drilling to bolster American-made energy.
However, Biden issued an 11th-hour executive order Monday morning to forestall such actions exactly two weeks before his term ends. He announced a permanent stop to most new oil and gas drilling across U.S. coastal and offshore waters in an area that spans about 625 million acres.
“It’s ridiculous. I’ll unban it immediately,” Trump said on “The Hugh Hewitt Show” on Monday. “What’s he doing?” as reported by Fox News.
Speaking of ridiculous, how about the government coming for your stove. SOS means “save our stoves”. One of the many blowbacks of the insane policies from the Biden administration that irritated the American people is the Biden administration coming for your natural gas stoves. Despite early denials that they want to take away our stoves, they made more and more efforts to move towards a natural gas stove ban but don’t worry. If you like your stove you can keep your stove. I think we heard that malarkey before.
President Trump, come protect our stoves! Reuters is reporting that, “President-Elect Donald Trump is weighing an executive order that seeks to protect gas-powered appliances including stoves and heaters from federal and local regulators who want to phase them out of homes and businesses, two sources familiar with the plans said. Chefs and restaurants and home cooks around the country will feel better to know that their natural gas stoves are safe from government confiscation.
Oil had a big surge in the reversal after it failed to take out 75. The fundamentals are still very bullish. Perhaps a market was a bit ahead of itself. Use breaks today to buy for a retest of 75.
The reversal in the dollar also weighed on prices as the markets seem to be so fundamentally heavy. We have a very tight physical market and see demand exceeding supply. That should lead to more drop downs of inventories around the globe.
Heating oil and natural gas surged on frigid forecasts. And even though we saw natural gas prices in the United States rise by over 40%. this year the reality is it’s a lot better than it is in Europe. John kemp Energy reports that, ”European surplus gas inventories have disappeared after repeated bouts of cold and windless weather this winter. Inventories have depleted by 280 terawatt-hours (TWh) since winter started on October 1, the largest seasonal draw for eight years since the winter of 2016/17. As a result, inventories were just 24 TWh (+3% or +0.19 standard deviations) above the prior ten-year seasonal average on January 5. The surplus had shrunk from 122 TWh (+13% or +1.38s) on October 1 and 283 TWh (+72% or +2.08s) at the end of last winter on March 31.
In the US natural gas supplies could be really challenged with the oncoming cold. Record demand and production problems could permeate the natural gas market and that’s the main reason why we’re seeing prices here in the US surge.
Fox Weather reports that it will be an extended stretch of brutal cold on the way for 40 states as arctic air infiltrates America. These frigid temperatures are expected to remain in place across the eastern half of the country for at least the next two weeks.
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2 weeks ago
Natural Gas Bullish Reversal as Buyers Regain Control
By: Bruce Powers | January 6, 2025
• A bullish reversal in natural gas suggests near-term strength, yet challenges at $3.87 and $4.20 may temper the rally’s momentum.
It looks like natural gas has once again held support around the 20-Day MA (purple). On Monday, it reached a low of 3.50 before finding support with buyers then taking back control. The subsequent rally triggered a bullish reversal on a move above Friday’s high of 3.68, while a daily close above that high will confirm strength of the move. At the time of this writing, natural gas is on track to close strong, in the upper third of the day’s trading range, after having reached a high for the day at 3.73.
Trend Support Leads to Rally
On Friday, natural gas closed below the 20-Day MA, a bearish sign. Of course, today’s bullish reversal negates that potential bearish clue. It is interesting to note the on each of the past three pullbacks, there was only one day that closed below the 20-Day line, and then it was quickly followed by a reclaim of the 20-Day line and a daily close above it. That is the situation today.
Bearish Weekly Shooting Star Pattern is a Concern
Of concern is the bearish shooting star weekly candlestick pattern (not shown) that completed last week. It includes a long top shadow followed by a close near the lows of the week’s price range. Whether silver resolves to the downside or upside, it adds risk to the rally. A new trend high is not triggered until there is a rally above last week’s high of 4.20. That is a way up.
200-Week MA is at 3.88
Before encountering potential resistance around the trend high, the 200-Week MA would need to be reclaimed. It is now at 3.88. It should be noted that the 200-Week line was reclaimed in each of the past two weeks but there has not yet been a weekly close above the 200-Week. Therefore, another daily close above the 200-Week line at 3.88 would show strength. Maybe, enough strength to see a challenge to the recent trend high. Until then the expectation is for choppy trading with last week’s price range of 4.20 to 3.33.
