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Energy & Inflation - The Chickens Come Home to RoostThe worldwide pandemic gripped the markets two years ago, throwing the global economy into a brief tailspin. In hindsight, the decline in markets across all assets seems like the blink of an eye. At the time, it felt like an eternity. Crude oil explodes and becomes very volatile Natural gas at an unseasonal high Coal reached a new record peak US energy policy lit the fuse Ukraine and inflation are pouring fuel on the fire Energy demand evaporated, sending landlocked NYMEX crude oil below zero for the first time since trading began in the 1980s. Seaborne Brent petroleum fell to the lowest price of this century at $16 per barrel. Natural gas dropped to a twenty-five-year low at $1.432 per MMBtu, and coal prices fell under $40 per ton. Central Bank liquidity and government stimulus that stabilized the economy ignited a recovery that began lifting prices. Two years later, the meltdown turned into a melt-up as raging inflation and the first significant war on European soil since World War II turned one crisis into another. The chickens came home to roost in the energy markets as prices went from famine to feast for producers and feast to famine for consumers. Crude oil explodes and becomes very volatile In March 2022, crude oil rose to the highest price since 2008 and blew through the $100 per barrel level as a hot knife goes through butter. The monthly chart shows that after probing above $100 in late February, nearby NYMEX crude oil futures rose to $130.50 in March, before pulling back to just below the triple digit price at the end of last week. The quarterly chart shows that the energy commodity rose for the eighth consecutive quarter in Q1 2022. Nearby Brent crude oil futures, the benchmark for European, African, Middle Eastern, and Russian petroleum, exploded to $139.13 per barrel in March before pulling back to the $104 level on the June futures contract. While crude oil corrected from the high, the price has been highly volatile, with $10 daily trading ranges becoming the norm instead of the exception. Natural gas at an unseasonal high The natural gas market moves into the injection season in late March as heating demand declines. March tends to be a bearish time in the natural gas market because of the energy commodity’s seasonality. The monthly chart shows that nearby natural gas futures rose to a high of $5.832 in March, the highest level during the month that ends the withdrawal season since 2008. On April 1, the price was over the $5.70 per MMBtu level, more than double the level at the start of April 2021. Coal reached a new record peak Coal, the fossil fuel that environmentalists consider a four-letter energy commodity, rose to a new record high in March. The monthly chart of thermal coal futures for delivery in Rotterdam, the Netherlands, shows the price reached a record $465 per ton in March before correcting to the $265.40 level. Meanwhile, the price remained above the previous record high from July 2008 at $224 per ton. US energy policy lit the fuse As the energy demand made a comeback from the lows during the second half of 2020, the change in US administrations planted very bullish seeds for fossil fuel prices. The shift in US energy policy was symbolic and real. On his first day in office on January 21, 2021, President Biden signed an executive order canceling the Keystone XL pipeline, fulfilling his campaign pledge to address climate change. Environmentalists and progressive Democrats called the US addiction to hydrocarbons an existential threat. In 2021 and 2022, the administration banned drilling and fracking for oil and gas on Alaska’s federal lands and tightened regulations on hydrocarbon production. All the while, the demand for gas, oil, and coal was rising. OPEC+, the international oil cartel, and its partner Russia maintained production cuts as they received a gift from the US administration. In March 2020, USD petroleum output led the world at 13.1 million barrels per day. The shift in US energy policy to favor alternative and renewable fuels and inhibit hydrocarbon production and consumption handed the pricing power back to OPEC+ on a silver platter. After decades of striving for energy independence, the US surrendered it in a matter of months. As the price rose, the Biden Administration continued to pander to its party’s progressive wing with green energy rhetoric while begging the cartel to increase output thrice. On each occasion, OPEC+ not so politely refused, and the oil price continued to rise. Meanwhile, natural gas and coal shortages pushed those commodities to multi-year highs. The bottom line is that while addressing climate change is a noble cause, it is a multi-decade project. The US and worldwide consumers continue to depend on the hydrocarbons that power the globe. The shift in energy policy planted very