WTI edges 70c higher as Iranian nuclear talks heat up; Gas holds last week's gains to trade near $3.29
Opening Prices:
> WTI is up 70c to $71.61/Bbl, and Brent is up 69c to $73.38/Bbl.
AEGIS: "The Trend remains UP and Buyers are in Control above $69.85. Market-Driven hedges are available at current prices. Only a weekly close below $66.40 derails upward market momentum."
> Natural gas is up 0.0c to $3.296/MMBtu.
AEGIS: "The Trend is UP. Buyers are in Control above $3.18. A change in Trend requires a Friday close below $3.01."
AEGIS Notes
Crude oil
Oil prices continue higher as demand growth looks robust and Iranian nuclear talks drag on
The G7 announcement to donate 1 billion Covid-19 doses is a bullish sign for the oil demand recovery
Iran’s foreign ministry said Monday there was “very little time left” for world powers to resolve outstanding differences to revive a nuclear deal (Bloomberg)
Saeed Khatibzadeh, a spokesman for Iran’s Foreign Ministry, claims that a broad agreement on how to lift U.S. sanctions on Iran’s energy industry had been agreed but gave no details
Hedge funds bullishness on WTI came back strong for the week ended June 8, boosting net-long positions to a nearly three-year high (CFTC)
We often discuss hedge funds or speculator interest when positioning is either relatively high or low historically. Speculators can often exacerbate market moves on news or shifts in the oil market
As net-spec length in WTI increases to historically high levels, we often caution that on negative news or downward sentiment, funds can help cause a quick and sharp sell-off as many head for the exit at the same time
Natural Gas
Feedgas flows to U.S. LNG export facilities are ticking higher as maintenance concludes (Bloomberg)
Flows to Cameron LNG are returning online. After averaging around 1.27 Bcf/d last week, flows are back up to approximately 1.57 Bcf/d
Corpus Christi volumes are also up around 0.824 Bcf/d to around 2.39 Bcf/d
Weather forecast held relatively steady over the weekend, only losing two pop-weighted cooling degree days (CWG)
The U.S. West is still slated for record-setting heat later this week. Much of the central U.S. is also forecast to see above-average temperatures
Baker Hughes’ gas-directed drilling rig count decreased by one, to bring the total gas rig count to 96 < Not enough to increase U.S. gas production.
The primary gas basins, Marcellus and Utica, lost two rigs collectively, while the Haynesville basin gained one rig
Oil & Gas Prices - June 14
Oil & Gas Prices - June 14
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - June 14
Energy Report: Hedge Funds Are Back
By Phil Flynn (Jun 14, 2021 09:46AM ET)
All of a sudden the hedge funds love oil again. Headphones that in recent weeks into abandon the oil complex as they worried that the resumption of Iranian nuclear talks would bring a flood of oil to the marketplace. Yet last week based on signs that demand in the United States and the world was coming back in a big way the hedge funds boosted their net long position to the highest level in nearly three years.
That helped support the oil market late last week along with reports that the Biden administration was considering giving in to pressure from refiners to reduce ethanol in gasoline. Reuters had reported that the US EPA was considering ways to provide relief to US refiners from biofuel blending mandates as the price of corn has exploded as well as the price of soybeans.
Talk of the waivers caused the grain market to sell off and the oil market to rally as we would use less AG hindwing and more oil. That about-face by the Biden administration seems to not be in keeping with his green energy cuts but at the same time, he is a political animal, and sometimes politics get ahead of what is good for the planet.
The other major factor that was keeping hedge funds out of the market was the possibility of an Iranian nuclear deal. The Biden administration has been falling all over itself trying to get Iran back to the table for these talks in basically begging them to get back into the ill-fated 2015 agreement. There have been mixed reports of progress coming out of the talks. < Why does Team Biden want to suck up to Iran?