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2 weeks ago
Tariff And Texas Tea. The Energy Report
By: Phil Flynn | January 6, 2025
A Washington Post report that President Trump is going to release a list of tariffs against plans and every country caused a sharp drop in the dollar and a rally in oil and other commodities. Yet even before this story moved the markets, oil and natural gas were getting support from the major blast of Arctic air and snow and the realization that the supplies of petroleum are below average and supply of natural gas while above the five-year average are now below levels. And as EBW Analytics points out, the February WTI contract broke upward to $73.96/barrel Friday, the highest level in nearly three months—as crude cleared the high end of the $66.50-72.50/bbl trading range that defined 4Q2024. That came as six straight draws and bullish technical catalyzed the move higher.
We also saw a sign of confidence in the demand side from Saudi Arabia when they raised the price for its main Arab light crude grade by a whopping $1.50 a barrel premium to the regional benchmark for February, an increase of 60 cents a barrel. That was 6 times the amount the market had expected.
The February WTI contract broke upward to $73.96/barrel Friday—the highest level in nearly three months—as crude cleared the high end of the $66.50-72.50/bbl trading range that defined 4Q2024. Six straight draws and bullish technical catalyzed the move higher.
Reports say Trump’s aides are exploring tariff plans that would be applied to every nation but only cover critical imports is raising concerns that we may see tariffs on countries that continue to do business with Iran. Under Biden, Iran has had a field day selling their oil raising billions of dollars for their terror campaigns. Kpler, a commodity intelligence company, said under Joe Biden’s presidency, Iran exported approximately 2 billion barrels of oil—a significant increase compared to the volumes recorded between 2019 and 2021. Iran, whose daily oil exports had fallen below 400,000 barrels in January 2021, at the start of the Biden administration, exported 1.6 million barrels daily last year.
Yet even as Iran was exporting more oil than they had here in the last five year high, here in the United States there are signs that Biden’s regulations are starting to take their toll. HFI Research reports that except for 2020, US oil production is on track for the weakest growth since the beginning of the US shale revolution.
Energy’s hard realities are starting to shape up right in front of our eyes. In Europe we see gas storage depleted at the fastest pace since 2018. Here in the US and other countries, the Arctic surge is pushing natural gas prices up 7.57%.That increase of course is based on the realization that the cold blast is going to hit. There’s still some issues about how long it’s going to stay around but there’s talking about different waves on the Fox weather channel that could mean a very tight market for natural gas. There are reports that in some areas they are already experiencing freeze offs that could impact reduction and the real cold stuff hasn’t really hit yet.
EBW Analytics reported that last week saw the February contract initially spike 81.8¢/MMBtu (+24%) to $4.201—only to return the entirety of gains by Friday to mark a small week-over-week loss. Weather-induced volatility was amplified by thin holiday trading ahead of a severe January cold blast. While January may not feature a 10+ Bcf/d freeze-off event if current forecasts hold, durable, substantial cold weather across the central and eastern lower 48 for the first time in three years may still yield a sizable monthly storage draw to offer support for near-term pricing.
You have to download The Fox Weather Ap to keep up with the lasted breaking on the arctic blast.
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2 weeks ago
Oil News: Can China’s Stimulus Offset Oversupply and Dollar Strength Risks?
By: James Hyerczyk | January 4, 2025
Key Points:
• Crude oil surged 4.76%, closing at $73.96 as China’s stimulus and cold weather boosted demand and market optimism.
• China’s economic measures and higher wages fuel bullish oil sentiment, offsetting fears of weak demand in 2025.
• U.S. crude stockpiles fell 1.2M barrels, tightening supplies, but rising gasoline inventories may limit further price gains.
• Strong U.S. dollar poses headwinds for oil, raising borrowing costs and threatening to curb global energy demand growth.
• Oil prices may climb further as winter demand rises, but oversupply risks from non-OPEC producers could cap gains.
Crude Oil Markets Respond to Stimulus and Cold Weather
Light crude oil futures climbed sharply last week, closing at $73.96, up $3.36 or 4.76%?. This marked the highest settlement in over two months as bullish drivers emerged from economic stimulus in China and colder weather patterns across Europe and the U.S. Traders interpreted these signals as supportive for near-term demand, pushing prices higher into the close of the trading week.
