Archive for Energy

OPEC+ Sticks To January Output Hike Despite Omicron

Lukman Otunuga

By Lukman Otunuga Senior Research Analyst, ForexTime

Oil bulls needed a lifeline. Instead, they were dealt another blow after OPEC+ agreed to stick to their previously agreed plan of hiking output by 400,000 barrels per day in January.

Brent crude tumbled to levels not seen since late August below $65.70 while WTI crude slipped as low as $62.30 before rebounding. The cartel’s decision to proceed with their next output hike comes at a time where the Omicron variant has cast a veil of uncertainty over the global economic recovery. On top of this, fears continue to linger over the United States releasing more crude reserves in an attempt to bring down soaring energy and petrol prices.

While the path of least resistance for oil certainly points south, there could still be some light at the end of the dark tunnel. One thing to keep in mind is that OPEC+ signalled that they could revisit the decision to hike output at any moment should the current market conditions shift. With the meeting not officially closed, anything could be on the cards with a decision to pause or cut output a possibility if conditions warrant.

Digging deeper, a decision to ditch the planned supply increase in January would have carried some political risk. Earlier this month, OPEC+ rejected calls from the United States to increase output faster in a bid to tame rising oil prices. Suspending the previously agreed production increase could have strained relations between both sides. Nevertheless, today’s decision is likely to set the tone for oil for the rest of 2021.

Interestingly, oil prices later rebounded on Thursday, giving up earlier losses as markets evaluated whether the Omicron variant may not be as troublesome as initially feared. Brent crude is pressing against the $70.00 resistance level as of writing as bulls try to snatch back the steering wheel. While a daily close above this resistance could open the doors to further upside, the first major barrier will be around the 200-day Simple Moving Average just above $71.60. A failure to clear this point could result in a decline back towards $68.20, $65.66, and $65.00.

 

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

5 Interesting Energy Stocks added to our Watchlist this Quarter

The fourth quarter of 2021 is approximately two-thirds over and we wanted to highlight some of the Top Energy Companies that have been analyzed by our QuantStock system so far. Our QuantStock system is a proprietary algorithm that takes into account key company fundamentals, earnings trends and other strength components to find quality companies. We use it as a stock market ideas generator and to update our stock watchlist every quarter. The QuantStock system does not take into consideration the stock price or technical price trends so one must compare each company idea against the current stock prices. There are a plethora of professional studies that continue to show stock markets are overvalued and this is always a key component to consider when researching any stock market idea. As with all investment ideas, past performance does not guarantee future results.

Here we go with 5 of our Top Energy Stocks two-thirds of the way through Quarter 4 of 2021:

Suncor Energy

Energy Stock | Medium Cap | 5.42 percent dividend | 15.22 P/E | Our Grade = C+

Suncor Energy Inc. (NYSE: SU) Energy Stock Chart

Suncor Energy Inc. (NYSE: SU) is one of Canada’s biggest energy stocks. It is an integrated energy company engaged in producing synthetic crude from oil sands. Suncor last announced its financial results for the third quarter on October 27. It came up with earnings of 56 cents per share and revenue of $8.11 billion for the three months ended September 30. The results showed significant improvement from the comparable quarter of 2020 but missed the consensus forecast of 58 cents per share for profit and $8.5 billion for revenue. Despite missing expectations, Suncor Energy stock climbed to a new high of $26.97 earlier this month.


Matador Resources Co.

Energy Stock | Small Cap | 0.51 percent dividend | 16.78 P/E | Our Grade = C-

Matador Resources Co. (NYSE: MTDR) Energy Stock Chart

Matador Resources Co. (NYSE: MTDR) is an energy company based in Texas, United States. The company last month announced impressive financial results for the third quarter. Matador earned $1.25 per share during the three months ended September 30, beating the consensus forecast of 96 cents per share. Moreover, it generated revenue of $472.351 million during the quarter, ahead of analysts’ average estimate of $387.950 million. In addition, Matador stock has also performed exceptionally well so far in 2021. The company’s share price has skyrocketed more than 200 percent on a year-to-date basis. The 52-week range of the stock is $10.16 – $47.23, while its total market value stands close to $4.5 billion.


Magnolia Oil & Gas Corp.

Energy Stock | Small Cap | 0.84 percent dividend | 11.29 P/E | Our Grade = C-

Magnolia Oil & Gas Corp. (NYSE: MGY) Energy Stock Chart

Magnolia Oil & Gas Corp. (NYSE: MGY) is another Texas-based oil producer. The company posted solid financial results for the third quarter earlier this month. Magnolia reported adjusted earnings of 67 cents per share on revenue of $283.58 million. The results easily surpassed analysts’ average estimate of 61 cents per share for earnings and $274 million for revenue. If we quickly look at its key financial metrics, Magnolia stock is currently trading around $18.82, against its 52-week range of $18.38 – $19.07. Moreover, the company’s market value is just over $3.4 billion, while its P/E ratio stands at 11.03.