bullish seeds where oil wells, gas fields, and coal mines once produced the energy commodities on US soil. An unexpected event made the prices combustible. Ukraine and inflation are pouring fuel on the fire In previous articles before the invasion, we wrote that the February 4 meeting between China’s President Xi and Russian President Vladimir Putin was a “watershed event.” The $117 billion trade agreement was secondary to the “no-limits” support deal. Twenty days after the leaders shook hands at the Beijing Winter Olympics opening ceremony, Russia invaded Ukraine launching a bloody and devasting war that created a massive schism in the geopolitical landscape. Sanctions on Russia, retaliatory measures, and heated rhetoric ignited an explosive fuse in fossil fuel markets. In crude oil, the price rose as Russia is a leading producer. Supply concerns pushed the Brent and WTI futures markets into backwardations where deferred prices were lower than prices for nearby delivery. The price eclipsed the $100 per barrel level for the first time since 2014 and reached the highest price since 2008. Asian and European natural gas prices were trading at much higher levels than the US Henry Hub price before Russia’s invasion. Meanwhile, European natural gas prices exploded to a new record peak in March. The chart of ICE UK natural gas futures speaks for itself with the explosive move to a record peak in March. LNG changed the US natural gas market over the past years, expanding its reach beyond the North American pipeline network. LNG now travels the world by ocean tankers, making US domestic prices more sensitive to worldwide levels. In the wake of Russian aggression and European sanctions, Europe is attempting to wean itself from its addiction to Russian natural gas, increasing the need for US LNG imports. The increase in demand has put upward pressure on US natural gas prices and downward pressure on inventories, which were over 14% below the five-year average for the week ending on March 25, 2022. In the coal market, China and India have had a healthy appetite for the dirtiest fossil fuel. Moreover, rising oil and natural gas prices put upward pressure on coal, a less expensive alternative. Meanwhile, rising inflation is causing production costs to rise as labor, equipment, and all other aspects of extracting fossil fuels and all commodities from the earth’s crust have skyrocketed. Rising energy prices are a root cause of increasing inflation, but it has become a vicious cycle that also impacts energy output costs. The February US inflation data ran at the highest level in over four decades. Last week, the US President announced the release of one million barrels per day from the US strategic petroleum reserve. Taping the supplies could run 180 days, making it the most significant use of the SPR in history. Meanwhile, over the past decades, most SPR releases have not pushed prices lower, and some have caused rallies in the oil futures market. US energy policy planted bullish seeds for fossil fuel prices in early 2021. It did not take long for the chickens to come home to roost. Now that consumers are pay $4, $5, $6, and $7 per gallon for gasoline, the administration calls higher prices the Russian President’s fault, a convenient political ploy. The perfect bullish storm in energy began long before Russian troops rolled over Ukraine’s border. The Russian leader and sanctions poured fuel on an already raging inflationary fire in the energy markets. However, US energy, monetary, and fiscal policies were the original arsonists. The base prices for oil, gas, and coal will remain elevated for as long as the eye can see. Buying dips is likely to be the optimal approach to the sector. Since corrections in commodities markets can be brutal, adjust your risk-reward horizons to reflect wide price variance. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
NYMEX:CL1!Education
by Andy_Hecht
Will importers cave into Putin’s gas for Rubles demand?In what is widely seen as an attempt to circumvent Western sanctions and prop up the Russian ruble, Russian President Vladimir Putin recently required “unfriendly” buyers of the country’s natural gas to pay in rubles, a move that could have far-reaching implications on global oil and energy supply. "I have decided to implement a set of measures to transfer payment for our gas supplies to unfriendly countries into Russian rubles,” news outlets quoted Putin as saying in a government meeting last week, adding that Russia would turn down payments for natural-gas supplies in currencies “that have compromised themselves,” including dollars and euros. Putin has given the Russian central bank and gas suppliers like Gazprom, Rosneft and Lukoil a week to implement the change. Why is Putin pushing for ruble payments? Russia’s decision came as the country’s oil trade has been left in disarray as importers put orders on hold amid a wide