Gasoline and Distillates Stocks Show Big Draws After Weeks of Builds – Around The Barrel

Oil prices continue to churn on Chinese woes and Mid East Threats after they had their largest weekly decline since October last week, moving higher as Red Sea and Iranian threats grow deeper. EIA reported a crude build of +5.520MMbbls. Gasoline stocks fell -3.146M after reaching a reached a fresh three-year high last week having risen +1.156M, 4.913Mbbls, +3.083Mbbls, +8.028Mbbls and +10.9Mbbls last weeks, that’s a lot of Gasoline building up. Distillate drew -3.221MMbbls in inventories. The WTI Futures Hub at Cushing stocks fell slightly with a -0.033M draw. Domestic US oil production figures rose 300kbpd back to the all-time high 13.3mbpd. Refinery utilization fell -0.15% to 82.4%. There was +0.615Mbbls added to SPR inventory WoW.

Oil Volatility

Last week saw another failed break higher having quickly reversed what had been their highest in nearly eight weeks the prior Friday. This week we are back testing the upper bands. Last week WTI settled at its lowest level in three weeks, March delivery fell $1.54, or 2.1% Friday to settle at $72.28 a barrel, nearly 7.4% lower for the week. April Brent crude fell $1.37, or 1.7% Friday, ending at $77.33 a barrel on ICE Futures Europe, 6.8% lower for the week. March gasoline fell 2.2% Friday to $2.15 a gallon for a weekly loss of 7.7%, March heating oil fell 2% to $2.66 a gallon for a 5.2% weekly loss.

Selling picked up after News reports citing Qatari officials that an Israel-Hamas ceasefire and hostage deal were imminent Thursday. Qatar however responded saying a deal had not yet been reached. Again, the speculative positioning failed running into hedges and demand issues.

The prices continue to pump and fail on continuing Middle East supply disruption threats. U.S. forces launched more strikes against Iran-backed Houthi militants who continue to target Red Sea shipping with missile and drone attacks. The Houthis and friends are adding a bigger risk factor to Mid-Eastern oil which is making energy exports from the U.S., Norway and Australia more attractive.

The energy complex closed last week with WTI oil futures fell -7.35% this week after rising up +6.50% the prior week. Brent crude fell -6.81% this week after rising up +6.49% the prior week. Gasoline fell -7.89% this week after rising up +6.04% the prior week, and heating oil fell -5.19% this week after rising up +6.81% the prior week. (Prices w/w at 16:00 ET close). The WTI price is well off its September 28 high of $94.99.

The geopolitical risk from the Israel-Hamas conflict to effect oil production and transportation in the Middle East has been moved to shipping lanes. The Levant is not a significant oil producing region and is unlikely to impact oil supply in the short term, it the ally risk and possible flow on. Traders’ eyes are on Iran with their backing of Hamas and the Biden’ Administration softening stance there prior to the attack.

The risk matrix changed Friday for Oil and Currency traders when a missile attack on a tanker taking Russian fuel through the Gulf of Aden was hit by Houthi militants with their attacks on merchant trade.

US economy resilience may be confirming the theory that the US economy is more rate resilient and hence better able to keep the world economy together than in past cycles economists at Scotiabank offered.

The US consumer remains key. Household finances are in vastly better shape with a twenty-three year low in the debt-to-income ratio, record low debt payments as a share of incomes, record low weighted average effective cost of mortgage debt, still very high cash and near-cash balances and all backed by strong job markets.

Fiscal policy is vastly different than, say, coming out of the GFC. Inventories are generally in better shape particularly in sectors like autos and housing.

We remain vigilant in a market with constant ongoing Saudi and Russian price manipulation and threats of an expanding Mid East war. To that end recall the self-important delusion of Saudi energy minister Prince Abdulaziz bin Salman saying that people are just “pretending” oil demand is weak, claiming “it’s all a ploy” by speculators.

Rystad: “We have revised our short-term oil demand forecast for 2024 and 2025 up by 0.6 million barrels per day (bpd) and 1 million bpd, respectively, compared to our December outlook.”

The moves remind investors the importance of the supply and demand matrix, derivative or paper positioning which includes hedging and speculation and the weighting of those positioning. Many forget that oil is a true commodity and as we say the rubber always meets the road. Timing matters, particularly when you play with margins.

