Daniels Energies
Content
Thursday October 02, 2014
DAILY ENERGY COMPLEX COMMENTARY 10/02/14 WTI Crude Oil into new low for the move on Saudi price cut & building global supplies. OVERNIGHT CHANGES THROUGH 6:05 AM (CT): CRUDE -191, HEATING OIL -408, UNLEADED GAS -467 CRUDE OIL MARKET FUNDAMENTALS: November Crude Oil prices pushed into a new low for the move during the early morning hours, weighed down by a surprise price cut by Saudi Arabia. There also remains concern over a lackluster global growth environment following a round of softer manufacturing data points during the previous session. Reports that Saudi Arabia cut their official selling price for November by more than expected seemed to tamp down expectations for a reduction in output at the November OPEC meeting. This has some in the trade suggesting that OPEC could be adjusting policy to counteract falling prices. An added factor weighing on the crude oil market is the active production pace in Libya, which contributes to abundant supply concerns. The crude oil market was able to push toward the $93.00 area during yesterday's session, helped by weekly EIA inventory data that showed an unexpected decline in US crude oil supplies of 1.36 million barrels. EIA crude stocks are 7.097 million barrels below year ago levels, but stand 4.017 million barrels above the five year average. Some traders were encouraged by the drawdown in US crude supply last week even in the face of a pullback in refinery activity back below the 90% level, as well as a rebound in imports. EIA crude oil imports for the week stood at 7.284 million barrels per day compared to 6.870 million barrels the previous week. The refinery operating rate was down 3.6% to 89.8%, which compared to 89% last year and the fiveyear average of 86.6%. In the meantime, ongoing concern over building global oil supplies and demand concerns in Europe and Asia keep the fundamental edge in favor of the bear camp. Price action in November WTI Crude Oil also favors the bear camp, especially, helped by a build in open interest during Tuesday's downdraft, with added followthrough yesterday and this morning. November Crude Oil has support coming in at its 2014 low at $87.85. PRODUCT MARKET FUNDAMENTALS: November RBOB Gasoline enters the US trading hours at a new low for the move and below the $2.40 area. Sharp downside action in both Brent and WTI Crude Oil, combined with demand uncertainty contributes to the decline. The market showed negative reversal action during the previous session and posted an inside day trading range in the process. The market was able to make a brief push above $2.50 in the wake of EIA inventory data that showed a larger than expected drawdown in US gasoline supplies last week of 1.836 million barrels. Average total gasoline demand for the past four weeks was down 0.71% compared to last year. The break in November RBOB indicates that focus is on macro fundamentals more than specific supply issues. This is highlighted by weaker price action in the face of a larger draw down in US supplies and ongoing refinery issues in Texas. The price trend in November RBOB favors the bear camp, with the next area of support coming from the April 2013 low of $2.3468. Meanwhile, November Heating Oil prices rallied to their high of the session in response to yesterday's EIA data showing a hefty decline in US distillates last week. EIA distillate stocks fell 2.894 million barrels and stand at 3.478 million barrels below last year and 25.178 million below the five-year average. Average total distillate demand for the past four weeks was up 0.75% compared to last year. EIA heating oil stocks fell 270,000 barrels and are 4.278 million barrels below last year and 24.144 million below the five year average. Support for November Heating Oil comes in at its contract low at $2.5997. TODAY'S ENERGY MARKET GUIDANCE: November Crude Oil prices plunged into a new low for the move, which keeps the bear trend intact. Added downside follow-through in the market comes with ongoing demand concerns in Europe and Asia, as well as reports that Saudi Arabia lowered their official selling prices. Of particular interest to the crude oil complex in the coming session is the press conference from Mario Draghi and potential for more aggressive
quantitative easing measures. A supportive feature for the crude oil market that so far has been overlooked is the weakness in the US dollar. Further weakness there could provide bargain-hunters a source of cover for a turn higher. The bear camp remains in control in November Crude Oil with support at $87.85.