condemnation of the Kremlin’s attacks on Ukraine. Since the war broke out over a month ago, concerns of a global energy crisis intensified, sending pump prices skyrocketing to record highs and fanning global inflation fears. Economic sanctions imposed by the US and its Western allies have also caused the Russian ruble to fall to record lows in the early weeks since the war started, further weakening the Russian economy. Putin’s latest move sent the ruble to its strongest in nearly a month against the US dollar last week, although it was still down ~25% this year as of Monday, March 28, at ~106 against the dollar. Will importers cave in? Russia supplies nearly 40% of the European Union’s natural gas and over 25% of the region’s crude oil. Although the global oil cartel known as the Organization of Petroleum Exporting Countries (OPEC) and other non-OPEC oil-exporting nations played down concerns of a global oil shortage as the war drags on, many industry players fear a potential demand destruction that could cause oil demand to peak and fall when pump prices become too expensive. To reinstate the balance in oil supply and demand especially during wintertime in Europe, EU-based importers of Russian oil could then choose to yield to Putin’s demands and pay in rubles. However, EU leaders, shortly after Putin’s announcement, stood firm and rejected the Kremlin’s demands, with Slovenia Prime Minister Janez Jansa saying “nobody will pay in rubles,” Bloomberg News reported. The message was backed by leaders of Ireland, Italy, Croatia, and Germany, among others, ahead of a summit meeting in Brussels. The leaders stressed that Putin’s demand would be in violation of their existing contracts. Adding to Putin’s woes is US President Joe Biden’s pledge to deliver 15 billion cubic meters of liquified natural gas to Europe this year on top of the shipments that are already on their way to Europe. The probability of EU importers caving into Russia’s demands are also looking less likely as the EU steps up its efforts to discontinue buying Russian gas before 2030. Faster transition to renewable energy sources Instead of a far-reaching energy crisis that many fear could come out of the Russia-Ukraine war, sanctions against Russia and the Kremlin’s countersanctions could accelerate the transition to renewable energy sources. Europe could speed up the construction of LNG terminals across the continent to store LNG deliveries from allies including the US. Agora Energiewende, a German think-tank, suggests a 32% reduction in Europe’s gas consumption by 2027 if the continent slashes its use of fossil fuels and transition to wind and solar energy in the next five years. This measure could save the EU between 127 billion euros and 318 billion euros on gas imports, the think-tank said. Scaling up renewable energy in the EU could allow the continent to avoid 80% of today’s Russian gas imports by 2027, Agora Energiewende added.
by BlackBull_Markets
NFG to cool off on NATO news?Based on historical movement, the peak could occur anywhere in the larger red box. The final targets are in the green boxes. The pending bottom should occur within the larger green box as has been the historical case. Half of all movement has ended in the smaller green box. In this instance, the signal indicated SELL on March 25, 2022 with a closing price of 68.04. If this instance is successful, that means the stock should decline to at least 67.47 which is the top of the larger green box. Three-quarters of all successful signals have the stock decline 2.05% from the signal closing price. This percentage is the top of the smaller green box. Half of all successful signals have the stock decline 3.298% which is the end point of the black dotted arrow. One-quarter of all successful signals have the stock decline 4.552% from the signal closing price which is the bottom of the smaller green box. The maximum decline on record would see a move to the bottom of the larger green box. These are the same concepts for the levels in the red boxes as well. The ends/vertical sides of the boxes are determined in a similar fashion. The trough of the decline can occur as soon as the next trading bar after signal close, while the max decline occurs within the limit of study at 50 trading bars after the signal. A 0.4% decline must occur over the next 50 trading bars in order to be considered a success. Three-quarters of successful movement occur after at least 15 trading bars; half occur within 26 trading bars, and one-quarter require at least 44 trading bars. The black dotted arrow represents median historical movement. Medians are a good metric, but they are just one of many I use when forecasting future movement. As always, the stock could decline the very next bar after the signal without looking back (therefore the red boxes would not come into play) or the stock may never decline (and the green boxes may never come into play).