Oil prices sold off sharply after a report that sanctions on Iranian oil were lifted. That was later clarified that they were lifting sanctions on some Iranian oil entities and individuals. Now over the weekend, Bloomberg News reports that Iran’s lead envoy said that a deal was unlikely before the presidential election in his country.
President Hassan Rouhani who negotiated the original deal in 2015 is due to leave office in August after serving two terms he is widely expected to be replaced by Ebrahim Raisi a cleric generally seen as hostile as engaging with the US according to Bloomberg News. Most oil traders realized that if Raisi is in power that the likelihood of an Iranian nuclear deal getting done is small.
The Bloomberg report also said that the Iran council said it reached a broad agreement with the US over the lifting of sanctions on its industrial sectors including energy but warned that there was very little time left for real powers to revive a 2015 nuclear deal. Based on market action in hedge fund activity it appears that the market is putting the Iran deal in the rearview window and now focused on the tightening of the global oil supply.
Now there is a breaking report of a leak at a Chinese nuclear facility. CNN reports that the US government has spent the past week assessing a report of a leak at a Chinese nuclear power plant after a French company that partly owns the plant warned of an imminent radiological threat according to US officials. The warning accused the Chinese safety authority of raising the acceptable limits for radiation detection outside the nuclear power plant in the Guangdong province to avoid having it shut down. No word as to whether Facebook (NASDAQ:FB) is going to block any report about this nuclear plant currently.
While the world’s oil demand goes up the big oil companies continue to retreat away from oil production. Royal Dutch Shell (NYSE:RDSa) recently has been put under big pressure by its shareholder to become greener is now reportedly looking into selling their massive US Permian Basin holdings, reportedly the Shell assets in the Permian basin could be worth as much as $10 billion. Shells retreat from fossil fuels production along with other big energy companies pulling back is going to substantially raise fossil fuel prices in the future.
Shell has been under pressure after a court last month ordered Shell to reduce its greenhouse gas emissions by 2030 much faster than the company planned. Shell is expected to appeal that ruling but in the short term it’s taking action to sell off its properties and reduce its oil production capabilities. OPEC and Russia, of course, are sharing these type of moves that it’s going to further end their dominance over the global oil supply as well as the global economy for generations people realized that the ability to produce energy produced power but not only the power that we used to turn on lights or drive our cars, but political power as well. Make no mistake about it that OPEC and Russia will use their energy prowess to push the political agenda they’ve done it in the past they will do it again.
Oil prices are holding up well even as gold gets beat up ahead of the Federal Reserve meeting and the grain market tumbles by the Biden administration is looking to relax biofuel requirements. It appears the traders are waking up to the fact that while big energy companies retreat from production, demand is not going to retreat leading us to a tighter and tighter global supply versus demand ratio. < This is a recipe for $100/bbl oil within a year.
Last week’s gasoline demand seemed to disappoint but the implied demand numbers from the Energy Information Administration were likely skewered due to the Colonial Pipeline mishap. If gasoline demand indeed is weak, you would never know it by pulling up at the gas pump. Triple-A puts the national average of gasoline at $3.08 per gallon. It seems that we’re not getting our normal post-Memorial Day dip in prices and that could be because the gasoline demand situation is only getting stronger. The national average for premium is at a very high $3.69 a gallon and diesel fuel is at $3.21 per gallon. As we predicted as it was apparent that President Biden was going to be elected that America voted for higher gasoline prices and that has proven to be true beyond a shadow of a doubt.
The heat wave driving natural gas prices sharply higher results as well as reports of TETCO having one of its pipelines declare a forced measure causing a strong rally. If the heat does not let up, we’re going to see sharply higher natural gas prices later in the summer. Make sure you’re prepared with some options as the situation for natural gas looks more bullish by the day.
By Phil Flynn (Jun 14, 2021 09:46AM ET)
All of a sudden the hedge funds love oil again. Headphones that in recent weeks into abandon the oil complex as they worried that the resumption of Iranian nuclear talks would bring a flood of oil to the marketplace. Yet last week based on signs that demand in the United States and the world was coming back in a big way the hedge funds boosted their net long position to the highest level in nearly three years.