China’s Growth Measures Bolster Market Sentiment
China continues to drive market optimism with successive economic stimulus measures aimed at boosting domestic consumption and industrial activity. The announcement of higher wages for government workers, along with increased funding from ultra-long treasury bonds, signaled Beijing’s intent to revitalize economic growth?. These actions reflect China’s commitment to stabilizing its economy, countering sluggish demand concerns that had previously weighed on crude oil markets.
According to analysts, the consistent release of stimulus measures by Chinese authorities is becoming a key factor shaping oil price expectations for 2025. The prospect of accelerated growth in the world’s top oil importer is providing a floor for crude prices, offsetting concerns about oversupply from non-OPEC producers.
Weather-Driven Demand and Inventory Drawdowns
Forecasts for colder weather in the U.S. and Europe further supported oil prices, contributing to expectations of rising demand for heating oil and distillates?. UBS analyst Giovanni Staunovo noted that winter conditions could play a significant role in lifting near-term oil consumption.
Additionally, the latest U.S. Energy Information Administration (EIA) data revealed a 1.2 million barrel draw in crude stockpiles, reducing inventories to 415.6 million barrels. Although the draw was smaller than anticipated, it indicated tightening supplies. However, gasoline and distillate inventories rose as refiners boosted output, reflecting increased refinery utilization?.
Market Eyes U.S. Economic Indicators and Interest Rates
Despite the positive momentum, crude oil prices faced potential headwinds from the stronger U.S. dollar, which recorded its best week in nearly two months. The dollar’s strength reflects expectations of U.S. economic outperformance and sustained higher interest rates, both of which could dampen global demand for oil by raising borrowing costs?.
Investors are closely monitoring the Federal Reserve’s policy signals, as any indication of rate cuts could further stimulate economic activity and energy consumption. In the absence of rate reductions, however, crude oil may encounter resistance around current price levels.
Market Forecast: Bullish but Cautious
Crude oil prices are poised to hold a bullish bias in the near term, driven by economic stimulus measures and seasonal demand. However, the strength of the U.S. dollar and potential oversupply from non-OPEC producers could temper upward momentum. The market’s focus will shift to upcoming economic reports and inventory data, which will provide further clues on supply-demand balance.
Weekly Light Crude Oil Futures
Key price levels to watch include weekly support at $71.10 and weekly resistance at $74.00. A sustained move above $74.00 could open the door for further gains with $77.36 to $81.33 a potential target zone, but failure to hold current levels may result in a return to rangebound conditions between $71.10 and $68.59.
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2 weeks ago
NY Crude Oil Futures (CL) »» Weekly Summary Analysis
By: Marty Armstrong | December 4, 2025
Next Monday is Martin Luther King, which is a holiday in the United States. NY Crude Oil Futures closed today at 7396 and is trading up about 3.12% 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 7435 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 in a bullish position at this time with the underlying support beginning at 7202.
On the weekly level, the last important high was established the week of December 30th at 7435, which was up 6 weeks from the low made back during the week of November 18th. So far, this week is trading within last week's range of 7435 to 7012. Nevertheless, the market is still trading upward more toward resistance than support. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 7435 made 0 week ago. Still, this market is within our trading envelope which spans between 6364 and 7708. The broader perspective, this current rally into the week of December 30th reaching 7435 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. Looking at this from a wider perspective, this market has been trading up for the past 6 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 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.
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2 weeks ago
Natural Gas Faces Bearish Break Below Key Support Levels
By: Bruce Powers | January 3, 2025
• Bearish momentum intensifies as natural gas drops below 20-Day MA, risking further declines to $3.13 and potentially challenging October’s swing low.
Natural gas dropped hard on Friday, falling below both an internal uptrend line and 20-Day MA before finding support at 3.33. Sellers remained in control at the time of this writing, with trading continuing near the lows of the day. The low currently was 3.33. Therefore, natural gas may end the day and therefore the week, in a bearish position below both lines. Lower prices levels may then be targeted if that happens.
Sellers Regain Their Footing
Today’s decline puts the near-term rising trend structure at risk of being violated. Dynamic support is represented by the internal uptrend line and 20-Day line. Notice that since the 20-Day MA was reclaimed on October 29 there have been no daily closes below the line, even though intraday trading did occur below the 20-Day line.
If natural gas closes today below the 20-Day MA, it will show a change in character. This would put the 2.29 recent swing low at risk of being busted. That would then signal further weakness and increase the chance of the 50-Day MA, now at 3.13, being tested as support.
