ImageWTI crude oil has notched up a substantial 30%+ rally off the lows, and is now pushing up against a key resistance level (around ~$90/bbl), which if breached will open up the path above $100. Interestingly this rally has come with declining volatility (an orderly move).Aside from the failed breakdown below a key long-term support level, WTI crude has also notched up a golden cross (50-day moving average crossing above the 200-day), and has busted comfortably through multiple short-term resistance levels.While the technicals look good, the fundamentals are also decent with world oil demand breaking out to new post-covid highs, and supply growth constrained by multiple factors.The steady move lower in crude oil implied volatility shows there is an air of certainty around the rally in oi
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Chart Of The Day - Crude Oil Price
Chart Of The Day - Crude Oil Price
Chart of the Week - World Oil Demand
$WTI Crude Oil - main 2310(CLmain)$ $Micro WTI Crude Oil - main 2310(MCLmain)$ $Brent Last Day Financial - main 2311(BZmain)$ $E-mini Crude Oil - main 2310(QMmain)$ ImageI’m a big fan of using technical breakouts as a prompt to take a closer look at a certain asset or market (to then go and build out the rest of the picture) —but a less common approach is to look at breakouts in fundamental indicators. And this one is worth looking at.The chart shows world oil demand (across all products, think: gasoline, diesel, jet fuel, LPG), what should be no surprise is the collapse in 2020 (as humanity collectively
Chart of the Week - World Oil Demand
OPEC members' annual production since 2014
OPEC members' annual production since 2014ImageOPEC broadly left both non-OPEC supply and demand forecasts for 2023 unchanged from a month ago. According to their own research, we should see a major drawdown in crude oil inventories during the second half of 2023 as voluntary cuts kick in.ImageDemand for crude in the second half is always higher than in the first half by about 1.2-2.5%. And yes cooling, not heating demand.OPEC May production was down ~462k bbls/d mainly driven by lower production from Gulf producers.Image
OPEC members' annual production since 2014
YTD crude oil demand/supply breakdown through 19 weeks
$WTI Crude Oil - main 2306(CLmain)$ $Micro WTI Crude Oil - main 2306(MCLmain)$ $E-mini Crude Oil - main 2306(QMmain)$ The implied product demand moved lower for the week ending May 12/2023, led by a big drop in both gasoline and jet fuel demand. There is just so much noise/volatility in weekly data right now.ImageYTD (through 19 weeks) crude oil demand/supply breakdown compared to previous years.ImageCommercial Crude and Big 4 products are now up ~ 20.6m bbls through 19 weeks into 2023. They are ~27.6m bbls higher than the 5yr average (~7m bbls draw) and 69.6m bbls higher than in 2022 (~49m bbls draw).Imageprobably, one of the most bearish reports in
YTD crude oil demand/supply breakdown through 19 weeks
Oil Inches Higher After Erasing Rally Scored After OPEC+ Rate Cuts
Oil futures rose modestly on Thursday, steadying a day after erasing the rally scored earlier this month after OPEC+ announced an unexpected round of production cuts. Oil futures inched higher Thursday, with prices attempting to recoup a small portion of the sharp losses see Wednesday. Prices Wednesday failed to find support even after government data showed that U.S. crude inventories plunged by a much larger-than-expected 5.1 million barrels last week. Analysts said the price drop affirmed that worries about the economic outlook continue to hold sway over the market. "The First Republic banking scare killed oil," Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch late Wednesday. Reports Wednesday said that the U.S. government is unwilling to intervene to help
Chart of the Week - The oil vs gold ratio is trending consistent with recession risk
$S&P 500(.SPX)$ $Gold - main 2306(GCmain)$ $WTI Crude Oil - main 2306(CLmain)$ $Micro WTI Crude Oil - main 2306(MCLmain)$ $E-mini Crude Oil - main 2306(QMmain)$ The crude oil vs gold ratio has peaked at a key level and turned down – threatening to break further lower...ImageAside from being interesting with respect to the relative attractiveness of gold miners vs energy stocks and relative trades within commodities, this chart is also interesting as a macro indicator…If the global economy does rollover into recession, that’s going to be negative for energy d
Chart of the Week - The oil vs gold ratio is trending consistent with recession risk
OPEC+ and the petrodollars