That helped support the oil market late last week along with reports that the Biden administration was considering giving in to pressure from refiners to reduce ethanol in gasoline. Reuters had reported that the US EPA was considering ways to provide relief to US refiners from biofuel blending mandates as the price of corn has exploded as well as the price of soybeans.
Talk of the waivers caused the grain market to sell off and the oil market to rally as we would use less AG hindwing and more oil. That about-face by the Biden administration seems to not be in keeping with his green energy cuts but at the same time, he is a political animal, and sometimes politics get ahead of what is good for the planet.
The other major factor that was keeping hedge funds out of the market was the possibility of an Iranian nuclear deal. The Biden administration has been falling all over itself trying to get Iran back to the table for these talks in basically begging them to get back into the ill-fated 2015 agreement. There have been mixed reports of progress coming out of the talks. < Why does Team Biden want to suck up to Iran?
Oil prices sold off sharply after a report that sanctions on Iranian oil were lifted. That was later clarified that they were lifting sanctions on some Iranian oil entities and individuals. Now over the weekend, Bloomberg News reports that Iran’s lead envoy said that a deal was unlikely before the presidential election in his country.
President Hassan Rouhani who negotiated the original deal in 2015 is due to leave office in August after serving two terms he is widely expected to be replaced by Ebrahim Raisi a cleric generally seen as hostile as engaging with the US according to Bloomberg News. Most oil traders realized that if Raisi is in power that the likelihood of an Iranian nuclear deal getting done is small.
The Bloomberg report also said that the Iran council said it reached a broad agreement with the US over the lifting of sanctions on its industrial sectors including energy but warned that there was very little time left for real powers to revive a 2015 nuclear deal. Based on market action in hedge fund activity it appears that the market is putting the Iran deal in the rearview window and now focused on the tightening of the global oil supply.
Now there is a breaking report of a leak at a Chinese nuclear facility. CNN reports that the US government has spent the past week assessing a report of a leak at a Chinese nuclear power plant after a French company that partly owns the plant warned of an imminent radiological threat according to US officials. The warning accused the Chinese safety authority of raising the acceptable limits for radiation detection outside the nuclear power plant in the Guangdong province to avoid having it shut down. No word as to whether Facebook (NASDAQ:FB) is going to block any report about this nuclear plant currently.
While the world’s oil demand goes up the big oil companies continue to retreat away from oil production. Royal Dutch Shell (NYSE:RDSa) recently has been put under big pressure by its shareholder to become greener is now reportedly looking into selling their massive US Permian Basin holdings, reportedly the Shell assets in the Permian basin could be worth as much as $10 billion. Shells retreat from fossil fuels production along with other big energy companies pulling back is going to substantially raise fossil fuel prices in the future.
Shell has been under pressure after a court last month ordered Shell to reduce its greenhouse gas emissions by 2030 much faster than the company planned. Shell is expected to appeal that ruling but in the short term it’s taking action to sell off its properties and reduce its oil production capabilities. OPEC and Russia, of course, are sharing these type of moves that it’s going to further end their dominance over the global oil supply as well as the global economy for generations people realized that the ability to produce energy produced power but not only the power that we used to turn on lights or drive our cars, but political power as well. Make no mistake about it that OPEC and Russia will use their energy prowess to push the political agenda they’ve done it in the past they will do it again.
Oil prices are holding up well even as gold gets beat up ahead of the Federal Reserve meeting and the grain market tumbles by the Biden administration is looking to relax biofuel requirements. It appears the traders are waking up to the fact that while big energy companies retreat from production, demand is not going to retreat leading us to a tighter and tighter global supply versus demand ratio. < This is a recipe for $100/bbl oil within a year.
