Once a bottom is satisfied with an upside breakout, plus a daily close above the signal price level, the trend should be ready to progress. Higher, being the more likely direction given the confirmation of the double bottom breakout that defines a bullish trend reversal, from down to up. When measuring the pattern and projecting forward a potential target of 2.72 is suggested. The 61.8% Fibonacci retracement is just below that level at 2.67. Together, they point to a range of potential resistance from 2.67 to 2.72.
Higher Target Starts at 2.89
A higher possible target is identified up around the downtrend line. It converges with a price zone around the 78.6% retracement at 2.89 and a previous interim swing high at 2.92. Natural gas is progressing inside a large symmetrical triangle pattern. The advance off the second bottom recently confirms the pattern.
It also strengthens the possibility of an eventual test of resistance at the top of the triangle. Once the bottom of a swing within the pattern is reversed, there is the potential to test the other side of the pattern to see if resistance is retained or determine when a bullish breakout may be occurring.
Strength Seen Relative to 200-Day MA
One bullish feature of the trend is that today’s session is likely to end with the price of natural gas closing back above the 200-Day MA, after falling below the 200-Day line for the prior couple of days. This type of price behavior shows strength. Nevertheless, the market will be watching for another advance above 2.30, followed by a daily close above that level.
For a look at all of today’s economic events, check out our economic calendar.
The United States Consumer Price Index was roughly in line with expectations in August.
Financial markets turned risk-averse as Fed expected to trim interest rates by 25 bps.
XAU/USD met buyers around $2,500, aims to retest record highs in the $2,530 price zone.
Gold price peaked at $2,528.95, flirting with its record high mid-European session. XAU/USD, however, changed course and fell towards the $2,500 level after the release of United States (US) macroeconomic data. The August Consumer Price Index (CPI) rose by 2.5% YoY in August, easing from the 2.9% posted in July and below the 2.6% anticipated by market participants. The annual core reading matched expectations by printing at 3.2%, although the monthly core reading rose by 0.3%, slightly higher than the previous and expected 0.2%.
The news heavily weighed on rate cut expectations, with the US Federal Reserve (Fed) now expected to proceed gradually. Market players expect the central bank to trim the main rate benchmark by 25 basis points (bps) when it meets next week. As the dust settled, concerns receded. US indexes keep trading in the red, but trimmed half of their post-release losses, helping XAU/USD reconquer the $2,510 mark.
The next first-tier event will take place on Thursday, as the European Central Bank (ECB) will announce its decision on monetary policy. Officials are widely anticipated to trim the three main interest rates by 25 bps each. If anything, a change in President Christine Lagarde’s usual wording can trigger action across financial markets.
XAU/USD short-term technical outlook
From a technical point of view, the daily chart for the XAU/USD pair shows it remains on the bullish side despite the absence of upward momentum. The pair keeps trading above a bullish 20 Simple Moving Average, finding buyers around it. At the same time, the 100 and 200 SMAs maintain their bullish slopes far below the current level. Finally, technical indicators hold within positive levels, lacking evident directional strength yet maintaining the risk skewed to the upside.
In the near term, and according to the 4-hour chart, XAU/USD offers a neutral-to-bullish stance. The pair develops above converging 20 and 100 SMAs, at around $2,507.00, while technical indicators bounced from around their midlines, maintaining their upward slopes within positive levels.
Silver attracts buyers for the third straight day and touches a fresh weekly top on Wednesday.
The lack of any follow-through buying and mixed technical oscillators warrant caution for bulls.
A sustained strength beyond the $29.00 mark is needed to support prospects for further gains.
Silver (XAG/USD) trades with a mild positive bias for the third straight day on Wednesday, albeit lacks bullish conviction and is currently placed around the $28.45 region, just below the weekly high touched during the Asian session.