Bloomberg/Getty Images OPEC+ last weekend cut oil production by 1.65 million barrels per day. Saudi Arabia and Russia are each taking 500,000 barrels, and beyond that, it is mainly Iraq, Emirates, and Kuwait that are cutting production. This reduction is different from last October's 2 million barrel reduction, which was mainly a recognition of the reality that less was being produced anyway. Also, Russia's additional reduction now of 500,000 barrels per day has already been achieved in recent months. Because of sanctions and production problems, Russia is already at that level. But the other countries are now going straight against the wishes of the U.S. government. The latter is actually demanding more oil production as part of the war in Ukraine. For a long time, the Americans even drew
OPEC+ and the petrodollars
Economic and Market Review March
$S&P 500(.SPX)$ $DJIA(.DJI)$ $NASDAQ(.IXIC)$ $Gold - main 2306(GCmain)$ $WTI Crude Oil - main 2305(CLmain)$ $Micro WTI Crude Oil - main 2305(MCLmain)$ $E-mini Crude Oil - main 2305(QMmain)$ Bank Failures May Alter Fed’s CourseThe failure of two regional banks unsettled equity and fixed-income markets globally in March. Financial contagion risks were at the forefront of the financial markets as the closure of Silicon Valley Bank $SVB
Economic and Market Review March
Crude Oil built is a built
$WTI Crude Oil - main 2305(CLmain)$ $Micro WTI Crude Oil - main 2305(MCLmain)$ $E-mini Crude Oil - main 2305(QMmain)$ Its due to SPR, its due to adjustments, its due to exports/imports math, its due to refinery maintenance: never seen anyone do the same when we have crude oil draws. Built is a built.WTI crude for May delivery settled at $81.53 a barrel on the New York Mercantile Exchange, up $1.79, or 2.24%. Highest settle since Jan 23/2023. Meanwhile energy equities Commodity price changes over the last year... Sugar: +16% US CPI: +6.0% Gold: +3% Silver: -1% Gasoline: -6% Soybeans: -10% Corn: -14% Copper: -14% Brent Crude: -15% WTI Crude: -15% Heati
North American Natural Gas Storage Levels
$WTI原油主连 2305(CLmain)$ $微型WTI原油主连 2305(MCLmain)$ $小原油主连 2305(QMmain)$ North American Natural Gas Storage Levels for the week ending Mar 31/23: US Natural Gas Storage is 19% above 5yr average with South Central being 38% above 5yr average. Canada's Natural Gas Storage is 3% above 5y average.North American Natural Gas Storage Levels for the week ending March 24/23 US Natural Gas Storage is 21% above 5yr average with South Central at 42% above 5yr average. Canada's Natural Gas Storage is flat compared to 5y average. It was down ~15%, 5 weeks ago. Crude oil released from SPR was 1.6m bbls for the week ending Apr 7/22. ~2m bbls done, ~24m bbls to go.
North American Natural Gas Storage Levels
2023 capital programs and dividends forecast for U.S. large-cap producer
BMO Capital Markets: $WTI Crude Oil - main 2305(CLmain)$ $Micro WTI Crude Oil - main 2305(MCLmain)$ $E-mini Crude Oil - main 2305(QMmain)$ We believe that on average, oil sands producers should be able to cover their 2023 capital budgets at WTI US$37/bbl and base dividends at WTI US$46/bblThis is well below the average U.S. large-cap producer, which we estimate require WTI prices of US$48/bbl and US$53.50/bbl, respectively, in order to fund 2023 capital programs and dividends.
Will there be excess natural gas capacity?
NattyWe need hot summer or natty below $1 is possible.I am now publishing end-of-season projected natgas storage levels for EUROPE. I currently project a 4195 BCF maximum, +773 BCF above the 5-year avg or an alarming 109% of capacity. Either consumption increases or imports of LNG will need to fall to avoid exceeding capacity.This year's total product supplied for the month of January was not good compared to previous Januarys'. However, it should get better as we move deeper into the year.
Will there be excess natural gas capacity?
U.S. 2023 Crude Oil in Storage Surplus/Deficit vs Prior Years
U.S. 2023 Crude Oil in Storage Surplus/Deficit vs Prior Years (Thousand Barrels) $WTI Crude Oil - main 2305(CLmain)$ $Micro WTI Crude Oil - main 2305(MCLmain)$ $E-mini Crude Oil - main 2305(QMmain)$ I will be extremely happy if we consolidate around this area for the remainder of 2023.ImageApril TD Energy Producers – Junior & Intermediate as well as Seniors & Integrateds Universe.ImageFor what it's worth: % of float bought back since initiating their respective NCIBs/SIBs Image
U.S. 2023 Crude Oil in Storage Surplus/Deficit vs Prior Years
This has been one of the worst withdrawal seasons in recent history
Other than oil and RBOB, pretty red week in the energy land. AECO strip is now below $2ImageI will be extremely happy if we consolidate around this area for the remainder of 2023. $WTI Crude Oil - main 2305(CLmain)$ $E-mini Crude Oil - main 2305(QMmain)$ $Micro WTI Crude Oil - main 2305(MCLmain)$ ImageAnd with that, natty withdrawal season is officially over. With 23Bcf withdrawal, Nat gas in storage is 19.5% above 5yr average and 32% above last year. This has been one of the worst withdrawal seasons in recent history.ImageOn Mar 30, another disappointing withdrawal for natty. With 47Bcf withdrawal, Nat gas in storage is 21% above 5yr average and 31.