Last week’s gasoline demand seemed to disappoint but the implied demand numbers from the Energy Information Administration were likely skewered due to the Colonial Pipeline mishap. If gasoline demand indeed is weak, you would never know it by pulling up at the gas pump. Triple-A puts the national average of gasoline at $3.08 per gallon. It seems that we’re not getting our normal post-Memorial Day dip in prices and that could be because the gasoline demand situation is only getting stronger. The national average for premium is at a very high $3.69 a gallon and diesel fuel is at $3.21 per gallon. As we predicted as it was apparent that President Biden was going to be elected that America voted for higher gasoline prices and that has proven to be true beyond a shadow of a doubt.
The heat wave driving natural gas prices sharply higher results as well as reports of TETCO having one of its pipelines declare a forced measure causing a strong rally. If the heat does not let up, we’re going to see sharply higher natural gas prices later in the summer. Make sure you’re prepared with some options as the situation for natural gas looks more bullish by the day.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - June 14
>widely expected to be replaced by Ebrahim Raisi a cleric generally seen as hostile as engaging with the US
Nice, someone with dementia negotiating with a nut case. How'd that work for Neville and he still had his wits.
Nice, someone with dementia negotiating with a nut case. How'd that work for Neville and he still had his wits.
Re: Oil & Gas Prices - June 14
On Wednesday, June 16 I will be on a webinar panel discussion that will focus on the likelihood of WTI oil price spiking to $100/bbl in 2022. To be clear, I am not forecasting it to happen, but the likelihood has increased sharply in just a few months. EPG members are invited to attend the webinar. You should have received the registration link via email this morning. If not, send an email to Sabrina at energyprospectus@gmail.com
--------------------------------
Commodities: Crude Oil Is On The Bullish Staircase
By Andy Hecht (Jun 14, 2021 07:36AM ET)
Crude oil makes a new multi-year high last week - The next technical target is the gateway to triple-digit crude oil prices
A perfect bullish storm for crude oil
Factor one - US energy policy
Factor two - Inflation
Factor three - Demand is going nowhere but higher - Look at the price action in two other energy commodities
The spike down to negative $40.32 per barrel on the nearby NYMEX crude oil futures contract on Apr. 20, 2020, shocked the oil market and the world. Since crude oil futures began trading at the CME’s NYMEX division in 1983, the price had never declined below $9.75 per barrel. This century, the low was $16.70 before that fateful day.
Crude oil has taken a staircase higher since the April 2020 low. The NYMEX contract settled at $48.42 per barrel at the end of 2020, an amazing comeback from the low. In 2021, the price continued to rally. Crude oil has not traded below $50 per barrel since the first week of this year. It has not been below $60 since a correction took the energy commodity to $57.25 in late March. Last week, the price climbed above $70 per barrel for the first time since October 2018.
Are we at the beginning of a "Commodity Super Cycle"?
We have seen many commodities reach multi-year highs over the past weeks and months. The latest were copper, lumber, and palladium, which made new record peaks in May. Gold traded to its highest price in history in August 2020. Over the past months, many agricultural commodities reached multi-year highs along with other raw materials. While many have pulled back from the highs, last week was oil’s turn to appreciate.
Crude oil has been on a bullish staircase, making higher lows and higher highs over the past 14 months. The trend looks set to continue and take the energy commodity to higher highs over the coming weeks and months.
The weekly chart highlights the latest new high at $71.24 on Friday, June 11. WTI is at $71.40 at the time of this post.
Crude oil has been on a steady path of higher lows and higher highs since early November 2020, with the only correction this March. The price briefly probed below the $60 level and eclipsed $70 per barrel last week. Nearby NYMEX crude oil futures closed 2020 at $48.52. The price has not been below the $50 level since the first week of January.
The monthly chart illustrates the next upside target stands at the October 2018 $76.90 high. The critical technical resistance level could be a gateway to triple-digit prices not seen since 2014.