Weekly EIA Petroleum Report CRUDE OIL
In Million Barrels Stocks
Imports Refinery Capacity(%)
Week Of
Current Weekly Change Yearly Change 5 Year Average Current Current
9/26/2014
356.635
-1.363
DISTILLATES
-7.097
352.618
Stocks
7.284 Imports
89.8
Current Weekly Change Yearly Change 5 Year Average Current Current
9/26/2014
125.701
GASOLINE
-3.478
150.879
Stocks
0.031 Imports
4.117
Current Weekly Change Yearly Change 5 Year Average Current Current
9/26/2014
208.488
-11.242
212.747
0.504
Year Ago 3.831
Demand
Week Of
-1.836
89
Demand
Week Of
-2.894
Year Ago
8.66
Year Ago 8.527
NATURAL GAS: November Natural Gas prices registered a lower low during the early morning hours, but managed to hold above the $4.00 level. The market pushed into a new high for the move early in yesterday's session at $4.184, but ended with a bearish outside-day reversal. Concerns that this morning's weekly EIA storage report could show another above-average injection, somewhere in the range of 105 bcf, triggered some profit-taking. An added drag on the natural gas market is the latest 6-day to 10-day weather maps, which show a smaller area of below-normal temperatures over the Great Lakes region going into October 11th. Meanwhile, the Henry Hub next-day cash market held steady, while the New York Transco Z6 market rallied during yesterday's session, and that provides a source of support for the November contract. The near-term trend for November Natural Gas continues to support the bull camp, with support coming in at $3.975. TODAY'S MARKET IDEAS: Aggressive bulls in November Natural Gas might consider buying the November 4.10 Calls on a setback toward 0.085, positioning for another leg higher in the November futures toward $4.39. NEW RECOMMENDATIONS: None. PREVIOUS RECOMMENDATIONS: None. OTHER ENERGY CHARTS:
ENERGY COMPLEX TECHNICAL OUTLOOK: Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.
CRUDE OIL (NOV) 10/02/2014: Momentum studies trending lower at mid-range should accelerate a move lower if
support levels are taken out. The market's short-term trend is negative as the close remains below the 9-day moving average. The market tilt is slightly negative with the close under the pivot. The next downside objective is now at 88.77. The next area of resistance is around 92.04 and 93.74, while 1st support hits today at 89.56 and below there at 88.77. HEATING OIL (NOV) 10/02/2014: The stochastics indicators are rising from oversold levels, which is bullish and should support higher prices. The close below the 9-day moving average is a negative short-term indicator for trend. It is a slightly negative indicator that the close was under the swing pivot. The near-term upside target is at 271.81. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 268.81 and 271.81, while 1st support hits today at 263.67 and below there at 261.52. RBOB GAS (NOV) 10/02/2014: Declining momentum studies in the neutral zone will tend to reinforce lower price action. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. The next downside objective is now at 238.74. The next area of resistance is around 248.33 and 252.71, while 1st support hits today at 241.35 and below there at 238.74. NATURAL GAS (NOV) 10/02/2014: Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The market's close above the 9-day moving average suggests the short-term trend remains positive. A negative signal was given by the outside day down. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next upside target is 4.230. The next area of resistance is around 4.110 and 4.230, while 1st support hits today at 3.944 and below there at 3.897.
DAILY TECHNICAL STATISTICS 9 DAY RSI
14 DAY RSI
14 DAY SLOW STOCH D
CLOSE ENERGY COMPLEX HOAZ4 266.47 21.27 26.32 16.33 RBAZ4 239.50 31.92 34.53 29.15 90.80 40.48 41.89 55.95 CLAX4 CLAZ4 89.79 38.11 39.91 51.84 HOAX4 266.24 28.05 30.46 17.44 244.84 38.55 39.95 39.18 RBAX4 NGAX4 4.027 51.52 51.32 65.11 NGAZ4 4.094 50.03 50.28 64.41 Calculations based on previous session. Data collected 09/30/2014 Data sources can & do produce bad ticks. Verify before use.
14 DAY SLOW STOCH K
4 DAY M AVG
9 DAY M AVG
18 DAY M AVG
45 DAY M AVG
60 DAY M AVG
17.37 27.10 46.52 41.19 18.02 30.89 68.28 67.29
2.70 2.44 92.52 91.54 2.68 2.47 4.08 4.16
2.70 2.45 92.16 91.38 2.69 2.50 4.00 4.08
2.74 2.46 92.14 91.47 2.73 2.50 3.99 4.07
2.82 2.52 93.67 93.17 2.81 2.54 3.98 4.07
2.85 2.55 95.21 94.66 2.83 2.57 3.99 4.07
DAILY SWING STATISTICS Contract Support 2 ENERGY COMPLEX HOAZ4 Heating Oil 259.48 RBAZ4 RBOB Gas 231.19 CLAX4 Crude Oil 88.76 CLAZ4 Crude Oil 87.77 Heating Oil 261.51 HOAX4 RBAX4 RBOB Gas 238.73 NGAX4 Natural Gas 3.896 Natural Gas 3.966 NGAZ4 Calculations based on previous session. Data collected 09/30/2014 Data sources can & do produce bad ticks. Verify before use.
Support 1
Pivot
Resist 1
Resist 2
262.49 234.68 89.55 88.55 263.66 241.34 3.943 4.012
267.44 240.83 91.25 90.25 266.66 245.72 4.063 4.129
270.45 244.32 92.04 91.03 268.81 248.33 4.110 4.175
275.40 250.47 93.74 92.73 271.81 252.71 4.230 4.292
***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of Daniels Trading is strictly prohibited. Violators are subject to a $15,000 fine per violation.