China Petroleum & Chemical Corp.

Energy Stock | Medium Cap | 10.26 percent dividend | 3.71 P/E | Our Grade = C

China Petroleum & Chemical Corporation (NYSE: SNP) Energy Stock Chart

China Petroleum & Chemical Corporation (NYSE: SNP), commonly known as Sinopec, is a leading oil and gas company based in China. Besides its listing in the New York Stock Exchange, it also trades in Hong Kong and Shanghai. Sinopec last month announced mixed results for the third quarter. Its reported earnings of $2.64 per share, representing a sharp decline from $5.54 per share in the comparable period of 2020. On the positive side, its revenue for the third quarter grew over 52 percent to $114.58 million. If we look at its share price, Sinopec stock has struggled to gain value so far in 2021. The stock has only increased nearly one percent on a year-to-date basis.


Petróleo Brasileiro S.A.

Energy Stock | Medium Cap | 19.49 percent dividend | 2.71 P/E | Our Grade = C

Petróleo Brasileiro S.A. (NYSE: PBR) Energy Stock Chart

Petróleo Brasileiro S.A. (NYSE: PBR) is one of the leading energy stocks based in Rio de Janeiro, Brazil. The company, also called Petrobras, is engaged in the exploration and production of oil and natural gas. Petrobras last released its quarterly financial results on October 28. The company reported earnings of $5.9 billion for the third quarter, down 26.9 percent from Q2 but significantly higher than the comparable period of 2020. In addition, its quarterly revenue of $23.3 billion was also well above $13.15 billion in the year-ago period. If we talk about its share price movement, Petrobras stock hasn’t performed well this year. The stock is still down nearly six percent on a year-to-date basis.


Article by InvestMacro – Be sure to join our stock market newsletter to get our updates and to see more top companies we add to our stock watch list.

 

Trade Of The Week: Can OPEC Rescue Oil Bulls?

Lukman Otunuga

By Lukman Otunuga Senior Research Analyst, ForexTime

Brent crude is struggling to nurse deep wounds inflicted from last Friday’s brutal selloff despite investors reassessing the impact of the new Omicron Covid variant.

After dropping more than 10% in the previous session (Friday), it is fair to say that the past few days and weeks have not been kind to brent crude. Things started going downhill for oil bulls after the announcement of a US coordinated release of strategic reserves earlier in the month. With the new coronavirus variant in town triggering fresh travel restrictions across the globe, this certainly does not bode well for the demand outlook – especially when factoring in the rising Covid cases in Europe.

Will Omicron menace cripple oil bulls?

According to the World Health Organization (WHO), the heavily mutated Omicron coronavirus variant is likely to spread across the globe and possesses a very high risk of infections surges.

Indeed, a growing number of countries have reported confirmed cases of the variant, including the United Kingdom, Germany, Hong Kong, and France among many others. When considering how the first case of Omicron was detected in South Africa on November 9, it was taken a short period for the highly mutated strain to spread its poisonous tentacles across the world. With more than 40 countries imposing travel restrictions from several African countries thanks to the variant, oil bulls could be in trouble.

What does this all mean for OPEC+?

The next few days promise to be tense for OPEC and its allies as they decide how to respond to Omicron. One could already feel the heightened level of caution from OPEC+ after the Joint Ministerial Monitoring Committee (JMMC) and Joint Technical Committee meetings were postponed to get more information about the current events. Nevertheless, the OPEC and OPEC+ meetings will go ahead as planned on Wednesday 1st and Thursday 2nd of December.

Since OPEC+ has already decided to increase production by 400,000 barrels per day (bpd) in December, any decision this week will be for January 2022.

Expectations are mounting over the cartel ditching its planned 400,000 bpd supply increase in January.

This could be based around the Omicron variant threatening oil demand recovery and a US coordinated release of strategic reserves with other countries such as China, India, and Britain among others.

Should OPEC+ suspend the 400,000 bpd production increase in January, oil bulls could be thrown a lifeline – ultimately pushing prices higher. However, if the cartel sticks to its original plan, the path of least resistance for oil will remain south.

Keep an eye on Strategic Petroleum Reserves

In a move that may pressure oil down the road, the Biden administration’s envoy recently repeated that the United States was ready to release more crude from the strategic reserves if needed.

