There is resistance at $57, so a close above that price would be bullish. Next resistance level is $59 with strong resistance at $60. There is very little technical resistance between $60 and $70 for WTI. - Dan
------------------------------------------------
Notes from Phil Flynn - 8:33 AM ET
It looks like oil is consolidating for another leg up as it shakes off political uncertainty in Germany, one of the reasons we pulled back yesterday. Instead there is talk of another big drop in supply in Cushing Oklahoma. Market chatter has the NYMEX delivery point falling at least 1 million barrels and some say the drop could be more than 2 million barrels. Last week the Energy Information Administration (EIA) reported that Cushing’s crude oil inventories fell by 1,504 barrels. The Cushing draws will continue as U.S. refiners are in a mad rush to keep up with distillate demand as supplies are the tightest we have seen in years and are well below the five-year average. (Supplies of diesel are at critical levels in Europe. - Dan)
That will keep oil that is unquestionably in a bull market rising as refiner demand will keep a bid on all grades of crude. Brent Crude which is in the high $62 a barrel handle will also be bid as European Refiners are looking to keep running and seasonal North Sea production issues are just up ahead. With a U.S. tax cut bill looking more likely like a done deal, at some point it will only add to the projected demand for oil.
I told Liz Claman on the Closing Bell on Fox Business Network that a tax cut bill over time might double the stock market over a period and would be wildly bullish for economic growth. While that might sound optimistic there is historical basis to it. Now Goldman Sachs co-chief markets economist Charles Himmelberg is predicting that 2018 will be another year of strong growth for the worldwide economy. He and his team expect the global economy to grow 4 per cent next year in which there will be growth surprises to the upside.
4% growth for the U.S. economy means oil well above $60 a barrel as demand will outstrip the shale oil producer’s ability to keep up with the growth.
Oil Bears are changing their tune as they are getting squeezed out by record longs. Predictions of surging U.S. production is falling short and the expected extension of OPEC production cuts will continue to drain global supply.
The Keystone Pipeline finally won approval but TransCanada is not jumping for joy. While approving the Nebraska commission offered a new route that will likely be fought again in court. 10 years and counting for approval!
My Buddy’s at GasBuddy have put out the, over the river and through the woods, retail gasoline outlook.
GasBuddy, projects that Thanksgiving will see the highest average gas prices since 2014 as the country prepares for the busiest traveling weekend of the year. Yet the average gas price in four of five U.S. states is lower than a week ago, coming as the number of Americans driving is expected to surge by 20 percent over last Thanksgiving, according to GasBuddy’s Annual Holiday Travel Survey.
GasBuddy projects the national average gas price this Thanksgiving will be $2.53 per gallon, the priciest Thanksgiving in three years (2014: $2.79), though not as high as the peak on Thanksgiving in 2012 ($3.44). Additionally, average gas prices have risen 9 cents in the last month, the largest pre-Thanksgiving Day increase since 2007, when average prices rose 26 cents in the 30 days leading up to the holiday. “This year has been unique at the pumps. Gas prices spent much of the time in the weeks approaching Thanksgiving by rising when typically, they would be on a sizeable downward trend,” said Patrick DeHaan, head of petroleum analysis at GasBuddy. “On average Americans are paying nearly 40 cents a gallon more than last year, which means collectively we’re spending $800 million more on fuel over the Thanksgiving travel period. Drivers should pay close attention to prices to avoid overpaying.”
According to GasBuddy’s Annual Holiday Travel Survey, despite higher gas prices, travelers are driving longer distances. 2017 is expected to see a 4 percent increase in travelers driving for 10 or more hours over Thanksgiving compared to 2016.
Oil Price - Nov 21
Oil Price - Nov 21
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Nov 21
Bloomberg Energy Sector comments today:
Countdown to OPEC: OPEC has an Iraq problem. Disruption to the group's second-biggest producer and exporter is seen persisting to 2018, clouding the policy-making picture as ministers decide how long to extend production curbs.