50-Day Moving Average Support is Key
The 50-Day MA is more significant than the 20-Day MA, particularly since it shows potential support above the top boundary line of a large symmetrical triangle pattern. In addition, it is above the most recent swing low at 2.98. That swing was the first test of a prior resistance area related to the triangle formation.
It is also part of the larger trend structure of higher swing highs and higher lows, that began from the October swing low. It also resides around the initial triangle breakout trigger of 3.02. Now that the top boundary lines have fallen further, it also needs to be considered as a potential support if it approached.
Bearish Weekly Chart to Complete
In addition to bearish signs on the daily chart, the weekly chart (not shown) also looks ominous and shows bearish momentum. A bearish shooting star candle will complete today, with a likely close near the lows of the week. Further, this week’s pattern includes a long tail, derived from the bearish reversal off the top rising trend channel line (circled).
In other words, this week is the result of a bearish reversal from the top of the trend. It is supportive of a continuation lower. Nonetheless, a new bearish weekly signal will not be given unless there is a drop below this week’s low and the sellers retain control.
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2 weeks ago
How Cold Is It? The Energy Report
By: Phil Flynn | January 3, 2025
The question is not how cold it is, but how cold is it going to be.
Fox Weather is reporting that America’s coldest weather so far this winter will send temperatures tumbling in nearly 40 states. The main push of dangerously cold air will move in starting Monday next week.
The latest from Fox Weather says that “Americans across the eastern half of the U.S. prepare to be blasted by rounds of frigid arctic air that are expected to send temperatures tumbling as far as Florida and Texas. The FOX Forecast Center said cold air originating from Canada is currently infiltrating the Plains region and is expected to move east.”
Fox Weather says that not only are people east of the Mississippi River and in the Northern Tier having to deal are dealing with colder temperatures Friday, but this is also just a preview of even colder air that’s expected next week.
Natural Gas prices, which surged over 20% to start the week, are pulling back as we get closer to this coming artic event.
Natural gas prices are retreating on some hopes that the arctic blast that is poised to hit Texas and big swaths of the United Staes might not be as bad as originally feared. Yet if the forecasts flip colder natural gas and heating oil will flip higher.
So, the fate for natural gas will come down not only to the holiday delayed EIA natural gas report but also the late day weather models. Which is no doubt Chilling.
Reuters is reporting that “U.S. energy firms likely pulled a larger-than-usual 124 billion cubic feet (bcf) of natural gas from storage last week, according to the average estimate of analysts in a Reuters poll released on Thursday. That compares with a withdrawal of 35 bcf during the same week a year ago and a five-year (2019-2023) average decrease of 104 bcf for this time of year.
For natural gas the weather in Texas is going to be key as oil and gas fields are at risk of freezing next week if some of the colder forecast hold up we could see a significant drop in production and that could lead to some tightness and supplies pipelines could also freeze which could be a real headache unless we know the wind power doesn’t work well in these icy cold conditions.
Fox Weather says that NOAA forecasters expect several waves of cold air to impact the U.S. through mid-January, putting the month on track to be one of the coldest months experienced in several years.
During the height of the cold weather, more than 200 million Americans are expected to see below-average temperatures, which will reach the Interstate 10 corridor and the Gulf Coast.
Oil prices seem to ignore a bid build in gasoline and distillate products as more than likely it was impacted by the holiday weekend. There is nothing like you’re in-tax positioning to mess up a weekly petroleum inventory report.
The EIA Reported that U.S. commercial crude oil inventories fell by 1.2 million barrels from the previous week. At 415.6 million barrels, that puts U.S. crude oil inventories are about 5% below the five-year average for this time of year.
Gasoline inventories increased miraculously by 7.7 million barrels but are slightly below the five year average for this time of year.
Distillate fuel inventories also dramatically increased by 6.4 million barrels last week, even with that incredible leap are about 6% below the five-year average for this time of year.
President Biden’s energy legacy is in a shambles.
People at the top of this administration that spent a lot of money with little results. Oil Demand and global emissions at records and the American deficit at an all-time high.
President Biden is the most anti fossil fuel president in the history of the country and the US oil and gas industry is not sad to see him go
President Biden being the kind of vindictive person he is taking one last shot reports are saying that President Biden to salvage his legacy plans to issue a decree to ban new offshore oil and gas development in some US coastal waters.
