Energy Prospectus

http://www.bloomberg.com/news/2014-10-2 ... bound.html

For all the noise about oil’s collapse, the market is saying not that much has really changed: Higher prices will be back soon enough because the current slowdown in demand growth will prove fleeting. [Between 9/30 and 11/30 demand for fuel goes up a million bbls per day.]

While Brent crude for next month delivery has fallen 25 percent since June to $86.03 a barrel yesterday, the price for 2020 contracts was down less than one-fourth that to $91.53.

Today’s prices can’t “be considered the new normal, or at least not yet,” Paul Horsnell, head of commodities research at Standard Chartered Plc in London, said by e-mail yesterday. “The back end of the curve does seem happier above $90.”

Global consumption will grow to 99 million barrels a day in 2019 from 92.8 million this year, according to the Paris-based International Energy Agency. While the U.S. is producing the most oil since 1985 as it taps shale-rock formations and OPEC production grew at the fastest rate in 13 months in September, future demand will require supply from areas with high costs, such as the deep waters of the Gulf of Mexico or the Arctic.

Prices may rebound well before 2020. Brent, the global benchmark, will climb to as much as $100 a barrel next year, according to Sanford C. Bernstein & Co., Standard Chartered and Barclays Plc.

Goldman Sachs Group Inc. said the slowdown will take time, with Brent hitting a bottom of $80 a barrel in the second quarter of 2015, then rising to $90 in 2016 as U.S. production growth is reduced, according to a research note Oct. 27. The bank cut its 2015 first-quarter and second-half forecasts for Brent and WTI by $15 a barrel to $85 and $75 respectively.

Standard Chartered expects a faster rebound, predicting Brent will average $105 a barrel next year and $115 in 2016. Bernstein forecasts an average Brent price of $104 a barrel next year, rising to $110 in 2016.

“Long-term marginal costs in oil production are well over $100 a barrel,” the Barclays research team including Mahesh said in a note yesterday. “It seems extremely unlikely that oil prices will remain below $100 for very long.”

On the CME website you can run a chart that breaks down trading active into 15 minute blocks. Here is the link.
http://www.cmegroup.com/popup/mdq2.html ... p#period=V

Nice bounce off the low.

I check the chart everyday. One thing that I have noticed is that there are small block trades in very early morning trading 3-5 AM ET that cause the regular hours trading to open way up or way down. NYMEX contracts trade 24 hours per day, but most of the trading happens during regular market hours.

U.S. dollar index spiked back up. See: http://www.marketwatch.com/investing/index/dxy/charts

This puts downward pressure on oil prices.

<On the CME website you can run a chart that breaks down trading active into 15 minute blocks. Here is the link.
http://www.cmegroup.com/popup/mdq2.html ... p#period=V>

I have been using this same site and I like the 1 minute chart which is streaming with a 10 minute delay.

On the daily CME Charts:

> WTI first dipped below $80 almost 3 weeks ago. It appears to have established a base at $80-$82. My SWAG is that it will stay in this range during November until after the mid-term elections and the OPEC meeting on November 27.

> The daily chart for natural gas is looking quite bullish. My SWAG is that Ngas moves over $4.00 this coming week.

I don't see a bottom, technically, until we have a close over $82.