Oil rose near $57/b in New York before U.S. government data forecast to show stockpiles dropped for the first time in three weeks. Futures added 0.6% after losing 0.5% on Monday. Inventories probably fell by 2.25 million barrels last week, a Bloomberg survey showed before data from the EIA on Wednesday. U.A.E. Energy Minister Suhail Al Mazrouei echoed the view of some fellow OPEC members as he urged an extension of output cuts.
Bank of America Merrill Lynch boosted its 4Q Brent forecast to $60/b from $54/b previously, and sees WTI at $54/b compared with $49/b previously. The bank sees Brent at $56/b in 2018, $55/b in 2019 and WTI at $52/b and $51/b in 2018 and 2019, respectively. < It is looking more and more like the $50 WTI price that I am using in all of my 2018 forecasts is too low. - Dan
OPEC will extend output cuts to June at a minimum, RBC said in an emailed report. “While at a minimum we think OPEC will opt to roll the deal until the next June meeting, and dispense with the current expiration date, in our view it is more likely than not that OPEC and its producer partners choose extend the cut through 2018,” it said. Libya "looks set to remain outside the deal," it added.
Chart of the day: Withering oil supplies from Venezuela and Mexico are making U.S. Gulf refineries more dependent on Canadian oil that Keystone XL would carry. Approval of the extension will probably further boost flows of Western Canadian Select crude to the Gulf, Wood Mackenzie said. Solomon Associates warned that some output from the Permian Basin would be displaced.
Andy Hall, the veteran crude trader who closed his hedge fund this year, will brief OPEC officials on the outlook for U.S. shale, according to a copy of the agenda seen by Bloomberg News. Hall will be among a number of speakers presenting at the group's headquarters in Vienna, according to the agenda. They also include representatives from Schlumberger and Citigroup. Energy Aspects and Rystad Energy will also speak, according to people familiar.
CME Group is set to give buyers in Asia a tool for hedging their American crude purchases. A futures contract for the price spread between WTI and Dubai oil will list on the NYMEX on Dec. 17 for trading the following day, the bourse operator said in a note on its website. That will allow refiners in Asia to lock in the differential between WTI and the Middle Eastern marker, as they increase American purchases.
Serica Energy, a U.K. oil and gas company focused on the North Sea, will boost its output sevenfold after buying assets there from BP. The company will acquire BP’s interests in the Bruce, Keith and Rhum fields in a deal that constitutes a reverse takeover, Serica said today in a statement. Its shares were suspended. Based on production from 1H 2017, Serica expects its net output to increase to more than 21,000 b/d.
Abu Dhabi National Oil Co. plans to sell as much as 20% of its fuel-distribution unit weeks after Saudi Arabia’s corruption crackdown deterred investors from the Middle East. The crude producer will offer 1.25 billion to 2.5 billion shares of Abu Dhabi National Oil Co. for Distribution PJSC, according to an advertisement on Monday.
Countdown to OPEC: OPEC has an Iraq problem. Disruption to the group's second-biggest producer and exporter is seen persisting to 2018, clouding the policy-making picture as ministers decide how long to extend production curbs.
Oil rose near $57/b in New York before U.S. government data forecast to show stockpiles dropped for the first time in three weeks. Futures added 0.6% after losing 0.5% on Monday. Inventories probably fell by 2.25 million barrels last week, a Bloomberg survey showed before data from the EIA on Wednesday. U.A.E. Energy Minister Suhail Al Mazrouei echoed the view of some fellow OPEC members as he urged an extension of output cuts.