Of course, people at the voting booths soundly rejected President Biden and his energy policies. So this is also a shot at the will of the American People
President Biden has had a vindictive energy policy trying to reverse all the progress that President Trump tried to make when it came to oil and gas production.
In the meantime, he wasted billions of dollars of taxpayer money on green energy projects it will never come to fruition
He empowered Iran and Venezuelan dictators. History will not judge Biden Policies kindly. A man blinded by ideology and vindictiveness and with no understanding how the real energy world works.
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2 weeks ago
Crude Oil Hits 11-Week High, Challenges Key Resistance Levels
By: Bruce Powers | January 2, 2025
• Crude oil surged to an 11-week high of 73.96, confirming bullish momentum, while targeting resistance zones between 74.29 and 76.74 for further gains.
Crude oil continued to follow-through on its recent breakout of consolidation and bull flag on Thursday, with a rise to an 11-week high of 73.96. That put crude above the interim swing high of 73.27 from early-November before an intraday pullback began.
Nonetheless, crude is on track to close strong, above the 72.27 level and in the top third of the day’s trading range. This puts it in a position to continue to strengthen and challenge higher target zones, if it can maintain upward momentum.
50% Bullish Retracement Exceeded
Today’s advance completed a 50% retracement at 72.97 and exceeded an initial target for a rising ABCD pattern (red) at 73.12. That behavior shows strength but the next higher target zone from 74.29 to 74.42 will likely have greater significance.
It includes an internal downtrend line that connects to the October swing high, plus the 127.2% extended target for the rising ABCD pattern (red) at 74.29, and the 61.8% retracement at 74.22. Subsequently, if gold can sustain a rally above 74.42, it has a chance to challenge a potential resistance zone from around 75.78 to 76.74.
Faces Potentially Significant Resistance
Notice that the long-term downtrend line, which is also the top boundary line for a symmetrical triangle formation, converges with that price zone, along with the 200-Day MA at 75.91 and the 78.6% retracement level at 76.47. Until there is a rally above the 200-Day line, followed by a daily close above it, the potential for a bearish continuation of the triangle breakdown that triggered at the beginning of September, remains. If it is going to follow through in a bearish fashion, then resistance will likely eventually be seen in the current rally attempt, leading to a downturn.
Monthly Chart Turns Bullish
Monthly strength improves the chance to challenge higher targets as noted above. The longer-term monthly chart (not shown) should also be considered. Today’s advance triggered a bullish monthly breakout as the December high of 72.27 was exceeded. The close today will likely be above last month’s high, providing further evidence of strength. This is the first month in three that crude was able to rise above a prior month’s high.
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2 weeks ago
Crude Stockpiles Fall Slightly, While Gasoline and Distillate Inventories Rise
By: James Hyerczyk | January 2, 2025
Key Points:
• U.S. crude oil inventories fell by 1.2M barrels, staying 5% below the five-year seasonal average.
• Gasoline inventories surged by 7.7M barrels, while distillate stocks grew by 6.4M barrels last week.
• Refinery utilization hit 92.7%, boosting distillate output to 5.4M bpd, while gasoline production slipped to 9M bpd.
• Crude imports rose 455K bpd to 6.9M bpd, though the four-week average remains 1.3% below last year.
• Mixed demand signals show gasoline up 0.6% but overall product demand down 1.2% year-over-year.
U.S. Crude Oil Inventories Decline as Refinery Activity Holds Steady
U.S. crude oil inventories saw a modest drawdown last week as refineries maintained high operating rates, according to the latest weekly petroleum data. Commercial crude stocks, excluding the Strategic Petroleum Reserve, fell by 1.2 million barrels, bringing total inventories to 415.6 million barrels, approximately 5% below the five-year seasonal average.
More Information in our Economic Calendar.
Refinery Utilization Remains High
Refinery inputs averaged 16.9 million barrels per day (bpd) for the week ending December 27, reflecting an increase of 41,000 bpd from the previous week. Refineries operated at 92.7% of their capacity, signaling continued strong demand for crude processing. Gasoline production dipped to 9.0 million bpd, while distillate fuel production rose to 5.4 million bpd, reflecting refiners’ shift to meet seasonal heating oil and diesel demand.
Crude Oil Imports Climb
Crude oil imports rose by 455,000 bpd last week, averaging 6.9 million bpd. This marked a slight increase over the past month, yet the four-week average of 6.5 million bpd remains 1.3% lower than the same period in 2023. Despite the weekly gain, import levels suggest a tighter supply environment, reinforcing the inventory draw observed in crude oil stocks.