The Hamas attacks have nixed the US and Saudi Arabia muted deal to pump more oil and recognize Israel in exchange for US defense guarantees. Prior to Hamas WTI Oil futures had been pulling back with the weight of falling risk assets and higher rates threatening economic growth and therefore demand.

Around The Barrel Contents

Click on the links below to navigate to the relevant section.

  1. DOE & API Petroleum Storage Forecast Matrix
  2. Crude Oil Quick Summary
  3. Weekly DoE US Petroleum Storage Report Breakdown
  4. API Crude Inventories
  5. Cushing Oil Stocks
  6. Crude Imports
  7. Crude Exports
  8. Gasoline
  9. Rig Watch
  10. Crude Oil Production
  11. Weather
  12. WTI Crude Oil Futures Technical Analysis
  13. DCOT Report
  14. Option Volatility and Gamma
  15. Key EIA and CME Dates

The risks of global recession threaten the demand picture and with higher rates push the likelihood of a meaningful recession higher. In 2024 the market has in the background the obtuse geopolitical framework framed by Russia’s Ukraine invasion, the Hamas/Israel war, Germany’s inept energy policy, and Iran and China pursuing aggressive directions.


The Week Ahead

DOE Weekly Petroleum Status Report Forecast

  • via TradersCommunity.com
  • Report Date 1/31/24
  • Release Date Wednesday Feb 7, 2024, at 10:30 A.M

Highlights

  • Crude EIA +5.520M Exp +2.133M Prior +1.234M API +0.674M
  • Cushing EIA -0.033M Exp +0.128M Prior -1.972M API +0.492M
  • Gasoline EIA -3.146M Exp +2.128M Prior +1.156M API +3.652M
  • Distillate EIA -3.221M Exp +1.764M Prior -2.542M API -3.699M
  • Refinery Utilization -0.5% to 82.4%. Exp -1.2%
  • Production +300kbpd to 13,300kbpd (13.30 ATH)
  • SPR +0.615 mil WoW
  • US petroleum inventories (crude, SPR, refined products) fell by 3.843mb w/w to 1,585.080mb last week – EIA

Note in bbls *exp = Reuters poll estimates adjusted for API shift, except Cushing

EIA reported a crude build of +5.520MMbbls. Gasoline stocks fell -3.146M after reaching a reached a fresh three-year high last week having risen +1.156M, 4.913Mbbls, +3.083Mbbls, +8.028Mbbls and +10.9Mbbls last weeks, that’s a lot of Gasoline building up. Distillate drew -3.221MMbbls in inventories. The WTI Futures Hub at Cushing stocks fell slightly with a -0.033M draw. Domestic US oil production figures rose 300kbpd back to the all-time high 13.3mbpd. Refinery utilization fell -0.15% to 82.4%. There was +0.615Mbbls added to SPR inventory WoW.

Crude oil inventories in the Gulf Coast often fall sharply in December and bounce back in January. At the end of December each year, parts of Texas and Louisiana, where significant volumes of crude oil are stored, assess ad valorem taxes (meaning, according to value) on end-of-year crude oil inventories.

Gulf Coast crude stocks generally fall sharply in December because of inventory taxes – EIA

Crude oil inventories in the Gulf Coast often fall sharply in December, averaging a decline of nearly 8 million barrels in that month from 1981 through 2011. Preliminary data for December 2012 show a decline of more than 12.5 million barrels in the region, bringing end-of-year crude inventories to approximately 165 million barrels. The reason for this sharp decline: December 31 is the typical assessment date for taxes on crude oil stocks that are collected by many states/counties/municipalities in regions where the bulk of U.S. crude oil and petroleum product inventories are stored. To decrease crude inventories, companies can do a combination of the following: delay or decrease imports, increase runs at refineries, move crude oil out of the taxable region, or sell crude oil to other market participants.

Following December declines, inventories tend to recover in January. Although large crude oil draws can be an indication of demand outpacing supply, the December phenomenon typically does not reflect tightening of the oil market, but rather how companies in the region are taxed on crude stocks. During the middle of the year, crude inventories in the Gulf Coast region both rise and fall, averaging out to relatively small net changes in stocks for a given month.