Bank of America Merrill Lynch boosted its 4Q Brent forecast to $60/b from $54/b previously, and sees WTI at $54/b compared with $49/b previously. The bank sees Brent at $56/b in 2018, $55/b in 2019 and WTI at $52/b and $51/b in 2018 and 2019, respectively. < It is looking more and more like the $50 WTI price that I am using in all of my 2018 forecasts is too low. - Dan
OPEC will extend output cuts to June at a minimum, RBC said in an emailed report. “While at a minimum we think OPEC will opt to roll the deal until the next June meeting, and dispense with the current expiration date, in our view it is more likely than not that OPEC and its producer partners choose extend the cut through 2018,” it said. Libya "looks set to remain outside the deal," it added.
Chart of the day: Withering oil supplies from Venezuela and Mexico are making U.S. Gulf refineries more dependent on Canadian oil that Keystone XL would carry. Approval of the extension will probably further boost flows of Western Canadian Select crude to the Gulf, Wood Mackenzie said. Solomon Associates warned that some output from the Permian Basin would be displaced.
Andy Hall, the veteran crude trader who closed his hedge fund this year, will brief OPEC officials on the outlook for U.S. shale, according to a copy of the agenda seen by Bloomberg News. Hall will be among a number of speakers presenting at the group's headquarters in Vienna, according to the agenda. They also include representatives from Schlumberger and Citigroup. Energy Aspects and Rystad Energy will also speak, according to people familiar.
CME Group is set to give buyers in Asia a tool for hedging their American crude purchases. A futures contract for the price spread between WTI and Dubai oil will list on the NYMEX on Dec. 17 for trading the following day, the bourse operator said in a note on its website. That will allow refiners in Asia to lock in the differential between WTI and the Middle Eastern marker, as they increase American purchases.
Serica Energy, a U.K. oil and gas company focused on the North Sea, will boost its output sevenfold after buying assets there from BP. The company will acquire BP’s interests in the Bruce, Keith and Rhum fields in a deal that constitutes a reverse takeover, Serica said today in a statement. Its shares were suspended. Based on production from 1H 2017, Serica expects its net output to increase to more than 21,000 b/d.
Abu Dhabi National Oil Co. plans to sell as much as 20% of its fuel-distribution unit weeks after Saudi Arabia’s corruption crackdown deterred investors from the Middle East. The crude producer will offer 1.25 billion to 2.5 billion shares of Abu Dhabi National Oil Co. for Distribution PJSC, according to an advertisement on Monday.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Nov 21
Notes from OilPrice.com on Tuesday November 21, 2017
Oil prices are in a holding pattern ahead of the OPEC meeting at the end of next week. The consensus expectation is for an extension, although there are some rumblings about unease with the Russian delegation. “There seems to be some equivocation by the Russians about extending the OPEC deal,” said John Kilduff, founding partner at Again Capital. “With the door being left open, you’re seeing the market take a hit on a potential unraveling.” < MY TAKE: OPEC and Russia will extend the production limitations through the end of 2018 because (a) they know the price of oil will go down if they don't extend it and (b) if the global oil market is back in balance earlier than expected they can always amend (i.e. rip up) the agreement.
Venezuela is now expected to lose 250,000 bpd of oil production this year. Data from OPEC suggests Venezuela could continue to see its oil production erode, with losses expected at 250,000 bpd in 2017. The losses could accelerate next year, jumping to 300,000 bpd. Some think it could be even worse. An OPEC source told Reuters that Saudi Arabia would not increase production in order to compensate for falling Venezuelan output. Still, Reuters points out that rising heavy oil production from Iraq, Canada and Brazil are offsetting the losses.
Volkswagen to spend $40 billion on EVs. Volkswagen said on Friday that it would spend upwards of $40 billion to expand its EV push, as well as build out its autonomous driving capabilities. The sum is much bigger than its previous plan. “With the planning round now approved, we are laying the foundation for making Volkswagen the world’s No. 1 player in electric mobility by 2025,” CEO Matthias Mueller told a press conference. Meanwhile, BMW said it would switch to 100 percent renewable energy for its operations by 2020, up from 63 percent last year.