From a technical perspective, the white metal is holding above the 23.6% Fibonacci retracement level of the August-September slide and looking to build on the momentum beyond the 200-period Simple Moving Average (SMA) on the 4-hour chart. Given that oscillators on the said chart have just started gaining positive traction, though are yet to confirm a bullish bias on the daily chart. Hence, the XAG/USD is more likely to confront stiff resistance near the $28.95-$29.00 confluence – comprising the 50% Fibo. level and the 100-period SMA on the 4-hour chart.
A sustained strength beyond, however, will be seen as a fresh trigger for bullish traders and pave the way for some meaningful appreciating move. The subsequent move up has the potential to lift the XAG/USD beyond the 61.8% Fibo. level resistance near the $29.25 region, towards the $29.65 area, or the 78.6% Fibo. level. The momentum could extend further towards reclaiming the $30.00 psychological mark, above which bulls might aim to challenge the August monthly swing high, around the $30.20 zone.
On the flip side, the $28.25 region, or the 23.6% Fibo. level is likely to protect the immediate downside ahead of the $28.00 mark. A convincing break below could make the XAG/USD vulnerable to weaken further below the $27.70-$27.65 zone, towards the next relevant support near the $27.20 region en route to the $27.00 mark. Some follow-through selling might then expose the August monthly swing low, around the $26.40-$26.35 area, before the white metal eventually drops to the $26.00 round figure.
Silver 4-hour chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Gold price preserves recent gains above $2,500 on US CPI inflation day.
The US Dollar tracks USD/JPY sell-off amid weak US Treasury bond yields and risk-off flows.
Gold buyers look to retest record highs at $2,532 after defending 21-day SMA. The daily RSI stays bullish.
Gold price is consolidating a two-day uptrend above $2,500 in Wednesday’s Asian trading. Gold buyers take a breather, with the next directional move likely triggered by the critical US Consumer Price Index (CPI) data due later this Wednesday.
Gold price risks a big reaction to US CPI data
Gold traders have tuned on the sidelines, refraining from placing fresh bets before the US inflation test, which could confirm the size of the US Federal Reserve (Fed) interest rate cut next week. The data is critical to determining the next direction in Gold price, as it hangs close to the record high of $2,532 set on August 20.
US CPI is seen rising 2.6% YoY in August after recording a 2.9% increase in July. The core CPI inflation is expected to hold steady at 3.2% YoY in the same period. Meanwhile, the monthly headline and core CPIs are set to rise 0.2%, at the same pace as seen previously.
An upside surprise to the annual and monthly inflation readings could trigger a fresh US Dollar recovery at the expense of the Gold price, washing out expectations of an outsized Fed rate cut. Conversely, a softer-than-expected headline and core annual CPI data could revive 50 basis points (bps) Fed rate reduction bets, slamming the US Dollar (USD) while propelling Gold price to fresh lifetime highs.
Markets are currently pricing in a 33% chance of a 50 bps rate cut move while the odds of a 25 bps rate cut stand at 67%, the CME Group’s FedWatch Tool shows.
In the lead-up to the US CPI showdown, Gold price stays supported by renewed selling in the US Dollar, courtesy of the steep USD/JPY sell-off. The Japanese Yen spiked to fresh eight-month highs against the USD near 141.50 after the hawkish remarks from Bank of Japan (BoJ) board member Junko Nagakawa. The policymaker signaled the bank’s readiness to hike rates further, highlighting the policy divergence between the Fed and the BoJ.
Meanwhile, the first US Presidential debate between former President Donald Trump and Democratic nominee Kamala Harris in Pennsylvania failed to have any significant impact on the financial markets, as investors traded with caution and scurried to the safety of the US government bonds. This weighed negatively on the US Treasury bond yields, allowing Gold price to stay on the front foot.
Gold price technical analysis: Daily chart
Nothing seems to have changed for Gold price from a short-term technical perspective. Buyers continue to stay hopeful as Gold price managed to close above the 21-day Simple Moving Average (SMA), now at $2,503, for the second day in a row on Tuesday.
The 14-day Relative Strength Index (RSI) points higher once again while well above the 50 level, justifying the bullish potential.
Gold buyers now aim for a sustained breakthrough the record high of $2,532, above which the $2,550 psychological level will come into play.