Product Inventories Mixed
Gasoline inventories posted a substantial increase of 7.7 million barrels, although total gasoline stocks remain marginally below the five-year average. Distillate inventories also rose significantly by 6.4 million barrels but are still 6% under typical seasonal levels. Propane/propylene inventories declined by 0.6 million barrels but remain 10% above the five-year average, providing ample supply for heating demands. Overall, total commercial petroleum inventories expanded by 9.3 million barrels, offsetting the crude oil drawdown.
Demand Trends Offer Mixed Signals
Total product demand over the past four weeks averaged 20.3 million bpd, representing a slight 1.2% decline year-over-year. However, gasoline demand ticked up by 0.6% to 8.7 million bpd, while distillate fuel consumption surged by 8.4% to 3.9 million bpd. Jet fuel demand also strengthened, rising 6.1% compared to the previous year, signaling robust travel activity through the holiday period.
Market Forecast
The draw in crude inventories coupled with rising imports points to a market balancing supply with consistent refining demand. However, the sharp rise in gasoline and distillate inventories could weigh on prices in the short term. Expect near-term bearish pressure on crude prices, particularly if refinery activity holds above 90% capacity and product inventories continue to build.
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2 weeks ago
Crude Oil Looking to Break Out
By: Christopher Lewis | January 2, 2025
• The crude oil market was bullish again on Thursday, as the markets are starting to price in the idea of increasing demand coming from the US, and some demand coming due to central bank easing around the world.
WTI Crude Oil Technical Analysis
The West Texas Intermediate crude oil market has broken above the $72.50 level, an area that of course I’ve been talking about for a while. And now the question is, do we have any follow through? This is a play that you need to be very on top of because this could be the beginning of something rather big. I’ve been talking about this area for a while now, and quite frankly, we are getting here quicker than I thought we would.
So, it looks like oil is trying to break out. If we can clear the $73 level on a daily close, I think it’s a very strong likelihood that short-term pullbacks will continue to bring in more buyers. as crude oil may have finally found some type of bottom.
Brent Crude Oil Technical Analysis
Brent, of course, looks very much the same thing. And if you miss the WTI trade, it might be Brent that you need to do or UK oil, just simply because it’ll be playing a little bit of catch up. Nonetheless, I do like the idea of WTI crude oil more than Brent, mainly due to the fact that it is more US centric, and that’s where most of the growth is right now. Oil has been stubborn over the last couple of months and just would not break through that two year low.
And now we’re starting to see the opposite forces come into the market. And I do think that we have further to run in both of these markets, but it’s very likely we’ll get the occasional pullback. Just keep that in the back of your head and make sure that you don’t overexpose yourself in what is a thin time of year, I would not get huge, but now is the time to really start to pay attention to whether or not we have a new trend forming.
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2 weeks ago
Cold Hearted. The Energy Report
By: Phil Flynn | January 2, 2025
Energy and global politics can be downright cold-hearted, leading to a surge in prices to start the new year as the bullish fundamentals are getting harder to ignore.
Oil and natural gas are on the rise as an arctic cold blast is about to descend on the United States. Russia cut off natural gas supplies to Europe through Ukraine. This comes after the Energy Information Administration (EIA) had to admit that they have overestimated supply and underestimated demand, which will lead to revisions in their monthly report and will force the market to readjust to a much tighter market than they had expected.
Russia and Ukraine failed to come to an agreement to extend the contract for Russia to send supply through Ukrainian pipelines led to a New Year’s Day cut off supply leaving some people out in the cold. The BBC says that, “Kyiv is calling it a “historic” day as its refusal to extend a transit agreement with Russia’s Gazprom has halted the return flow of cash to fund the full-scale invasion of Ukraine. But in neighboring Moldova, the move threatens to cause a crisis. In Transnistria, a separatist region of eastern Moldova loyal to Moscow, the year began with only hospitals and critical infrastructure being heated, not houses. “The hot water was on until about 2am, I checked. Now it’s off and the radiators are barely warm,” Dmitry told the BBC by phone from his flat in the enclave. “We still have gas, but the pressure is very low – just what’s left in the pipes. “It’s the same everywhere.”
Transnistria split from the rest of Moldova in a short war as the Soviet Union fell apart. It still has Russian troops on its soil and an economy that’s fully dependent on Russian gas, for which the authorities in Tiraspol pay nothing, the BBC wrote.