It’s worth keeping in mind that two days before Thanksgiving, Biden announced that the US would release 50 million barrels from the strategic reserves in an effort to tame inflation.

The idea of the US and other countries flooding markets with oil at a time where the Omicron variant could threaten oil demand recovery has the potential to limit oil’s upside gains.

Is brent crude poised for a steeper decline?

Brent crude remains under intense pressure on the daily charts with bears drawing strength from last Friday’s heavy selloff. There have been consistently lower lows and lower highs while the MACD trades to the downside.

Given how prices have already closed below the 200-day Simple Moving Average, bears seem to be in a position of power with the next key level of interest found at $70. A solid breakdown below this point could open the doors towards $68.20 and $65.00, respectively. For bulls to jump back into the game, prices need to push back above $80.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

COT Energy Charts: WTI Crude Oil, Natural Gas, Gasoline, Bloomberg Index, #2 Heating Oil & Brent Oil

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC) on Monday due to the Thanksgiving holiday last week.

The latest COT data is updated through Tuesday November 23rd 2021 and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.


Data Snapshot of Commodity Market Traders | Columns Legend
Nov-23-2021 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index
WTI Crude 2,028,573 13 407,657 42 -454,965 46 47,308 82
Gold 559,823 40 234,411 62 -267,834 36 33,423 63
Silver 149,642 16 40,105 62 -56,998 43 16,893 39
Copper 190,681 20 13,722 52 -20,941 45 7,219 67
Palladium 10,078 16 -1,766 9 1,913 91 -147 36
Platinum 61,553 24 13,135 21 -20,272 80 7,137 62
Natural Gas 1,280,907 38 -137,255 37 97,333 62 39,922 80
Brent 206,668 45 -14,522 95 7,811 1 6,711 100
Heating Oil 338,034 0 15,631 65 -30,997 38 15,366 52
Soybeans 691,303 20 66,214 47 -29,173 59 -37,041 10
Corn 1,611,856 40 417,089 83 -363,662 20 -53,427 12
Coffee 272,527 38 67,904 98 -71,494 4 3,590 13
Sugar 920,493 24 249,626 88 -296,922 12 47,296 66
Wheat 425,301 47 41,489 82 -32,939 9 -8,550 61

 


WTI Crude Oil Futures:

WTI Crude Oil Futures COT ChartThe WTI Crude Oil Futures large speculator standing this week reached a net position of 407,657 contracts in the data reported through Tuesday. This was a weekly decrease of -8,128 contracts from the previous week which had a total of 415,785 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 41.8 percent. The commercials are Bearish with a score of 46.1 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 81.7 percent.

WTI Crude Oil Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 25.2 35.2 4.8
– Percent of Open Interest Shorts: 5.1 57.6 2.4
– Net Position: 407,657 -454,965 47,308
– Gross Longs: 510,586 713,989 96,613
– Gross Shorts: 102,929 1,168,954 49,305
– Long to Short Ratio: 5.0 to 1 0.6 to 1 2.0 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 41.8 46.1 81.7
– COT Index Reading (3 Year Range): Bearish Bearish Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: 0.9 -0.4 -2.3

 


Brent Crude Oil Futures:

Brent Last Day Crude Oil Futures COT ChartThe Brent Crude Oil Futures large speculator standing this week reached a net position of -14,522 contracts in the data reported through Tuesday. This was a weekly decline of -1,622 contracts from the previous week which had a total of -12,900 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 95.1 percent. The commercials are Bearish-Extreme with a score of 0.7 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 100.0 percent.

Brent Crude Oil Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 19.8 41.1 5.4
– Percent of Open Interest Shorts: 26.8 37.3 2.2
– Net Position: -14,522 7,811 6,711
– Gross Longs: 40,872 84,910 11,253
– Gross Shorts: 55,394 77,099 4,542
– Long to Short Ratio: 0.7 to 1 1.1 to 1 2.5 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 95.1 0.7 100.0
– COT Index Reading (3 Year Range): Bullish-Extreme Bearish-Extreme Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: 37.5 -38.3 12.6

 


Natural Gas Futures:

Natural Gas Futures COT ChartThe Natural Gas Futures large speculator standing this week reached a net position of -137,255 contracts in the data reported through Tuesday. This was a weekly increase of 7,365 contracts from the previous week which had a total of -144,620 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 37.4 percent. The commercials are Bullish with a score of 61.6 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 80.1 percent.