If Gold price faces rejection once again near the $2,530 supply zone, a correction would ensue, with a daily closing below the 21-day SMA at $2,503 needed to negate the bullish outlook in the near term.
A breach of the latter will challenge the previous week’s low of $2,472, followed by the symmetrical triangle resistance-turned-support at $2,462.
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
The red-hot copper rally has cooled off in recent weeks, with prices pulling back from their May all-time high to close below $9,000/t. Just like in the oil markets, sentiment in copper markets has weakened, driven by weak U.S. manufacturing and labor market data, soft China data, and a sizable build in LME inventories.
Last week, Goldman Sachs downgraded its copper price forecast, due to weakening demand from China. GS now sees copper prices averaging $10,100 per metric ton in 2025, a sharp reduction from its previous forecast of $15,000. Further, Australian mining giant BHP Group (NYSE:BHP) recently downgraded its forecast for China’s copper demand amid concerns about the country’s economic recovery.
Thankfully for the bulls, the long-term copper outlook remains robust. A couple of months ago, Swiss multinational commodity trading company Trafigura predicted that EVs, Artificial Intelligence (AI), power infrastructure, and automation boom will drive at least 10 million metric tons of additional copper demand by 2035, According to Graeme Train, Trafigura’s head of metals analysis, one third of the 10 million tons of new demand will come from the electric vehicle sector, “A third is electricity generation, transmission and distribution, and the rest is for things like automation, manufacturing capex and cooling systems within data centers,” he said.
Saad Rahim, Trafigura’s chief economist, has projected that AI alone has the potential to add one million tonnes per annum of copper demand by 2030.
Related: Rystad: Germany Set to Generate 80% of Its Electricity With Renewables by 2030
Jeff Currie, Chief Strategy Officer at The Carlyle Group and former Global Head of Commodities Research at Goldman Sachs, has declared that copper is the new oil and the best trade he has seen in his career. The analyst has pointed out that copper has long been touted as a big winner from the world’s drive towards electrification including electric vehicles and huge grid upgrades. At the same time, Currie notes that it takes years for new copper mining capacity to actually come onstream. However, copper prices have, unexpectedly, pulled back sharply several times over the past two years. Currie says this has created a mismatch between short-term prices and long-term supply, making copper his highest-conviction trade ever.
Meanwhile, a recent study, published by the International Energy Forum (IEF) says the EV revolution alone will drive enough copper demand to outstrip supply in the next couple of decades. According to IEF, current projections show that copper production will increase 82% to hit a massive 37.1 million tonnes by 2050; however, supply will need to increase by an extra 55% to power an all-EV global fleet– equating to the establishment of 194 new mines or six each year till 2050. With an estimated 6.66bn tonnes of global copper resources identified, copper scarcity is not the main issue here, rather than the fact that it takes ~23 years to turn a copper discovery into a functioning mine. The lengthy development time suggests the world is facing a near-impossible task to develop enough mines to meet demand in the available timeframe.
Source: Mining.com
The report, however, notes that if copper recycling remains constant at its 2018 level rather than increasing as assumed, 43 new mines will need to come online every year, with the copper demand gap clocking in at 8.1 million tonnes in 2035 and 9.6 million tonnes in 2040.
It is worth noting that the study used the same methods to arrive at this dire picture as the one used by American geologist M. King Hubbert to accurately predict 30 years of U.S. oil production. However, Hubbert’s model broke when technologies such as hydraulic fracturing, directional drilling and Enhanced Oil Recovery (EOR) made it possible to produce natural gas and crude oil from shale and expanded the hydrocarbon resource. This offers the world a narrow window to expedite the process of bringing new copper mines online.
Hybrids A Potential Solution
IEF has also offered another way to ditch efforts to replace fossil fuel-powered vehicles with all-electric vehicles and instead replace them with hybrids.