At the end of December each year, parts of Texas and Louisiana, where significant volumes of crude oil are stored, assess ad valorem taxes (meaning, according to value) on end-of-year crude oil inventories. These taxes, along with the generally accepted accounting practice of last-in, first-out (LIFO) method used to value the assets, create an incentive to draw down crude stocks in the region at the end of the year in order to reduce the tax bill. If oil prices have risen during the year, this accounting practice gives companies stronger incentive to reduce inventory because doing so will further limit their tax exposure. Conversely, if oil prices have fallen throughout the year, companies have less incentive to reduce crude held in storage Source: EIA

Floating Oil storage 12/15 is 70.40 mmb, -13.81 WoW vs revised up 12/08 of 84.21 mmb. If not revised, 12/15 of 70.40 would be 3rd lowest in last 12-mths following 10/20 of 63.49 and 12/16/22 of 69.89 via @Energy_Tidbits

Energy Price Matrix

Energy Market Performance
W/e 2/2/2024

Crude Oil Futures in 2023

Despite all the fear and gloom and geopolitical tinderboxes burning in the Middle East and Russia Crude oil closed 2023 down over 10% lower for its first annual decline in three years. It was a year highlighted by repeated efforts by OPEC+ to ram prices higher via production cuts. The US and specifically Texas ramped up production to record highs to gain valuable customers, export income and energy security for the U.S.

Front-month Nymex crude for February delivery closed out the year -10.7% to $71.65/bbl, and front-month Brent Crude for March delivery settled -10.3% to $77.04/bbl. Gasoline futures fell 14.5% in 2023 to $2.1026/gal, heating oil fell 24.1% Y/Y to $2.5531/gal and natural gas (NG1) plunged 43.8% to $2.514/MMBtu.

2023

US Crude Oil Quick Look

Oil prices continue to be subject to geopolitical bifurcation dynamics with sudden changes that accompanies the onset of chaos. The unexpected knock-ons continue with imperfect bifurcation with political influence and personal vagaries from world leaders such as Putin, Scholz and Biden in addition to routine crude dynamics.

Dec 20 US petroleum inventories in million barrels – EIA via @staunovo

Crack Spreads Matter

Russia plans to reduce diesel exports from its key western ports by a quarter this month amid seasonal refinery maintenance and government efforts to keep more fuel at home to ease growth in domestic prices (Bloomberg). Surging #diesel futures underpinning crude oil prices with today’s gains being led by a 3% rally in the ICE Gasoil (diesel & heating oil) contract. Priced in USD per barrel, gasoil and ULSD trades at $130.5 and $137.6 per barrel respectively @Ole_S_Hansen
American commercial crude stockpiles plunged a week in August by 17 million barrels — the largest weekly drop in data going back more than 40 years. @JavierBlas

Weekly DoE US Petroleum Storage Report Breakdown

Weekly Storage via DOE

with RonH Data ‏@Ronh

  Via RonH at Ron H Public Tableau Link

API Crude Oil Inventories

US petroleum (Crude, SPR, oil products) inventories in million barrels (EIA)

US petroleum inventories (crude, SPR, refined products) fell by 8.705mb w/w to 1,588.923mb last week –
EIA · Jan 31, 2024
Jan 16 2024

US total crude oil inventories (both commercial and the Strategic Petroleum Reserve) had fallen to a 36-year low, dropping below the previous bottom set in 2001 via Bloomberg

Jan 16, 2024, DoE

To date, DOE has purchased a total of 17.03 million barrels of oil for the SPR for an average price of $75.75, as well as accelerated nearly 4 million barrels of exchange returns, pursuant to its strategy to refill the SPR.

US bought 3.2mb for SPR, to be delivered in April, from

  • BP Products North America Inc. 0.6mb
  • ExxonMobil Oil Corporation 1.4mb
  • Phillips 66 Company 0.3mb
  • Macquarie Commodities Trading US LLC 0.6mb
  • Sunoco Partners Marketing & Terminals LP 0.3mb

There was +0.615Mbbls added to SPR inventory WoW.

Cushing Oil Stocks

Cushing, OK is the hub for the most heavily traded US oil Futures contract – West Intermediate Crude – WTI so for that reason we pay special attention to the storage there.