Bloomberg reports that the gas cut off brought an end to more than five decades of being the key conduit for the region. While the move was expected after months of political wrangling, Europe will still have to replace about 5% of its gas and may rely more heavily on storage, which has fallen below average levels for the time of year. Bloomberg says that gas prices rose in anticipation of the cut-off, with Europe’s gas benchmark closing 2024 up more than 50%. Those gains haven’t yet been fully reflected in the cost of the normally more-expensive LNG that nations including Japan and South Korea are heavily reliant on according to Bloomberg.
It’s not just Europe that’s going to be facing some cold here. In the US forecast for an Arctic cold blast is already impacting the market. Fox Weather is reporting that a major blast of Arctic air will bring a cold, snowy start to 2025. Several rounds of cold air will set up the eastern half of the U.S. for bitter cold to start 2025. This long-lasting cold streak is forecast to stretch into mid-January.
This comes after the Energy Information Administration (EIA) had to admit that they have overestimated supply and underestimated demand which will lead to revisions in their monthly report.
While oil production did hit a record, it failed to reach market expectations. HFI research pointed out that the EIA said that October and November US oil production was supposed to be at 13.45 million barrels a day to 13.5 million b/d but came it at 13.3 million b/d. That puts the three-month average at 13.25 million barrels a day and a mother’s sign that U.S. oil production may be peeking. And oil production in December production will be lower than October raising concerns of peak oil production in the US and the possibility we are starting to feel the damage of the Biden Administration’s anti-US oil and gas policies.
Total U.S. oil demand rose by about 700,000 bpd from September to 21.01 million bpd in October, the highest since August 2019, EIA data showed and a record for the month of October. Demand for distillate fuels, which include diesel and heating oil, rose to 4.06 million bpd in October, the highest in a year. Jet fuel demand is soaring as well as the TSA put total travelers over the last seven days to be 6.9% over the levels we saw back in 2019 before the Covid lockdown.
In 2025 India is expected to be the world’s driver of oil and energy demand growth. According to the American Petroleum Institute (API), the primary driver of global oil demand growth is currently the Asia Pacific (APAC) region, with countries like India leading the charge as major consumers, primarily due to their rapidly growing economies and transportation needs. This trend is expected to continue in the near future, with India potentially surpassing China as the top source of global oil demand growth.
To that point, the Economic Times in India reported that India’s petrol and diesel consumption increased in December 2024 due to holiday travel. Petrol sales rose 9.8 per cent and diesel demand was up 4.9 per cent from the previous year. Fuel demand also increased due to agriculture activities. This rise continues the trend of growth seen in November 2024 despite the tepid monsoon months according to the Economic Times.
Market headdresses look like they are going to pay off.
Natural gas sees some ups and downs here because of strong production here in the US but if these forecasts that we’re seeing from the Fox Weather channel come true, we could continue to see new highs for this contract.
The Energy Information Administration is going to release both reports today about the natural gas inventory reported at 9:30 and petroleum at 10:00 central .
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3 weeks ago
Crude Oil Surges Past Swing High, Targets Fibonacci Levels
By: Bruce Powers | January 1, 2025
• Crude oil’s breakout signals strength as it targets higher resistance zones, with key technical levels and bullish patterns guiding its upward trajectory.
Crude oil continued to rally on Tuesday to reach a high of 72.27. Gains further confirmed strength from yesterday’s breakout of a small bull flag pattern. A prior lower swing high at 71.79 was exceeded today, after showing resistance yesterday with the day’s high. This provides another sign of strength in the process of a bullish reversal. Further, notice that the 20-Day MA (purple) is about to rise above the 50-Day MA (orange). Crude is on track to end the day in a strong position in the top third of the day’s trading range and above the 71.79 swing high.
First Target Zone Around 72.97
There are two initial upside target zones defined by the confluence of Fibonacci retracement levels and the initial, plus extended targets for a rising ABCD pattern (red) derived from the flag formation. The first target zone is from 72.97 to 73.12, and it includes the 50% retracement and 100% target for the ABCD pattern, respectively. Next up would be the 74.29 to 74.42 price area. That range starts with the 127.2% extended ABCD target and a 61.8% Fibonacci retracement level.