“There is remarkably little difference between the amount of copper needed to manufacture hybrid electric rather than ICE vehicles,” with the researchers pointing out that hybrid electric vehicles require 29 kg of copper compared to 24 kg for an ICE (internal combustible engine) vehicle. “It would therefore be judicious to aim for a transition to the 100% manufacture of hybrid electric vehicles by 2035, rather than transitioning to the 100% manufacture of battery electric vehicles, which require 60 kg. The copper required for this transition is only slightly above baseline and does not require major grid improvements,” the report’s authors said.
Fossil fuel investors will no doubt be pleased to know that hybrids remain incredibly popular in this age where pure EVs have become dominant, a full 25 years since Toyota Motor Corp. (NYSE:TM) launched the Prius. Nearly 3 million hybrid EVs were sold in 2022, good for nearly 30% of all EVs sold. Hybrids remain popular because they make considerable savings on gas and cut their carbon footprint without the attendant charging anxiety that comes with pure EVs.
In a hybrid car, there is an ICE component and an electric motor, with battery-stored energy. However, a hybrid can’t be plugged in to charge. Instead, it is charged by the regenerative braking of the internal combustion engine. The extra power provided by the electric motor can potentially allow for a smaller engine, adding some environmental benefits. The battery can also power auxiliary loads and reduce engine idling when stopped, according to the Alternative Fuels Data Center.
By Alex Kimani for Oilprice.com
More Top Reads From Oilprice.com
Russia Is Losing Its Grip on Central Asia
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Silver price appreciates as weak US labor data raises the odds of a Fed rate cut at its September meeting.
CME FedWatch Tool suggests fully pricing in at least a 25 basis point Fed rate cut in September.
Chicago Fed President Goolsbee stated that Fed officials are starting to align with the broader market’s sentiment of rate adjustment.
Silver price (XAG/USD) inches higher to near $28.00 per troy ounce during the Asian session on Monday. The non-yielding assets like Silver gains ground as weak US jobs data increase the likelihood of a 25 basis-point rate cut by the Federal Reserve (Fed) at its September meeting.
The US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) added 142,000 jobs in August, below the forecast of 160,000 but an improvement from July’s downwardly revised figure of 89,000. Meanwhile, the Unemployment Rate fell to 4.2%, as expected, down from 4.3% in the previous month.
Lower interest rates tend to benefit Silver by reducing the opportunity cost of holding non-yield-bearing bullion assets. According to the CME FedWatch Tool, markets are fully anticipating at least a 25 basis point (bps) rate cut by the Federal Reserve at its September meeting.
Additionally, Chicago Fed President Austan Goolsbee remarked on Friday that Fed officials are starting to align with the broader market’s sentiment that a policy rate adjustment by the US central bank is imminent, according to CNBC.
FXStreet’s FedTracker, which uses a custom AI model to evaluate Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10, rated Goolsbee’s comments as dovish, assigning them a score of 3.2.
The potential gains for Silver might be limited due to safe-haven flows, given the recent easing of geopolitical tensions in the Middle East. Israeli forces have withdrawn from Jenin, according to Reuters citing the Palestine news agency WAFA.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Item 1 of 2 Oil tankers wait at anchorage in the Black Sea off Kilyos near Istanbul, Turkey, December 8, 2022. REUTERS/Mehmet Emin Caliskan/File Photo
[1/2]Oil tankers wait at anchorage in the Black Sea off Kilyos near Istanbul, Turkey, December 8, 2022. REUTERS/Mehmet Emin Caliskan/File Photo Purchase Licensing Rights, opens new tab
Brent futures settle below $70 for first time since December 2021
OPEC revises down world oil demand for 2024, 2025
Tropical Storm Francine causes offshore production shut-ins
Investors await EIA weekly oil stock data at 10:30 a.m. EDT (1430 GMT) on Wednesday
HOUSTON, Sept 10 (Reuters) – Global oil benchmark Brent crude futures settled at their lowest level since December 2021 on Tuesday, after OPEC+ revised down its demand forecast for this year and 2025, offsetting supply concerns from Tropical Storm Francine.