Cushing Storage Tanks
Cushing Storage Tanks
Crude inventories at Cushing at 21mb are at the lowest level since October 2014 – EIA 10/18/23

API Cushing Stocks

API Cushing

Weekly Update via RonH Data ‏@Ronh999

US stocks of distillate fuel (diesel and heating oil)

CHART OF THE DAY: Let’s hope the US economy is truly slowing down — particularly manufacturing –, and that the winter is mild. US stocks of distillate fuel (diesel and heating oil) are ending the fall season at their lowest seasonal level in data since 1982 Javier Blas @JavierBlas Nov 15 2023

It is important to address the situation in diesel.

If you recall our colleague, legendary journalist Robert Gibbons mentioned months ago the reporting on it was incorrect and seemingly agenda based. The fundamental and technical basis did not match the constant fear reporting by analysts and reporters. That no doubt led to top heavy speculative positioning and explains much of the sell off. Throw in a sputtering, at best Chinese economy and declines in European industrial and economic activity has seen a sharp retreat in fuel consumption.

In addition, there is the overwhelming supply we spoke of month ago, this has expanded further. To quote Manish Raj, managing director at Velandera Energy Partners to MarketWatch that “smugglers, dark fleet operators, thieves and black-market dealers are working overtime washing and gushing oil produced or stolen from Russia, Iran, Kurdistan, and Nigeria.”

US Oil Import Export

Imports

US crude imports by origin in kbpd (incl. w/w changes)

  • Canada +303 to 3573
  • Mexico +71 to 427
  • Saudi Arabia +69 to 150
  • Colombia +7 to 79
  • Iraq -1 to 205
  • Ecuador +100 to 103
  • Nigeria -9 to 190
  • Brazil -53 to 213
  • Libya -37 to 0
  • 1/31/24
The US imported 10,000 crude barrels from Russia in November – EIA
U.S. Net Imports of Crude Oil and Petroleum Products (Thousand Barrels per Day) – EIA
US crude imports from #Venezuela were at 163kbpd in September vs 145kbpd in August – EIA

Exports

US crude exports

Top buyers of US crude in November (total exports 3.967mbpd) in kbpd

  • Netherland 562
  • South Korea 478
  • China 404
  • Canada 315
  • Germany 204
  • UK 193
  • Italy 179
  • Singapore 172

Top buyers of US refined products in November (total exports 6.255mbpd) in kbpd

  • Mexico 1137
  • Canada 548
  • China 542
  • Japan 515
  • India 251
  • Netherland 199
  • South Korea 192
U.S. Exports to China of Crude Oil (Thousand Barrels per Day) – EIA

Top buyers of US refined products in September in kbpd (Total exports: 5.903mbpd) – EIA

  • Mexico 1,208
  • Japan 610
  • China 493
  • Canada 397
  • India 208
  • Netherlands 191

The Russia, India and China mix

Russia said they would cut production by 500kbbls in March just as Russia launched its heaviest bombardment on southern Ukraine since the start of the war, as officials warned Moscow’s major offensive had ‘definitely’ started. There is a clear use of oil as a weapon by Putin. India and China being Russia’s main customers are not filling the demand void. Not hard to join the dots.

EU’s sanctions on Russian refined products were implemented Feb. 5. The ban follows a similar price cap on crude shipments introduced last year. European countries have pushed to lower the crude price cap ($60) on Moscow even further, but the Biden administration said it was inclined to oppose the move. 

Futures have been ignoring large US builds and have chosen hope with China opening up rather than negative morose from China’s economic implosion and the Central Bank maelstrom. Europe has been addressing energy dependance on Russia since the Ukraine invasion. President Vladimir Putin said Russia would immediately stop oil supply to countries that support the G7 members price cap on exports of Russian oil.

Since the cap, if not before Russian exports have been redirected to India and China in particular. Russian crude exports into India rose by 260kbd m/m in December to a record 1.2mbd. January exports are on-track to nearly 1.3mbd of Russian crude. Russian Exports to China were 70kbd in December, down nearly 27%m/m. We have seen Malaysia increase exports well beyond its own output to China. In turn China has exported products such as distillates back to Europe.

US Gasoline Consumers

Input to Refineries

Refinery utilization rate in % in PADD 3 @staunovo

Jan 31, 2024

Update: PADD 3 Refinery Utilization

U.S. Refinery Utilization (%) via ⁦@SoberLook 11/15/2003

US consumers bought 369.9 million gallons of gasoline per day last week. That is +15.9 mil YoY

US consumers spent $1,160.0 million dollars per day for gasoline last week. That is $-59.1 mil YoY.