Keystone XL approved…with caveats. Nebraska regulators gave the greenlight to the Keystone XL pipeline, removing one of the last barriers for the decade-old proposal. However, Nebraskan officials approved an alternative route, not TransCanada’s (NYSE: TRP) preferred route. That means that there could be new litigation that stands in the way of construction. Environmental groups argue that the alternative route has not yet been vetted.
Oil majors push high-tech engine oil to rescue internal combustion engine. As some automakers shift aggressively towards electric vehicles, the oil majors are spending heavily to keep the internal combustion engine alive. The WSJ reports that ExxonMobil (NYSE: XOM), Royal Dutch Shell (NYSE: RDS.A) and BP (NYSE: BP) are seeking to develop the next generation of engine lubricants, which could help boost fuel efficiency, allowing gasoline-fueled vehicles to compete.
U.S. gasoline demand spikes to record high. U.S. gasoline consumption hit a record high for the month of October, according to the American Petroleum Institute. Total deliveries of petroleum products hit 19.9 mb/d in October, 1.1 percent higher than a year ago. Gasoline demand averaged 9.3 mb/d.
BNEF: $103 billion in spending on energy storage between 2016 and 2030. A new report from Bloomberg New Energy Finance (BNEF) finds that the global energy storage market will double six times by 2030, a similar trajectory that the solar market experienced between 2000 and 2015. Total spending will reach $103 billion over that timeframe. [b]< As I said at both of our luncheons in November, Power Storage has HUGE upside for us.[/b]
Hedge funds pare bullish bets on oil ahead of OPEC meeting. Hedge funds and other money managers had built up a record level of bullish bets on crude futures, a buying spree that appears to have stalled as oil prices faltered. In the most recent week for data is available, money managers trimmed their net-length positions on Brent, a sign of a potential shift in investors sentiment. The buying looks overdone, and the danger is that anything other than strong resolve from OPEC to extend its cuts through next year could mean an unraveling of the speculative positions. "We’re at levels where the market appears to have crested," Gene McGillian, a market research manager at Tradition Energy told Bloomberg. "Continuing to see supply draw-downs is probably what the next leg of the rally will be predicated on." < This is why OPEC will extend the agreement because it will push oil above $60 on the news.
Volatile Iraqi oil production complicates OPEC efforts. Iraq has consistently flouted its agreed upon production limit this year, posting less-than-impressive compliance rates. But production plunged by 120,000 bpd in October, pushing output below its production ceiling for the first time this year. The seesawing of output clouds the calculations for OPEC ahead of its meeting, particularly with volatile output in Nigeria and Libya. Still, Bloomberg notes that Iraq is intent on boosting output to 5 million barrels per day, well above its limit, if it can. < Conflict with the Kurds is a much bigger deal than people think it is. The Kurds want their own country and they are willing to fight for it.
Natural gas glut could crimp Permian production. Permian shale drillers are running out of places to put all of the natural gas coming out of their wells. Gas is produced as a byproduct of oil drilling, but the pipeline network in Texas is full, reports the WSJ. Natural gas spot prices have cratered, which is a boon for utilities in the region that burn gas for electricity. But it could force shale drillers to cap their wells, which could put a dent in oil production.
Oil prices are in a holding pattern ahead of the OPEC meeting at the end of next week. The consensus expectation is for an extension, although there are some rumblings about unease with the Russian delegation. “There seems to be some equivocation by the Russians about extending the OPEC deal,” said John Kilduff, founding partner at Again Capital. “With the door being left open, you’re seeing the market take a hit on a potential unraveling.” < MY TAKE: OPEC and Russia will extend the production limitations through the end of 2018 because (a) they know the price of oil will go down if they don't extend it and (b) if the global oil market is back in balance earlier than expected they can always amend (i.e. rip up) the agreement.
Venezuela is now expected to lose 250,000 bpd of oil production this year. Data from OPEC suggests Venezuela could continue to see its oil production erode, with losses expected at 250,000 bpd in 2017. The losses could accelerate next year, jumping to 300,000 bpd. Some think it could be even worse. An OPEC source told Reuters that Saudi Arabia would not increase production in order to compensate for falling Venezuelan output. Still, Reuters points out that rising heavy oil production from Iraq, Canada and Brazil are offsetting the losses.