Demand Remains Despite Earlier Breakdown
The larger pattern unfolding that needs to be considered is the breakdown from a large symmetrical triangle pattern that triggered in early-September. Subsequent consolidation has largely been contained below resistance from the triangle formation as represented by the two boundary lines. By itself, that is a bearish clue and leads to the expectation that signs of resistance are likely before crude oil rallies above the top boundary line of the triangle.
Nevertheless, faster moves can follow failed breakouts, up or down. This, combined with the fact that there has been little bearish follow through following the drop from the triangle, along with recent bullish price action, leaves open the possibility of an eventual bullish reversal through the top line of the triangle and then above the 79.09 swing high from October.
If the 74.42 price level can be reclaimed, then the next higher price zone to watch begins around a 161.8% extended ABCD target at 75.78. That is in an area of confluence with other indicators, including the two lines of the triangle along with the 200-Day MA at 76.02, plus the 78.6% retracement at 76.47.
Bullish Weekly Signs
It is also bullish that this week has the potential to end with the highest weekly closing price for crude in 12 weeks. Plus, this week crude broke above the 20-Week MA at 71.15 and is likely to end the week above that price level.
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3 weeks ago
Natural Gas Faces Pressure After Reaching Key Resistance Levels
By: Bruce Powers | January 1, 2025
• Bearish signals intensify for natural gas as resistance holds, putting key levels like the 20-Day MA and recent 3.29 low at risk.
Natural gas weakened further on Tuesday, reaching a six-day low of 3.58 before stalling the decline. It continues to trade near the lows of the day at the time of this writing and will likely close weak, in the lower third of the day’s trading range. Also, it may further confirm weakness with a daily close today below yesterday’s low of 3.65. Either way, natural gas looks likely to end the day with a lower daily high and lower low.
Bearish Price Action
Today’s bearish price action follows signs of resistance seen yesterday after the 4.20 trend high was reached. Once reached sellers took back control and dropped natural gas to end the day a little below the halfway point of the day’s price range and below the prior trend high at 4.01. That is not bullish price action following a new trend high and it was further indicated today.
Top Channel Line Resistance
Resistance was seen yesterday around the top parallel line of a rising trend channel. Given the subsequent bearish reaction there is the potential for the price of natural gas to eventually target the lower channel line. The line starts from the April 2024 bottom. Of course, that line is quite a way down. Whether it is reached or not, it provides supporting technical clues for a possible bearish correction that may see natural gas fall through key support levels.
Moving Average Support at 20-Day Line
If weakness persists a test of support around the 20-Day MA at a minimum, now at 3.42, looks likely. It can be watched along with the nearby rising trendline. Although the 20-Day line has reflected support on several days recently due to daily closes above the 20-Day line, the line was breached earlier in each relative trading session. Maybe this time natural gas falls below the 20-Day MA but does not recover within the same day to close above the line. That might be a change in character, and if it happens the recent 3.29 swing low will be at risk of being broken.
Bearish Weekly Pattern Forming
A bigger concern is reflected in the developing weekly chart (not shown). If natural gas stays weak or weakens into this week’s close it is set to leave a bearish shooting star candlestick pattern. Given that it occurred following a successful of resistance at the top of the rising trend channel, is the market’s way of telling us to pay attention.
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3 weeks ago
Natural Gas ETF UNG Pulls Back from Best Day in 4 Years
By: Schaeffer's Investment Research | December 31, 2024
• UNG jumped 14.5% last session
• Yesterday's spike in natural gas prices sent UNG surging
Natural gas exchange-traded fund (ETF) United States Natural Gas Fund LP (NYSE:UNG) is pulling back from yesterday's surge, down 4.6% at $17.22 at last glance. UNG jumped 14.5% last session, its largest single-day percentage gain since August 2020, as natural gas prices saw their biggest jump since January 2022.
Expectations of a colder-than-usual January on the East Coast had traders murmuring of volatile storms and a potential "polar vortex," sending February-dated natural gas up 16.4% to $3.9360 per million British thermal units yesterday. Today, the contract is down 5.3%.
UNG hit a November 1 record low of $12.37. And despite yesterday trading at seven-month highs, the ETF is still down 14.8% since the start of the year. Plus, the fund could be due for a short-term drop on the charts, per its relative strength index (RSI) of 80.7, which sits in "overbought" territory.
Options trader have been betting bullishly. UNG's 10-day put/call volume ratio of 0.76 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 85% of readings from the last year. So while calls are still winning out on an absolute basis, the options pits have been much more bearish than usual.
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