Energy & Commodities

Crude Oil Slumps as OPEC & Russia Consider Output Boost

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Posted by Oil & Energy Insider

on Friday, 25 May 2018 11:27

Oil prices have fallen $3 per barrel this Friday as Saudi Arabia and Russia discussed easing supply curbs that have helped push crude prices to their highest since 2014. Below a graphon  Russia vs Saudi vs U.S. oil production - R. Zurrer for Money Talks


Rally Unwinds As Russia, Saudis Aim To Increase Oil Output

U.S. West Texas Intermediate crude and internationally-favored Brent crude oil are trading sharply lower on Friday, putting the market in a position to finish the week lower for the first time since the week-ending April 27. The market is being pressured by the possibility of increased production from OPEC for the first time since 2016. This news is offsetting potentially bullish supply disruptions from both Venezuela and Iran. 

Also worrying bullish crude oil traders was a sustained rise in gasoline inventories just ahead of the Memorial Day holiday in the United States, which typically marks the start of the summer driving season. 

Russia Factor 

Crude oil sellers are reacting to the news that Russia hinted it may gradually increase output after withholding supplies since 2017 together with producer cartel OPEC. 

Russia has been floating the idea of ending the production for several weeks, with energy minister Alexander Novak saying on Thursday that restrictions on oil production could be eased “softly” if OPEC and non-OPEC countries see the oil market balancing in June. 

Surprise Build in U.S. Inventories 

An unexpected build in U.S. crude oil inventories also weighed on prices, driving the spread between Brent crude and U.S. West Texas Intermediate (WTI) close to its widest in three years. 

On Wednesday, the U.S. Energy Information Administration (EIA) said commercial crude inventories rose by 5.8 million barrels in the week to May 18. This surprised traders who were looking for a draw of 1.6 million barrels. 

Additionally, U.S. crude oil exports dropped by more than 800.000 barrels a day last week to about 1.75 million barrels a day. Meanwhile, crude imports were up by 558,000 barrels and refiners produced less distillate fuel, which includes diesel and heating oil. 

Gasoline stockpile levels also surprised the market by jumping 1.9 million barrels a day, while distillate inventories fell slightly less than expected. 

Hedge Fund Activity Indicator

One key indicator that is impacting the price action is hedge fund and commodity fund activity. According to government trading data, they have cut their holdings of crude futures and options by more than 10 percent in the last seven weeks to the lowest level this year. The markets are not likely to rally much from current price levels until the professional money managers start buying again. 

July West Texas Intermediate Crude Oil Technical Analysis

Current prices @ 11:15am May 25th shows drop $3.00 from thursday's close:

Screenshot 2018-05-25 11.14.37


The main trend is up according to the weekly swing chart, however, the higher-high, lower-close chart pattern has put the market in a position to form a potentially bearish closing price reversal top. This chart pattern doesn’t indicate a change in trend, but it often indicates that the selling is greater than the buying at current price levels. This is likely to lead to a 2 to 3 week correction and possibly a 50% correction of the last rally. 

The short-term range is $55.45 to $72.90. If the closing price reversal top chart pattern is confirmed next week then look for the start of a possible correction into the 50% to 61.8% zone at $63.77 to $61.81. 

This week’s weakness has also put the market inside the contract’s 50% to 61.8% zone at $64.77 to $70.60. This makes $70.60 new resistance and $64.77 a new downside target. 

Combing the short-term retracement zone and the contract retracement zone creates a potential support cluster at $64.77 to $63.77. This area is my primary downside target. 

Weekly Forecast

Based on this week’s price action, the direction of the Weekly July WTI crude oil contract over the near-term will be determined by trader reaction to the long-term uptrending Gann angle at $68.98 this week and $69.48 the week-ending June 1. 

A close under $69.98 the week-ending May 25 will put the market in a weak position even before the start of next week’s trading. The inability to overcome $69.48 next week will also be a sign of weakness. This could trigger the start of a prolonged sell-off with $64.77 to $63.77 the next likely downside target. 


The main trend is up on the monthly chart, but the market is coming dangerously close to forming a potentially bearish monthly closing price reversal top. 

A close below $68.48 on May 31 will form a closing price reversal top. This will be a very serious development because a reversal on a monthly chart often triggers the start of a 2 to 3 month correction. 

A pair of Gann angles come in on the monthly chart at $66.98 and $66.51. Crossing to the weak side of these angles will indicate the selling pressure is increasing. This could trigger a move into the major 50% level at $64.77. 

Crude oil has formed a closing price reversal top on the daily chart and is in a position to form one on the weekly chart. A close below $68.48 on May 31 will form a reversal on the monthly chart. This rare triple closing price chart pattern will be a strong sign that a major top has formed.


Energy & Commodities

Renewable Energy Storage: The Next Big Power Play

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Posted by Morgan Stanley

on Wednesday, 02 May 2018 16:53


New renewable energy storage technology has the power to turn solar and wind energy into a reliable source of electricity generation for U.S. utilities.