Brent crude futures settled down $2.65, or 3.69%, at $69.19 a barrel. U.S. West Texas Intermediate (WTI) crude settled down $2.96, or 4.31%, to $65.75 a barrel.
Both benchmarks dropped by more than $3 during the session, after each rose by about 1% on Monday. WTI crude futures fell more than 5% on Tuesday, hitting their lowest levels since May 2023.
On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) in a monthly report said world oil demand would rise by 2.03 million barrels per day (bpd) in 2024, down from last month’s forecast for growth of 2.11 million bpd.
Until last month, OPEC had kept the forecast unchanged since it was first made in July 2023.
OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd. Prices slid on the weakening global demand prospects and expectations of oil oversupply.
Separately, the U.S. Energy Information Administration (EIA) on Tuesday said global oil demand is set to grow to a bigger record this year while output growth will be smaller than prior forecasts.
Global oil demand is expected to average around 103.1 million barrels per day this year, the EIA said, some 200,000 bpd higher than its previous forecast of 102.9 million bpd.
Oil prices remained depressed after the EIA forecast release, as concerns about China continued to weigh on prices.
Data released on Tuesday showed China’s exports grew in August at their fastest in nearly 1-1/2 years, but imports disappointed with domestic demand depressed.
Meanwhile, Asian refiners’ margins fell to their lowest seasonal level since 2020 last week on rising supplies of diesel and gasoline.
“There’s almost no oil demand growth in the advanced economies this year. Fiscal stimulus in China has not boosted the construction sector; that’s one big reason Chinese demand for diesel is shrinking,” said Clay Seigle, an oil market strategist.
Investors are increasingly pricing in a slowing global economy, according to Phil Flynn, a senior analyst at Price Futures Group.
Meanwhile, Tropical Storm Francine barrelled across the Gulf of Mexico driving operators to shut in around a quarter of offshore crude production, the U.S. Bureau of Safety and Environmental Enforcement said on Tuesday.
The U.S. Gulf of Mexico accounts for about 15% of all domestic oil production and 2% of natural gas output, according to federal data.
The storm was on track to become a hurricane on Tuesday, the U.S. National Hurricane Center said.
So far, production shut-ins have failed to offset weak demand sentiment and support prices, analysts said.
Meanwhile, U.S. crude oil and gasoline inventories fell while distillates rose last week, according to market sources citing American Petroleum Institute figures on Tuesday.
The API figures showed crude stocks fell by 2.793 million barrels in the week ended Sept. 6, the sources said, speaking on condition of anonymity. Gasoline inventories fell by 513,000 barrels, and distillates rose by 191,000 barrels.
Investors await weekly oil stock data from the EIA, published at 10:30 a.m. EDT (1430 GMT) on Wednesday.
Reporting by Georgina McCartney in Houston, Ahmad Ghaddar in London
Additional reporting by Katya Golubkova in Tokyo, Florence Tan in Singapore and Arunima Kumar in Bengaluru
Editing by Emelia Sithole-Matarise, Nick Zieminski and Matthew Lewis
Upcoming first-tier events in the United States and central banks’ announcements spur caution.
US Treasury yields touched fresh one-year lows and aim to extend their slides.
XAU/USD consolidates gains above $2,500 with a neutral technical stance.
Gold extended its recovery on Tuesday, trading around $2,513 a troy ounce mid-US session. Financial markets turned risk-averse ahead of first-tier events, resulting in a firmer US Dollar against major rivals except for safe-haven ones. Gold, the Swiss Franc and the Japanese Yen post modest advances vs the American currency as Wall Street dipped.
There has not been a specific catalyst for the souring mood, but caution ahead of the release of the United States (US) Consumer Price Index (CPI) on Wednesday and the European Central Bank (ECB) monetary policy decision on Thursday. About the first, market players are expecting easing price pressures, yet inflation holds above the Federal Reserve (Fed) goal of around 2%. Nevertheless, the Fed is scheduled to announce its decision on monetary policy next week and most likely trim interest rates by 25 basis points (bps).