Volkswagen to spend $40 billion on EVs. Volkswagen said on Friday that it would spend upwards of $40 billion to expand its EV push, as well as build out its autonomous driving capabilities. The sum is much bigger than its previous plan. “With the planning round now approved, we are laying the foundation for making Volkswagen the world’s No. 1 player in electric mobility by 2025,” CEO Matthias Mueller told a press conference. Meanwhile, BMW said it would switch to 100 percent renewable energy for its operations by 2020, up from 63 percent last year.
Keystone XL approved…with caveats. Nebraska regulators gave the greenlight to the Keystone XL pipeline, removing one of the last barriers for the decade-old proposal. However, Nebraskan officials approved an alternative route, not TransCanada’s (NYSE: TRP) preferred route. That means that there could be new litigation that stands in the way of construction. Environmental groups argue that the alternative route has not yet been vetted.
Oil majors push high-tech engine oil to rescue internal combustion engine. As some automakers shift aggressively towards electric vehicles, the oil majors are spending heavily to keep the internal combustion engine alive. The WSJ reports that ExxonMobil (NYSE: XOM), Royal Dutch Shell (NYSE: RDS.A) and BP (NYSE: BP) are seeking to develop the next generation of engine lubricants, which could help boost fuel efficiency, allowing gasoline-fueled vehicles to compete.
U.S. gasoline demand spikes to record high. U.S. gasoline consumption hit a record high for the month of October, according to the American Petroleum Institute. Total deliveries of petroleum products hit 19.9 mb/d in October, 1.1 percent higher than a year ago. Gasoline demand averaged 9.3 mb/d.
BNEF: $103 billion in spending on energy storage between 2016 and 2030. A new report from Bloomberg New Energy Finance (BNEF) finds that the global energy storage market will double six times by 2030, a similar trajectory that the solar market experienced between 2000 and 2015. Total spending will reach $103 billion over that timeframe. [b]< As I said at both of our luncheons in November, Power Storage has HUGE upside for us.[/b]
Hedge funds pare bullish bets on oil ahead of OPEC meeting. Hedge funds and other money managers had built up a record level of bullish bets on crude futures, a buying spree that appears to have stalled as oil prices faltered. In the most recent week for data is available, money managers trimmed their net-length positions on Brent, a sign of a potential shift in investors sentiment. The buying looks overdone, and the danger is that anything other than strong resolve from OPEC to extend its cuts through next year could mean an unraveling of the speculative positions. "We’re at levels where the market appears to have crested," Gene McGillian, a market research manager at Tradition Energy told Bloomberg. "Continuing to see supply draw-downs is probably what the next leg of the rally will be predicated on." < This is why OPEC will extend the agreement because it will push oil above $60 on the news.
Volatile Iraqi oil production complicates OPEC efforts. Iraq has consistently flouted its agreed upon production limit this year, posting less-than-impressive compliance rates. But production plunged by 120,000 bpd in October, pushing output below its production ceiling for the first time this year. The seesawing of output clouds the calculations for OPEC ahead of its meeting, particularly with volatile output in Nigeria and Libya. Still, Bloomberg notes that Iraq is intent on boosting output to 5 million barrels per day, well above its limit, if it can. < Conflict with the Kurds is a much bigger deal than people think it is. The Kurds want their own country and they are willing to fight for it.
Natural gas glut could crimp Permian production. Permian shale drillers are running out of places to put all of the natural gas coming out of their wells. Gas is produced as a byproduct of oil drilling, but the pipeline network in Texas is full, reports the WSJ. Natural gas spot prices have cratered, which is a boon for utilities in the region that burn gas for electricity. But it could force shale drillers to cap their wells, which could put a dent in oil production.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group