A perfect bullish storm for crude oil
Commodity prices have been in bullish mode since reaching bottoms in March and April 2020.
The last time the raw materials asset class experienced the current level of consistent price appreciation was following the 2008 global financial crisis, which pushed prices to lows in 2008, which gave way to rallies that took them to multi-year or all-time highs in 2011 and 2012.
So far, in 2020 and 2021, gold, copper, lumber, palladium, and soybean oil have risen to new all-time peaks. Grain and other agricultural commodity prices have risen to multi-year highs.
Last week, while many of the other high-flying commodities were consolidating after recent highs, crude oil took the bullish baton. At least three factors could make the current environment a perfect bullish storm for the crude oil market over the coming months and years.
Factor one - US energy policy
Perhaps the most bullish issue facing crude oil is the retreat of the world’s leading producer, the United States. On his first day in office, President Joseph Biden canceled the Keystone XL pipeline project that carries petroleum from the oil sands in Alberta, Canada, to Steele City, Nebraska, and beyond to the NYMEX delivery point in Cushing, Oklahoma.
More recently, the Biden administration banned fracking and drilling on federal lands in Alaska. The “drill-baby-drill” and “frack-baby-frack” policies under the previous administration are, as the Saudi oil minister said earlier this year, “dead.”
At the peak, in March 2020, the US produced an average of 13.1 million barrels per day. As of June 4, the Energy Information Administration reported that daily output stood at the 11.0 mbpd level, 16% below the high. Meanwhile, Baker Hughes said that the number of oil rigs operating in the US stood at 365 as of June 11, 166 higher than the same time in 2020. While the rig count is rising, production is likely suffering from increasing regulations, weighing on supplies. < The active drilling rig count is less than half of where it was mid-2018.
As the US addresses climate change, the production of all fossil fuels will decline. The dramatic shift in energy policy comes at a time when inflationary pressures and energy demand are booming. Meanwhile, the oil market’s pricing power has passed from the US back to OPEC and Russia. After years of suffering from low prices because of US shale production, the international oil cartel and Russians are now positioned to squeeze US consumers. OPEC’s mission is to extract the optimal return for producers.
Factor two - Inflation
The US Fed created a tidal wave of liquidity via a Fed Funds rate at zero and quantitative easing to the tune of $120 billion per month. The Fed has said it is not thinking about tapering QE or increasing short-term rates given its “full employment mandate.”
Moreover, the tsunami of trillions of dollars in government stimulus in the US to stabilize the economy during the pandemic has added more inflationary fuel to the fire. After over a year of unprecedented monetary and fiscal policy accommodation, the latest May consumer price index highlights the impact. The CPI rose by 5%, with core inflation excluding food and energy increasing by 3.8%, the highest level in nearly three decades.
Inflation erodes money’s purchasing power and is bullish for raw material prices. Crude oil is no exception, as rising inflation is the wind behind the bull market trend in the energy commodity.
Factor three - Demand is going nowhere but higher - Look at the price action in two other energy commodities
After a year of social distancing and working from home, vaccines creating herd immunity to the virus is sending people back to work. As they travel to the workplace, gasoline demand is rising. Moreover, long overdue vacations will increase the demand for gasoline and jet fuel, both oil products. Energy demand is robust as COVID-19 fades into the rearview mirror.
Meanwhile, oil is not the only energy commodity experiencing a bullish trend these days.
Even though the natural gas futures market is in the offseason, where gas goes into storage, the price has been trending higher, making higher lows since June 2020.
The weekly chart shows that natural gas futures traded to a high of $3.33 per MMBtu on June 11, the highest price of 2021, and double the price since last June when it fell to a 25-year low of $1.432 per MMBtu. July natural gas futures settled at the $3.296 level last Friday. The last time the energy commodity traded above that price in June was in 2014.