Meanwhile, US Treasury yields retreat. The 10-year note offers 3.66% after bottoming at 3.64%, a fresh 52-week low. The same happens with the 2-year note, now yielding 3.62% after bottoming at 3.59%.
XAU/USD short-term technical outlook
The daily chart for XAU/USD offers a neutral-to-bullish stance, with the pair still meeting intraday buyers around a bullish 20 Simple Moving Average (SMA). Technical indicators, in the meantime, lack directional strength, with the Momentum indicator stuck around its 100 line and the Relative Strength Index (RSI) indicator consolidating at around 58. Finally, the 100 and 200 SMAs keep grinding higher, far below the current level, limiting the bearish potential in the wider perspective.
For the near term, the 4-hour chart offers a neutral stance. XAU/USD trades above its 20 and 100 SMAs, while the 200 SMA advances far below the current level. Technical indicators have turned flat, reflecting the absence of directional conviction, although the fact that the RSI indicator stands at 56 suggests bears have no interest in Gold.
Last week natural gas exceeded the 200-Day MA and closed above it for the first time in 10 weeks. That set the stage for further strengthening. Another breakout above the 200-Day, now at 2.25, that is retained, prepares natural gas for a breakout from a bullish double bottom pattern. Notice that today’s advance exceeded the 200-Day line but at the time of this writing, natural gas is trading below the line and not on track to close above it.
Waiting Breakout of Double Bottom
A bull breakout of a double bottom pattern will trigger on a decisive rally above 2.30. That will also confirm a bull continuation of the developing uptrend as a violation of the 2.30 swing high presents a higher swing high and that goes with an uptrend. Also, the purple 20-Day MA is close to crossing above the orange 50-Day MA. A bullish crossover of the 20-Day line above the 50-Day line will confirm underlying strength in the price of natural gas and supports the likelihood of a rise to higher targets in the near term.
Pattern Points to 2.72
Following a double bottom breakout natural gas heads towards the target from measuring the pattern at 2.72. And eventually it may be heading towards a potential test of resistance around the downtrend line. The line is close to the 78.6% retracement level at 2.89. It marks the second higher potential target price zone following a breakout of the double bottom pattern. The first resistance zone following an upside breakout is likely from 2.47 to 2.52, consisting of a prior interim swing low and the 50% retracement, respectively.
For a look at all of today’s economic events, check out our economic calendar.
WTI crude futures fell 4.5% on Tuesday morning as hedge funds and money managers continued to sour on crude oil.
Bearish Sentiment on Oil Still Yet to Hit Bottom
– Hedge funds and other money managers have turned the most bearish on crude ever since the CFTC started to publish information on market positioning, with Brent and WTI net longs totaling a mere 139,242 lots in the week ended September 3.
– As the oil market gathered in Singapore this week for the annual Appec conference, Trafigura head of oil trading Ben Luckock said oil would dip into the 60s soon, depressed by weakening demand in China.
– US investment Citi lowered its 2025 price forecast to a mere 60 per barrel, prompting a general downward revision of outlooks as Morgan Stanley and the Bank of America both slashed its expectations to $75 per barrel.
– Crude oil futures could potentially flip into contango over the upcoming period as the ICE Brent 36-month spread between the November 2024 and November 2027 contracts shrank to a mere $2 per barrel, down from $9 per barrel a month ago.
Market Movers
– A blaze at Mexico’s largest refinery, the 330,000 b/d Salina Cruz refinery operated by national oil company Pemex, killed two workers as a fire broke out after a truck bumped into refinery waste that surfaced after rain overflowed the sewers.
– Canada’s pipeline operator Pembina Pipeline (TSO:PPL) agreed to buy infrastructure assets in Alberta’s Montney basin from oil producer Veren for $300 million, in yet another instance of M&A in the midstream segment.
– US oil major ExxonMobil (NYSE:XOM) has reportedly renounced on the idea of buying half of Galp Energia’s (ELI:GALP) stake in the allegedly huge Mopane offshore discovery in Namibia, potentially wielding 10 billion barrels of oil equivalent.