This has been one of the worst withdrawal seasons in recent history
Why the OPEC+ Cut is a brake to overcapacity?
April 3rd, the OPEC+ JMMC meeting was held as scheduled. Due to unexpected signals from Saudi Arabia and other member countries on voluntary production cuts two days prior, this meeting received much attention from the market. he meeting officially announced a voluntary production cut plan and determined details such as reduction quotas and benchmarks. Eight OPEC+ agreement countries including Saudi Arabia, Iraq, United Arab Emirates, Kuwait (with Gabon added compared to previous news information) will voluntarily reduce their total output by 1.157 million barrels per day with a benchmark for reducing production set at the agreed-upon October 2022 production level and a reduction period from May to December 2023. In addition, Russia has postponed its active reduction period of 500 thousand
Why the OPEC+ Cut is a brake to overcapacity?
Don't miss out! What to buy after the surge in crude oil?
What happened?Last Sunday, OPEC+ unexpectedly announced a production cut of over 1 million barrels per day, abandoning their previous commitment to maintaining supply stability. On Monday (April 3rd), US crude oil futures opened and jumped by 8%. Several OPEC+ members are set to tighten global production by an additional 1.16 million barrels per day until the end of the year, further burdening central bank efforts to curtail global inflation — but critically protecting the alliance’s broader output strategy from political pressures. This unexpected cooperation among OPEC+ members surprised the market, as it was previously thought that the most likely action OPEC would take to deal with the growing uncertainty in the oil market would be to maintain existing production targets.Oil at $1
Don't miss out! What to buy after the surge in crude oil?
Oil Prices Soar After Saudi Arabia Leads Coordinated OPEC+ Cuts Totaling More Than 1 Million Barrels a Day
Oil prices spiked late Sunday, after Saudi Arabia led a surprise oil production cut across several OPEC+ nations that will remove more than 1 million barrels of oil a day from May. In an announcement on Sunday, Saudi Arabia's Ministry of Energy stated that the kingdom will implement a voluntary cut of 500,000 barrels a day from May until the end of 2023, in conjunction with other countries. It said that the "voluntary cut is in addition to the reduction in production" agreed at the OPEC meeting in October and "is a precautionary measure aimed at supporting the stability of the oil market." OPEC+ agreed in October to cut production by two million barrels a day from November, a move that angered the Biden administration. Russia's deputy prime minister, Alexander Novak, said his country would
Will the US be a FOMO buyer of crude oil?
Crude oil could be the next Meme stockLast week, US President Joe Biden ordered the release of another 15 million barrels of oilfrom the Strategic Petroleum Reserve (SPR). This is the last tranche of emergency release of 180 million barrels of oil announced in March this year.The massive release of oil has resulted in the lowest level of SPR since 1984. This is only sufficient to last 22 days of daily consumption in the US.This has left the US in a short squeeze position and could result in a Fear Of Missing Out (FOMO) buying action from the US if oil price surge to above $100.Here are my insights: Alarming to have low levels of SPR US vs OPEC+ Biden vs Oil producers Replenishment of SPR could lead to a FOMO moment Alarming to have low levels of SPRThe re
Will the US be a FOMO buyer of crude oil?
Be careful of the gold, The Great Crash Ahead!
Next Thursday night, Beijing time, the results of the most important meeting of the Federal Reserve on interest rates will be released.Besides how much to raise interest rates in September, it will also determine the rate increase by the end of the year, which determines the central level of interest rates. Economists had expected that when the US interest rate was still lower than 3%, the impact on the financial market might not be great, but when the Fed's benchmark interest rate was higher than 3%, the impact on the market would gradually increase, and the desire to do at least would be greatly weakened.In September, no matter whether the interest rate increase is 75 or 100, the interest rate will reach 3%, and the real impact on the financial market has just begun. In the fourth quarte
Be careful of the gold, The Great Crash Ahead!
Oil Tends to Fall? How about The Stock Market? | Correlation and Trend Analysis
Key Points: Are Energy and U.S. Stocks Really Negatively Correlated?The Oil Supply Going to Increase while Demand Tends fall, how oil price and stock market will perform? Bloomberg reportsOil Stocks Negatively Correlated to Market First Time Since 2001.From the data of past 3 month and half year, Oil and gas equities are defying the broader stock market in a way investors haven’t seen in two decades. The energy index has climbed 39% this year while the broader index has fallen 6% and the S&P 500 Information Technology Index is down 10%. The correlation between the S&P 500 Energy Index and the broader S&P 500 has gone negative for the first time since 2001, fue
Oil Tends to Fall? How about The Stock Market? | Correlation and Trend Analysis