Meanwhile, at $2.31 per gallon wholesale ($97/bbl), ethanol is trading at its highest price since April 2014. The biofuel has rallied on the back of higher gasoline, corn, and sugar prices. In the US, corn is the primary ingredient in ethanol. In Brazil, sugarcane is the input in the production of the biofuel.
Rising oil demand, the shift in US energy policy, and increasing inflation create an almost perfect bullish storm for crude oil’s price. The next test comes at $76.90 per barrel, which could be a gateway to the triple-digit levels seen in 2014. Natural gas and ethanol have already hit the highest prices since that year, natural gas from the June perspective, and ethanol from its nominal price. Crude oil could be on its way to join them as the path of least resistance remains higher.
--------------------------------
Commodities: Crude Oil Is On The Bullish Staircase
By Andy Hecht (Jun 14, 2021 07:36AM ET)
Crude oil makes a new multi-year high last week - The next technical target is the gateway to triple-digit crude oil prices
A perfect bullish storm for crude oil
Factor one - US energy policy
Factor two - Inflation
Factor three - Demand is going nowhere but higher - Look at the price action in two other energy commodities
The spike down to negative $40.32 per barrel on the nearby NYMEX crude oil futures contract on Apr. 20, 2020, shocked the oil market and the world. Since crude oil futures began trading at the CME’s NYMEX division in 1983, the price had never declined below $9.75 per barrel. This century, the low was $16.70 before that fateful day.
Crude oil has taken a staircase higher since the April 2020 low. The NYMEX contract settled at $48.42 per barrel at the end of 2020, an amazing comeback from the low. In 2021, the price continued to rally. Crude oil has not traded below $50 per barrel since the first week of this year. It has not been below $60 since a correction took the energy commodity to $57.25 in late March. Last week, the price climbed above $70 per barrel for the first time since October 2018.
Are we at the beginning of a "Commodity Super Cycle"?
We have seen many commodities reach multi-year highs over the past weeks and months. The latest were copper, lumber, and palladium, which made new record peaks in May. Gold traded to its highest price in history in August 2020. Over the past months, many agricultural commodities reached multi-year highs along with other raw materials. While many have pulled back from the highs, last week was oil’s turn to appreciate.
Crude oil has been on a bullish staircase, making higher lows and higher highs over the past 14 months. The trend looks set to continue and take the energy commodity to higher highs over the coming weeks and months.
The weekly chart highlights the latest new high at $71.24 on Friday, June 11. WTI is at $71.40 at the time of this post.
Crude oil has been on a steady path of higher lows and higher highs since early November 2020, with the only correction this March. The price briefly probed below the $60 level and eclipsed $70 per barrel last week. Nearby NYMEX crude oil futures closed 2020 at $48.52. The price has not been below the $50 level since the first week of January.
The monthly chart illustrates the next upside target stands at the October 2018 $76.90 high. The critical technical resistance level could be a gateway to triple-digit prices not seen since 2014.
A perfect bullish storm for crude oil
Commodity prices have been in bullish mode since reaching bottoms in March and April 2020.
The last time the raw materials asset class experienced the current level of consistent price appreciation was following the 2008 global financial crisis, which pushed prices to lows in 2008, which gave way to rallies that took them to multi-year or all-time highs in 2011 and 2012.
So far, in 2020 and 2021, gold, copper, lumber, palladium, and soybean oil have risen to new all-time peaks. Grain and other agricultural commodity prices have risen to multi-year highs.
Last week, while many of the other high-flying commodities were consolidating after recent highs, crude oil took the bullish baton. At least three factors could make the current environment a perfect bullish storm for the crude oil market over the coming months and years.
Factor one - US energy policy
Perhaps the most bullish issue facing crude oil is the retreat of the world’s leading producer, the United States. On his first day in office, President Joseph Biden canceled the Keystone XL pipeline project that carries petroleum from the oil sands in Alberta, Canada, to Steele City, Nebraska, and beyond to the NYMEX delivery point in Cushing, Oklahoma.