US avg retail price for gasoline was $3.136 last week. That is -0.308 YoY.


Rig Watch

Baker Hughes Weekly North American Rigs Report

  • US Baker Hughes Rig Count Feb 2: 619 (prev 621)
  • Rotary Oil Rigs Feb 2: 499 (prev 499)
  • Rotary Gas Rigs Feb 2: 117 (prev 119)

US Oil Rigs w/w changes by key shale basins (Prior Week)

  • Permian +1 to 307
  • Eagle Ford -2 to 48
  • Williston unchanged at 34
  • Cana Woodford +1 to 24
  • DJ Niobrara unchanged at 13
  • Feb 2, 2024

US oil rigs and frac spread (Baker Hughes/Primary Vision)

Horizontal oil rigs in the Permian -2 to 293 Baker Hughes 12/21/23
  • Permian Basin rigs pulled off at the fastest pace in three years amid consolidation and slow return in oil demand.
  • Rigs targeting both crude and natural gas in the West Texas and southeast New Mexico region declined by 7 to 320 this week, according to data released Friday by Baker Hughes Co.
  • It’s the biggest weekly drop in the Permian since June 2020. – Bloomberg

Canada Rigs

  • Canada’s active rig count came in at 106 December 22, 2023, a decrease of 52 rigs compared to December 15. This is a large drop, but entirely expected in the lead-up to Christmas.
  • Alberta’s active rig count declined from 110 to 77, Saskatchewan’s rig count decreased to 6. BC’s active rig count settled at 23 compared to 26 earlier in the week.
  • Oil rigs decreased by 41 between December 15 and December 22.
  • Gas rigs decreased by 10, settling at 57 rigs.
  • The number of rigs classified as “Other” or “Unknown” held steady at 1 rig.
  • Today’s rig utilization rate is 29.5%, a decline from 43.4% at last week’s end.
  • The total number of rigs fell from 364 to 359, a 1.4% decrease. It is expected that the utilization rate will rebound strongly after the Christmas slowdown

International oil rigs ex North America

International oil rigs ex North America -14 m/m to 731 in December – Baker Hughes

  • Norway +3
  • Nigeria, Brazil+2
  • Abu Dhabi, Saudi Arabia, Libya, Argentina -2
  • Algeria -8
International oil rigs ex North America -14 m/m to 731 in December
via Baker Hughes Jan 5, 2024 @staunovo

Ministry of Energy: Saudi Arabia will extend the voluntary cut of one million barrels per day for another month to include September that can be extended or extended and deepened.

Riyadh, August 03, 2023, SPA — An official source from the Ministry of Energy announced that the Kingdom of Saudi Arabia will extend the voluntary cut of one million barrels per day, which has gone into implementation in July, for another month to include the month of September that can be extended or extended and deepened. In effect, the Kingdom’s production for the month of September 2023 will be approximately 9 million barrels per day. The source also noted that this cut is in addition to the voluntary cut previously announced by the Kingdom in April 2023, which extends until the end of December 2024.
The source confirmed that this additional voluntary cut comes to reinforce the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets.
–SPA

KSA Ministry of Energy 15:51 LOCAL TIME 12:51 GMT

US Oil Production

US crude production: This week’s domestic crude oil production estimate incorporates a re-benchmarking that increased estimated volumes by 189,000 barrels per day, which is about 1.4% of this week’s estimated production total. – EIA 12/20/23

US Oil Field Production +300kbpd at 13.30mbpd ATH (13.30mbpd ATH)

US crude production was at 13.308mbpd in November vs 13.224mbpd in October (revised from 13.248mbpd) m/m changes in kbpd:

  • Texas +76
  • New Mexico +45
  • North Dakota +17
  • Colorado +12
  • Wyoming +10
  • Ohia +5
  • Gulf of Mexico -78
Crude production from the 4 major US shale plays now exceeds 9mbd out of the total US crude production of 13.2mbd. 70%. @DialPauldial

EIA New Production Calculation

Below is a summary via HFI Research

The formula is simple: US crude oil production + transfers to crude oil + adjustment.

Now there are still major flaws in the weekly oil storage reports that require the modified adjustment. For example, EIA does not take into account real-time US crude exports or imports. So the variance between these two figures could explain large differences in the adjustment. If you took this week for example, the reported adjustment came in at +512k b/d, while our modified adjustment showed +95k b/d. This is because EIA overstated both crude exports and crude imports to the tune of 417k b/d.