Storage makes renewable energy available when it’s needed the most. Peak electricity usage happens in the early morning and evening, whereas peak production of solar energy is midday and at night for wind. Given the U.S. electric grid’s lack of storage capacity, conventional power plants, including gas-fired ones, are utilities’ most reliable source of electricity.

That could be about to change.  In a new collaborative report, “An Underappreciated Disruptor,” Morgan Stanley’s Utility and Clean Tech analyst, Stephen Byrd and Shared Mobility & Auto analyst, Adam Jonas, argue that the price of both solar and wind energy, as well as new storage units, have reached a point where renewable energy can finally become a dependable rather than an unpredictable source of energy.

 “Demand for energy storage from the utility sector will grow more than the market anticipates by 2019-20,” the report posits. The demand for storage is expected to grow from a less than $300 million a year market to as much as $4 billion in the next two to three years, says the Morgan Stanley report. Ultimately there’s about a $30 billion market for storage units, with capacity for around 85 gigawatt-hours of power storage. That’s enough electricity to light up most of the New York City metro area for a year.

There will be winners and losers. Companies with gas-fired plants might suffer margin compression as utilities increase their use of cheaper renewable sources on tap in battery storage units. Energy storage will also release stored power during periods of high demand in the early mornings and evenings, when power prices are at their highest — another negative to the bottom line of gas-fired plant owners. “Storage effectively provides a low-cost source of power, eliminating the need for the highest cost, least efficient conventional power plant,” says the report.

Companies creating the storage units are the likely winners, although new entrants will find it hard to compete with the two biggest market leaders, say the analysts.

Utilities will have good reason to want to buy the storage units. “We think utilities could deploy storage as a way to enable the growth of renewables and/or defer costly transmission and distribution projects,” says Byrd. Having renewable energy on tap to supplement peak electricity periods will also reduce the likelihood of blackouts.

More affordable battery storage units could also lead to significant utility bill savings for customers with solar panels, as well as those in states where utilities add a “demand charge” to utility bills to recover transmission and distribution grid costs.

As for the grid, the proliferation of electricity storage could eventually transform it into a “plug and play” for the units, used by utilities, solar customers and electric vehicles.

 “The grid of the future is becoming more complex, necessitating improved grid infrastructure to accommodate a proliferation of distributed energy resources,” the report says.


Energy & Commodities

"Iran Lied" - Oil Markets Up

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Posted by Reuters

on Monday, 30 April 2018 15:33

iran lied

Oil prices rose on Monday, bouncing off early losses after Israeli Prime Minister Benjamin Netanyahu said Israel had proof that "Iran lied" about its nuclear capabilities, and that he was sure U.S. President Donald Trump would do "the right thing" in reviewing the country's nuclear deal with western powers... Click for complete article


Energy & Commodities

Trump's revenge: U.S. oil floods Europe, hurting OPEC and Russia

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Posted by Olga Yagova and Libby George

on Monday, 23 April 2018 15:28

oilrigAs OPEC's efforts to balance the oil market bear fruit, U.S. producers are reaping the benefits - and flooding Europe with a record amount of crude.

Russia paired with the Organization of the Petroleum Exporting Countries last year in cutting oil output jointly by 1.8 million barrels per day (bpd), a deal they say has largely rebalanced the market and one that has helped elevate benchmark Brent prices close to four-year highs.

Now, the relatively high prices brought about by that pact, coupled with surging U.S. output, are making it harder to sell Russian, Nigerian and other oil grades in Europe, traders said.

"U.S. oil is on offer everywhere," said a trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude and has recently started purchasing U.S. oil. "It puts local grades under a lot of pressure."... Click Here for complete article


Energy & Commodities

This Natural Resource Uptrend Is Unstoppable

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Posted by Matt Badiali - Real Wealth Strategist

on Friday, 20 April 2018 06:17


There is a huge problem in the Copper Market. Despite strong demand growth from electric cars and battery production about 40% of the world’s current copper production will close over the next 10 to 20 years. In other words demand is going up while supply is scheduled to shrink. Check out The world’s top 10 highest-grade copper mines for investment opportunities after reading this analysis - R. Zurrer for Money Talks

The next big commodity story isn’t some exotic metal like cobalt or palladium…

It’s much more simple and important. The next boom in natural resources is copper.

Copper demand is soaring. You know the story. Electric carsmunicipal-scale batteries and millions of other electronics out there. They all need copper.

While we know the story, the numbers are incredible. The price of copper is up 44% in the last two years.

If you don’t have a position in copper mining, you should buy right now.

A Huge Problem for the Copper Market

Monthly demand for copper rose 82% since January 2000, as you can see from the chart below:

Natural Resource Bull Market

As you can see, the trend works out to about 3.4% annual growth in copper demand. That’s setting up a huge problem for the copper market in the next 10 years.

According to a mining analyst with CRU, around 220 mines — about 40% of the world’s current copper production — will close over the next 10 to 20 years. In addition, mines that continue to produce will do so with lower grades — less metal per ton of rock moved.



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