More recently, the Biden administration banned fracking and drilling on federal lands in Alaska. The “drill-baby-drill” and “frack-baby-frack” policies under the previous administration are, as the Saudi oil minister said earlier this year, “dead.”
At the peak, in March 2020, the US produced an average of 13.1 million barrels per day. As of June 4, the Energy Information Administration reported that daily output stood at the 11.0 mbpd level, 16% below the high. Meanwhile, Baker Hughes said that the number of oil rigs operating in the US stood at 365 as of June 11, 166 higher than the same time in 2020. While the rig count is rising, production is likely suffering from increasing regulations, weighing on supplies. < The active drilling rig count is less than half of where it was mid-2018.
As the US addresses climate change, the production of all fossil fuels will decline. The dramatic shift in energy policy comes at a time when inflationary pressures and energy demand are booming. Meanwhile, the oil market’s pricing power has passed from the US back to OPEC and Russia. After years of suffering from low prices because of US shale production, the international oil cartel and Russians are now positioned to squeeze US consumers. OPEC’s mission is to extract the optimal return for producers.
Factor two - Inflation
The US Fed created a tidal wave of liquidity via a Fed Funds rate at zero and quantitative easing to the tune of $120 billion per month. The Fed has said it is not thinking about tapering QE or increasing short-term rates given its “full employment mandate.”
Moreover, the tsunami of trillions of dollars in government stimulus in the US to stabilize the economy during the pandemic has added more inflationary fuel to the fire. After over a year of unprecedented monetary and fiscal policy accommodation, the latest May consumer price index highlights the impact. The CPI rose by 5%, with core inflation excluding food and energy increasing by 3.8%, the highest level in nearly three decades.
Inflation erodes money’s purchasing power and is bullish for raw material prices. Crude oil is no exception, as rising inflation is the wind behind the bull market trend in the energy commodity.
Factor three - Demand is going nowhere but higher - Look at the price action in two other energy commodities
After a year of social distancing and working from home, vaccines creating herd immunity to the virus is sending people back to work. As they travel to the workplace, gasoline demand is rising. Moreover, long overdue vacations will increase the demand for gasoline and jet fuel, both oil products. Energy demand is robust as COVID-19 fades into the rearview mirror.
Meanwhile, oil is not the only energy commodity experiencing a bullish trend these days.
Even though the natural gas futures market is in the offseason, where gas goes into storage, the price has been trending higher, making higher lows since June 2020.
The weekly chart shows that natural gas futures traded to a high of $3.33 per MMBtu on June 11, the highest price of 2021, and double the price since last June when it fell to a 25-year low of $1.432 per MMBtu. July natural gas futures settled at the $3.296 level last Friday. The last time the energy commodity traded above that price in June was in 2014.
Meanwhile, at $2.31 per gallon wholesale ($97/bbl), ethanol is trading at its highest price since April 2014. The biofuel has rallied on the back of higher gasoline, corn, and sugar prices. In the US, corn is the primary ingredient in ethanol. In Brazil, sugarcane is the input in the production of the biofuel.
Rising oil demand, the shift in US energy policy, and increasing inflation create an almost perfect bullish storm for crude oil’s price. The next test comes at $76.90 per barrel, which could be a gateway to the triple-digit levels seen in 2014. Natural gas and ethanol have already hit the highest prices since that year, natural gas from the June perspective, and ethanol from its nominal price. Crude oil could be on its way to join them as the path of least resistance remains higher.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - June 14
Closing Prices:
> WTI prompt month (JUL 21) was down $0.03 on the day, to settle at $70.88/Bbl.
> In contrast, NG prompt month (JUL 21) was up $0.056 on the day, to settle at $3.352/MMBtu.
> WTI prompt month (JUL 21) was down $0.03 on the day, to settle at $70.88/Bbl.
> In contrast, NG prompt month (JUL 21) was up $0.056 on the day, to settle at $3.352/MMBtu.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group