So going forward, there will be times when the adjustment comes in massively positive or massively negative, but over time, the adjustment should start to revert back to zero or possibly negative, while transfers to crude oil remain positively around ~+700k b/d.

If you look at our modified adjustment since the start of 2021, our dataset averaged ~750k b/d. We used ~750k b/d as our “plant condensate” figure to derive our weekly US crude estimates.

Now, in reality, this is an average, so week-to-week volatility will usually be elevated. But over time, this figure almost always goes back to the mean. In other words, if EIA over-reports crude draws or crude builds, they almost always revert back over the coming weeks.

US oil production is around ~13.2 million b/d. EIA’s latest change in adjustment math has really helped our modified adjustment calculation. The only issue remaining is the “reported” crude imports and exports vs “actual”. But that’s ok, we can easily solve that problem. @HFI_Research Nov 29, 2023

New post-COVID record, only 90 kbpd below the all-time crude production record set in November 2019.

m/m changes in kbpd

US crude production data – weekly vs monthly figures – weekly data is mostly model based, using as an input two month lagging data from the monthly report, monthly data is based on company reporting (values in mbpd – data from EIA)
North Dakota oil production 1.278mbpd in November, +24kbpd or 1.9% m/m, +180kbpd or 16.4% y/y – pipeline authority
@staunovo
·
Jan 19
NorthDakota oil production was at 1.278mbpd in November, +24kbpd or 1.9% m/m, +180kbpd or 16.4% y/y – pipeline authority – state

OPEC Crude Oil Production

OPEC+

Voluntary OPEC+ supply cuts for 1Q24 – Nov 30 23 Meeting
Saudi Arabia 1mbpd
Russia (300kbpd crude, 200kbpd fuel oil) -> exports
Kuwait 135kbpd
Kazakhstan 82kbpd
Algeria 51kbpd
Oman 42kbpd

Ministry of Energy: Saudi Arabia will extend the voluntary cut of one million barrels per day into next year that can be extended or extended and deepened

Weather Watch

Gulf of Mexico


WTI Crude Oil Futures Technical Analysis

via KnovaWave @KnovaWave

US Crude Oil (WTI)

The aggressive move high three weeks ago was also helped by the sharp long-liquidation week which left the futures market exposed to a geopolitical risk such as the Israel-Hamas conflict potential to effect oil production and transportation in the Middle East. Note the Levant is not a significant oil producing region and is unlikely to impact oil supply in the short term, it the ally risk and possible flow on. Traders’ eyes are on Iran with their backing of Hamas and the Biden’ Administration softening stance there prior to the attack.

For perspective the Friday before the attacks West Texas Intermediate settled around $83 a barrel, down $8 this week to its lowest since August, erasing gains from the extension of production cuts by Saudi Arabia and Russia. Prices had risen over 30% with OPEC+ campaign to reduce supplies and raise prices. Sliding crack spreads for refined products are impacting. At one point this week, gasoline was trading less than $8 above crude, halving from two weeks prior. Diesel’s premium over crude fell to the lowest since July as Russia lifted an export ban for its oil producers.

Daily:  WTI Crude Oil continues to trade in the long channel from last year’s panic high and bounced last month around the 38% zone around 64 and option confluence back through the minor pennant resistance. From there we had a sharp spillover emotive wave up creating a clear break over the 50 dma, Kijun and Tenkan kiss of life. The move up came after completing the correction in 3 wave from gap fill and fail of the daily bull flag back in Oct/Nov. Through the Hamas/Israel spike higher we spat the outer channel and are working through that overhead speculative supply. For bulls needs to break above those descending levels for higher.

We are in a completive mode with this impulse, it’s a question of degree on the topside, use the Murrey math 240/60 grid. From there down in 3 waves, completing a C or IV? Support is previous lows. The bear case is the high was a complete 5.

Weekly: WTI crude Oil futures simply reversed downside momentum near the key 61.8% with impulse, having plunged more than $60 off the June highs. WTI was never able to take on its sphere of influence which is causing resistance now as it has bounced off the double bottom through Kijun. The support is 50wma for the upside. Recall WTI completed 3 waves and spat the 50wma after the since filled OPEC+ gap up underscoring its weakness prior to the Hamas attack. Near lows underscore the support, no less than 5 times since April 2021. Risk support is the grid. Long term 61.8% target fueled the spit of a spit by after rebalanced Chikou sated. Support Weekly Kijun, tenkan, cloud and Murrey Math levels and previous breaks (off monthly). Bear case is Wave 5 complete.