[email protected]
1.800.800.3840
DAILY ENERGY COMPLEX COMMENTARY 10/02/14 WTI Crude Oil into new low for the move on Saudi price cut & building global supplies. OVERNIGHT CHANGES THROUGH 6:05 AM (CT): CRUDE -191, HEATING OIL -408, UNLEADED GAS -467 CRUDE OIL MARKET FUNDAMENTALS: November Crude Oil prices pushed into a new low for the move during the early morning hours, weighed down by a surprise price cut by Saudi Arabia. There also remains concern over a lackluster global growth environment following a round of softer manufacturing data points during the previous session. Reports that Saudi Arabia cut their official selling price for November by more than expected seemed to tamp down expectations for a reduction in output at the November OPEC meeting. This has some in the trade suggesting that OPEC could be adjusting policy to counteract falling prices. An added factor weighing on the crude oil market is the active production pace in Libya, which contributes to abundant supply concerns. The crude oil market was able to push toward the $93.00 area during yesterday's session, helped by weekly EIA inventory data that showed an unexpected decline in US crude oil supplies of 1.36 million barrels. EIA crude stocks are 7.097 million barrels below year ago levels, but stand 4.017 million barrels above the five year average. Some traders were encouraged by the drawdown in US crude supply last week even in the face of a pullback in refinery activity back below the 90% level, as well as a rebound in imports. EIA crude oil imports for the week stood at 7.284 million barrels per day compared to 6.870 million barrels the previous week. The refinery operating rate was down 3.6% to 89.8%, which compared to 89% last year and the fiveyear average of 86.6%. In the meantime, ongoing concern over building global oil supplies and demand concerns in Europe and Asia keep the fundamental edge in favor of the bear camp. Price action in November WTI Crude Oil also favors the bear camp, especially, helped by a build in open interest during Tuesday's downdraft, with added followthrough yesterday and this morning. November Crude Oil has support coming in at its 2014 low at $87.85. PRODUCT MARKET FUNDAMENTALS: November RBOB Gasoline enters the US trading hours at a new low for the move and below the $2.40 area. Sharp downside action in both Brent and WTI Crude Oil, combined with demand uncertainty contributes to the decline. The market showed negative reversal action during the previous session and posted an inside day trading range in the process. The market was able to make a brief push above $2.50 in the wake of EIA inventory data that showed a larger than expected drawdown in US gasoline supplies last week of 1.836 million barrels. Average total gasoline demand for the past four weeks was down 0.71% compared to last year. The break in November RBOB indicates that focus is on macro fundamentals more than specific supply issues. This is highlighted by weaker price action in the face of a larger draw down in US supplies and ongoing refinery issues in Texas. The price trend in November RBOB favors the bear camp, with the next area of support coming from the April 2013 low of $2.3468. Meanwhile, November Heating Oil prices rallied to their high of the session in response to yesterday's EIA data showing a hefty decline in US distillates last week. EIA distillate stocks fell 2.894 million barrels and stand at 3.478 million barrels below last year and 25.178 million below the five-year average. Average total distillate demand for the past four weeks was up 0.75% compared to last year. EIA heating oil stocks fell 270,000 barrels and are 4.278 million barrels below last year and 24.144 million below the five year average. Support for November Heating Oil comes in at its contract low at $2.5997. TODAY'S ENERGY MARKET GUIDANCE: November Crude Oil prices plunged into a new low for the move, which keeps the bear trend intact. Added downside follow-through in the market comes with ongoing demand concerns in Europe and Asia, as well as reports that Saudi Arabia lowered their official selling prices. Of particular interest to the crude oil complex in the coming session is the press conference from Mario Draghi and potential for more aggressive
quantitative easing measures. A supportive feature for the crude oil market that so far has been overlooked is the weakness in the US dollar. Further weakness there could provide bargain-hunters a source of cover for a turn higher. The bear camp remains in control in November Crude Oil with support at $87.85.