Tuesday, September 10, 2024
Not even a forming hurricane in the US Gulf of Mexico could halt the decline in oil prices, with ICE Brent dipping below $70 per barrel and marking the lowest level it has been since late 2021. Defying OPEC+’s postponement of output increases and the Libyan oil embargo, oil prices continue to edge lower on fears of oversupply and an ever-weakening Chinese outlook.
OPEC Lowers Its Demand Growth Outlook. Amidst plunging oil prices, OPEC cut its forecast for global oil demand growth in both 2024 and 2025, revising this year’s outlook to a still very ambitious 2.03 million b/d whilst cutting next year’s number marginally lower to 1.74 million b/d.
Storm Francine Triggers Gulf Evacuations. UK-based energy major Shell (LON:SHEL) has paused drilling operations at its Perdido and Whale offshore platforms in the Gulf of Mexico as Tropical Storm Francine, the sixth named storm of the 2024 hurricane season, is headed towards Texas.
New Regulations Jeopardize US Gulf Production. The American Petroleum Institute warned the US Department of Commerce that if it does not act quickly to publish a new assessment on how to protect endangered species in the Gulf of Mexico, all offshore oil and gas operations could be disrupted.
Central Europe Exhales Amidst New Deal on Ukraine Transit. Hungary’s oil company MOL said it reached a deal to ensure the continued supply of Russian oil via the Druzhba pipeline that transits Ukraine, changing the delivery point from its own border to the Belarus-Ukraine border.
Biden Administration Expedites SPR Repurchases. Having purchased 2.5 million barrels of US crude last month for delivery to Bryan Mound in January-March, the US Energy Department bought another 3.4 million barrels to be delivered in the same months at the same time, boosting the pace of SPR replenishment.
Russia’s Grey Tankers Ignore Danish Pilots. Oil tankers carrying Russian oil as part of its so-called shadow fleet are increasingly refusing to use the service of Danish pilots as they navigate their ships through the Danish straits, increasing the risks of oil spills amidst strong currents and varying depths.
India Doubles Down on Coal Plants. India’s state-owned coal producer Coal India (NSE:COALINDIA) is planning to invest $8 billion to build coal-fired power plants next to its mines, adding at least 4.7 GW of generation over the next six years as part of a giant 88 GW capacity buildout.
Italy Revisits Its Nuclear Strategy. Italy is looking to reverse its ban on nuclear power production and is mulling the creation of a new company to build smaller modular nuclear reactors, to be led by the state power market champion Enel (BMI:ENEI), expecting to pass it in Parliament next year.
UAE Signs Another Major LNG Term Deal. ADNOC, the national oil company of the UAE, has agreed to a 15-year term deal with India’s leading oil firm IOC (NSE:IOC) to supply up to 1 million metric tonnes of LNG per year from 2028, the seventh term contract that it allocated to future buyers.
China Launches Anti-Dumping Probe into Canola. Chinese authorities have announced the launch of a one-year anti-dumping investigation into the imports of canola from Canada, with rapeseed becoming Beijing’s tit-for-tat response to Ottawa’s 100% on Chinese-made EVs and other products.
Qatar Names Flagship LNG Carrier After Rex Tillerson. Qatar’s national energy company QatarEnergy has unveiled its first LNG carrier to be built by the Chinese Hudong-Zhonghua shipyard for its upcoming North Field expansion, naming it after former Exxon CEO Rex Tillerson.
Ecopetrol Implodes on CrownRock Deal Fallout. Two independent directors have resigned from the board of Colombian oil producer Ecopetrol (NYSE:EC), dissatisfied with the company’s decision not to take a 30% stake in CrownRock Energy as part of Occidental’s (NYSE:OXY) $12 billion takeover.
India Launches New LNG Truck Policy. Mirroring China’s large-scale conversion of diesel trucks to LNG, India announced a draft scheme to convert one-third of its existing heavy-duty vehicle fleet over the next five years, however, the lack of a nationwide retail network and high costs could derail that vision.