The key is crowd behavior to help tell the story which in energy is often around geopolitics. A great example of why we watch ABC corrections and from here we get the energy from the break being balanced. This move that was powered by 50 dma Tenkan spit of a spit – hence the fractal energies reverberations.

These are special times, recall “After we regained the pattern 261.8% from the extreme (-$40) move. The climax of the larger acceleration lower after broke the weekly uptrend, a fractal of the sharp and all the way to all-time lows to negative pricing we have seen mirror replications.” Above we have Murrey Math time and price

What we broke…….

Crude Oil in the past quarter built a huge bull flag. We watch if the recent break was false, or we fail. Very clear pattern.

The focus remains 85.61-88.01 a region defined by the 2013 low, the 100% extension of the March decline and the 61.8.% retracement of the November advance. A break below opened up the objective 2020 yearly open and 2018 high at 75.35-76.87 which gave away and has held on to attempts to get above. This is an area of interest for downside exhaustion and price inflection potentially.


Crude Oil Futures Commitment of Traders

Latest ICE and CFTC Open Interest Data:

CTFC and ICE open interest:

Money managers increased their net-length in Brent crude oil futures and options by 53,269 contracts to 261,416 in the week ending January 30 via ICE

  • Long-only positions rose by 50,711
  • Short-only positions fell by 2,558
  • other reportables net-length fell by 35,687
Brent Volume & Open Interest options & futures on 29-Jan-2024 @buzzz00

Money managers increased their net-length in WTI crude oil futures and options by 16,088 contracts to 150,228 in the week ending January 30 via CFTC

  • Long-only positions rose by 2,339
  • Short-only positions fell by 13,749
  • other reportables net-length fell by 3,125
WTI Volume & Open Interest options & futures on 02-Feb-2024 (PRELIMINARY) @buzzz00

Charts on crude net-positioning of non-commercial accounts (=managed money and other reportables) in Brent and WTI futures and options combined latest value is January 30 via @staunovo

Aggregated open interest in Brent and WTI in million contracts

COT on Commodities

COT on commodities in week to Jan 30, 2024: Supported by broad gains across all sectors except grains, the hedge fund long among the 24 major futures contracts tracked in this more than doubled from a Sept 2019 low. Strong buying of crude oil, gas oil, copper, sugar and livestock being partly offset by selling of natgas, gold and not least grains via Ole S Hansen @Ole_S_Hansen

via Ole S Hansen @Ole_S_Hansen

Image

Understanding DCOT Reports

Read Understanding Commitments of Traders Reports – COT, TFF and DCOT  to help understand the disaggregated reports (DCOT) and how they break down the reportable open interest positions into four classifications:

1. Producer/Merchant/Processor/User 2. Swap Dealers 3. Managed Money 4. Other Reportables


Crude Oil Option Volatility Watch

The sharp move in WTI to $63 in May and then rebound came after ten-day volatility in oil rose the highest level since October as crude sank for a third week. It gives a good indicator of complacency and optionality out there in slow price ranges. API reported big product draws which is supportive for the cracks. The contango structure and inflation having cooled from its recent peak, but remaining stubbornly elevated adds a volatile dynamic around settlements. The US regional banking disaster filtered through to commodities such as oil, copper and natural gas.

Ten-day volatility in oil jumped to the highest level since October as crude sank for a third week.

via commodityvol.com

Image

NYMEX LO = Crude Oil Options First 3 Months (Live Link)

Image

NYMEX LO & ICE North Sea Brent BRN Crude Oil Options (Live Link)

NYMEX LO NYMEX OH NYMEX OB Options (Live Link)

Image

NYMEX LO NYMEX OB Options (Live Link)

Image

Energy Earnings Highlights for Q2 2023

Major oil companies reported Q3 earnings:

Lower earnings have been across the big oil board.

The three major oil services companies all reported Q3 earnings:


Key EIA and CME Dates for WTI Crude Oil

Key EIA and CME Dates For WTI Crude Oil

From The TradersCommunity US Research Desk

Leave a Reply

Your email address will not be published. Required fields are marked *