Weekly EIA Petroleum Report CRUDE OIL
In Million Barrels Stocks
Imports Refinery Capacity(%)
Week Of
Current Weekly Change Yearly Change 5 Year Average Current Current
9/26/2014
356.635
-1.363
DISTILLATES
-7.097
352.618
Stocks
7.284 Imports
89.8
Current Weekly Change Yearly Change 5 Year Average Current Current
9/26/2014
125.701
GASOLINE
-3.478
150.879
Stocks
0.031 Imports
4.117
Current Weekly Change Yearly Change 5 Year Average Current Current
9/26/2014
208.488
-11.242
212.747
0.504
Year Ago 3.831
Demand
Week Of
-1.836
89
Demand
Week Of
-2.894
Year Ago
8.66
Year Ago 8.527
NATURAL GAS: November Natural Gas prices registered a lower low during the early morning hours, but managed to hold above the $4.00 level. The market pushed into a new high for the move early in yesterday's session at $4.184, but ended with a bearish outside-day reversal. Concerns that this morning's weekly EIA storage report could show another above-average injection, somewhere in the range of 105 bcf, triggered some profit-taking. An added drag on the natural gas market is the latest 6-day to 10-day weather maps, which show a smaller area of below-normal temperatures over the Great Lakes region going into October 11th. Meanwhile, the Henry Hub next-day cash market held steady, while the New York Transco Z6 market rallied during yesterday's session, and that provides a source of support for the November contract. The near-term trend for November Natural Gas continues to support the bull camp, with support coming in at $3.975. TODAY'S MARKET IDEAS: Aggressive bulls in November Natural Gas might consider buying the November 4.10 Calls on a setback toward 0.085, positioning for another leg higher in the November futures toward $4.39. NEW RECOMMENDATIONS: None. PREVIOUS RECOMMENDATIONS: None. OTHER ENERGY CHARTS:
ENERGY COMPLEX TECHNICAL OUTLOOK: Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.
CRUDE OIL (NOV) 10/02/2014: Momentum studies trending lower at mid-range should accelerate a move lower if
support levels are taken out. The market's short-term trend is negative as the close remains below the 9-day moving average. The market tilt is slightly negative with the close under the pivot. The next downside objective is now at 88.77. The next area of resistance is around 92.04 and 93.74, while 1st support hits today at 89.56 and below there at 88.77. HEATING OIL (NOV) 10/02/2014: The stochastics indicators are rising from oversold levels, which is bullish and should support higher prices. The close below the 9-day moving average is a negative short-term indicator for trend. It is a slightly negative indicator that the close was under the swing pivot. The near-term upside target is at 271.81. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 268.81 and 271.81, while 1st support hits today at 263.67 and below there at 261.52. RBOB GAS (NOV) 10/02/2014: Declining momentum studies in the neutral zone will tend to reinforce lower price action. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. The next downside objective is now at 238.74. The next area of resistance is around 248.33 and 252.71, while 1st support hits today at 241.35 and below there at 238.74. NATURAL GAS (NOV) 10/02/2014: Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The market's close above the 9-day moving average suggests the short-term trend remains positive. A negative signal was given by the outside day down. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next upside target is 4.230. The next area of resistance is around 4.110 and 4.230, while 1st support hits today at 3.944 and below there at 3.897.
DAILY TECHNICAL STATISTICS 9 DAY RSI
14 DAY RSI
14 DAY SLOW STOCH D
CLOSE ENERGY COMPLEX HOAZ4 266.47 21.27 26.32 16.33 RBAZ4 239.50 31.92 34.53 29.15 90.80 40.48 41.89 55.95 CLAX4 CLAZ4 89.79 38.11 39.91 51.84 HOAX4 266.24 28.05 30.46 17.44 244.84 38.55 39.95 39.18 RBAX4 NGAX4 4.027 51.52 51.32 65.11 NGAZ4 4.094 50.03 50.28 64.41 Calculations based on previous session. Data collected 09/30/2014 Data sources can & do produce bad ticks. Verify before use.
14 DAY SLOW STOCH K
4 DAY M AVG
9 DAY M AVG
18 DAY M AVG
45 DAY M AVG
60 DAY M AVG
17.37 27.10 46.52 41.19 18.02 30.89 68.28 67.29
2.70 2.44 92.52 91.54 2.68 2.47 4.08 4.16
2.70 2.45 92.16 91.38 2.69 2.50 4.00 4.08
2.74 2.46 92.14 91.47 2.73 2.50 3.99 4.07
2.82 2.52 93.67 93.17 2.81 2.54 3.98 4.07
2.85 2.55 95.21 94.66 2.83 2.57 3.99 4.07
DAILY SWING STATISTICS Contract Support 2 ENERGY COMPLEX HOAZ4 Heating Oil 259.48 RBAZ4 RBOB Gas 231.19 CLAX4 Crude Oil 88.76 CLAZ4 Crude Oil 87.77 Heating Oil 261.51 HOAX4 RBAX4 RBOB Gas 238.73 NGAX4 Natural Gas 3.896 Natural Gas 3.966 NGAZ4 Calculations based on previous session. Data collected 09/30/2014 Data sources can & do produce bad ticks. Verify before use.
Support 1
Pivot
Resist 1
Resist 2
262.49 234.68 89.55 88.55 263.66 241.34 3.943 4.012
267.44 240.83 91.25 90.25 266.66 245.72 4.063 4.129
270.45 244.32 92.04 91.03 268.81 248.33 4.110 4.175
275.40 250.47 93.74 92.73 271.81 252.71 4.230 4.292
***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of Daniels Trading is strictly prohibited. Violators are subject to a $15,000 fine per violation.
[email protected]
1.800.800.3840