NYSE:NFGShort
by StockSignaler
LONG TERM Dividends TA on ENB?Technical Analysis $ENB for a friend looking to add $ENB as a long-term investment ENBRIDGE has been making gains and is a great Low P/E High Value Dividend Investment here is a TA that brings us into 2026 $ENB Is no doubt a safe long-term investment no matter the price but that being said in this current GeoPolitical new world ENBridge could also show some growth potential that could send this stock price into a much higher tier with not much downside risk
TSX:ENBLong
by bmoneytree
1
Civintas $CIVI, innovation is not always creating thingsCivintas Resources Inc. is in the Oil & Gas Sector, centered in the Exploration and Production Industry. It should benefit from the current uptrend of oil prices NYMEX:CL1! . I mentioned innovation because the company is set to "clean up dozens of wells orphaned by others". The state of Colorado has granted this new startegy for NYSE:CIVI to "work hand in hand with landowners and local communities to restore former well sites". This may because of their strategy to protect Colorado’s groundwater resources. They perform Horizontal Drilling but before, they install multiple layers of cement and steel casing and then performs pressure tests on the well casings. This is a good story funds might see to buy this stock. Today the price emerge with a strong breakout from a flat base. The base has a 11.48 points of height, TA rules state that the target price after the breakout is to add that up the base, that is at $70.63. The breakout from today has a gain of 7%, that is far from the pivot so I won't chase it. Also the volume isn't that great. So, as I didn't buy yesterday, I'll wait for a throwback to the previous resistance line and buy there. If it doesn't happens, I'll wait for another opportunity.
NYSE:CIVILong
by dpuleo19
$TSLA whos giving out this much return on investment? 👁‍🗨*This is not financial advice, so trade at your own risks* *My team digs deep and finds stocks that are expected to perform well based off multiple confluences* *Experienced traders understand the uphill battle in timing the market, so instead my team focuses mainly on risk management* Recap: My team entered electric vehicle company Tesla $TSLA on March 9, 2022, at $800 per share. Our first take profit was set at $975 but we were able to sell our shares today at $992 per share for a gain of 24%! Our trade initially brushed a tight stop-loss we had at $775 but we talked it over and decided to hold onto our shares. We strive to promote an investing style that is profitable, but most importantly safe to use. Please understand that this isn't a healthy trading habit to have, and that going forward we will try and make sure that it doesn't happen again. Congrats to those of you who took this trade! Entry: $800 Take Profit (HIT): $992 If you would like to see more, please like and follow us @SimplyShowMeTheMoney
NASDAQ:TSLA
by SimplyShowMeTheMoney
6
Crucial Moment For Oil I never post here but I really wanted to give this notice to as many ppl as possible. Forget the conflict no one knows how that will end. OPEC is still very tight with supply staying on pace with supply increases in the face of $130-$90 barrel oil. We aren't seeing much action in terms of increases in supply in the US either. Iran oil also seems to be off the table. All of this tells me we should hold this trend line and close around $99 today, but the chart is saying otherwise atm. If we close above $99 I believe we see a significant move higher to at least past resistance around $120. If we close below $99 today we could see a drop down to $80. Oil has traded in this channel for almost 2 years before the russian-ukraine war, making a move below or a confirmation of support very significant.
FX:USOILLong
by Value-Invest
1
Natural Gases Futures (NG!), H4 Potential for dip!Type: Bearish drop Resistance : 372 Pivot: 363.9 Support : 332 Preferred case: We see the potential for a further bearish drop from our Pivot at 363.9 in line swing high resistance towards our 1st support at 332 in line with 127.2% Fibonacci projection and 61.8% Fibonacci retracement. Our bearish bias is further supported prices trading below our ichimoku clouds. Alternative scenario: If prices were to reverse, they can potentially climb towards our 1st resistance at 372 which is in line with 100% Fibonacci projection Fundamentals: Warmer weather conditions and renewable energy sources might mean temporary setback on the commodities
MCX:NATURALGAS1!Short
by Genesiv