Natural Gas Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 19.3 43.6 4.8
– Percent of Open Interest Shorts: 30.0 36.0 1.7
– Net Position: -137,255 97,333 39,922
– Gross Longs: 247,059 558,259 61,756
– Gross Shorts: 384,314 460,926 21,834
– Long to Short Ratio: 0.6 to 1 1.2 to 1 2.8 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 37.4 61.6 80.1
– COT Index Reading (3 Year Range): Bearish Bullish Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: -1.9 1.9 0.6

 


Gasoline Blendstock Futures:

RBOB Gasoline Energy Futures COT ChartThe Gasoline Blendstock Futures large speculator standing this week reached a net position of 55,994 contracts in the data reported through Tuesday. This was a weekly lift of 1,780 contracts from the previous week which had a total of 54,214 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 27.1 percent. The commercials are Bullish with a score of 75.6 percent and the small traders (not shown in chart) are Bearish with a score of 43.7 percent.

Nasdaq Mini Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 32.5 45.4 6.2
– Percent of Open Interest Shorts: 15.7 63.8 4.6
– Net Position: 55,994 -61,376 5,382
– Gross Longs: 108,575 151,563 20,636
– Gross Shorts: 52,581 212,939 15,254
– Long to Short Ratio: 2.1 to 1 0.7 to 1 1.4 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 27.1 75.6 43.7
– COT Index Reading (3 Year Range): Bearish Bullish Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: 8.9 -3.6 -31.0

 


#2 Heating Oil NY-Harbor Futures:

NY Harbor Heating Oil Energy Futures COT ChartThe #2 Heating Oil NY-Harbor Futures large speculator standing this week reached a net position of 15,631 contracts in the data reported through Tuesday. This was a weekly decrease of -1,398 contracts from the previous week which had a total of 17,029 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 65.4 percent. The commercials are Bearish with a score of 38.3 percent and the small traders (not shown in chart) are Bullish with a score of 51.6 percent.

Heating Oil Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 14.9 48.5 13.0
– Percent of Open Interest Shorts: 10.3 57.6 8.4
– Net Position: 15,631 -30,997 15,366
– Gross Longs: 50,383 163,853 43,785
– Gross Shorts: 34,752 194,850 28,419
– Long to Short Ratio: 1.4 to 1 0.8 to 1 1.5 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 65.4 38.3 51.6
– COT Index Reading (3 Year Range): Bullish Bearish Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: -34.6 36.9 -38.6

 


Bloomberg Commodity Index Futures:

Bloomberg Commodity Index Futures COT ChartThe Bloomberg Commodity Index Futures large speculator standing this week reached a net position of -13,927 contracts in the data reported through Tuesday. This was a weekly boost of 46 contracts from the previous week which had a total of -13,973 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.3 percent. The commercials are Bullish with a score of 58.5 percent and the small traders (not shown in chart) are Bullish with a score of 56.0 percent.

Bloomberg Index Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 55.7 37.8 1.9
– Percent of Open Interest Shorts: 90.3 5.0 0.1
– Net Position: -13,927 13,206 721
– Gross Longs: 22,440 15,222 777
– Gross Shorts: 36,367 2,016 56
– Long to Short Ratio: 0.6 to 1 7.6 to 1 13.9 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 40.3 58.5 56.0
– COT Index Reading (3 Year Range): Bearish Bullish Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: 6.2 -6.8 8.7

 


Article By InvestMacroReceive our weekly COT Reports by Email

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

Brent Is Under Severe Stress

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

The Brent price reached stability on Monday after experiencing severe stress last Friday; the asset is trading at $75.30. Still, there is too much volatility and emotions in the instrument.

The reason for that is the new coronavirus strain found in South Africa, which has much more mutations than any other before it. The strain is believed to be very aggressive and may complicate the current epidemiological situation. Many countries started sealing their borders from any contact with South African countries. Israel, for example, forbade the country from foreigners. Under such circumstances, a possibility of new lockdowns is not in favour of the commodity market: the demand for energies may plummet.

At the moment, market players are switching their attention to the December meeting of OPEC+. Maybe this time the cartel and its allies will take a break and put the 400K daily output increase in January on hold. Under current conditions, it would be a great relief for the commodity market.

In the H4 chart, completing the descending wave at 71.40 and finishing the correction, Brent is growing with the first target at 82.40. After that, the asset may start a new correction to reach 77.00. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving near the lows within the histogram area. Later, the line is expected to leave the area and grow towards 0.

As we can see in the H1 chart, Brent s forming the first ascending structure and may soon reach 77.53. Later, the market may correct towards 74.33 and then resume trading upwards with the first target at 82.52. From the technical point of view, this idea is confirmed by the Stochastic Oscillator: after breaking 50 to the upside, its signal line is expected to test this level and then resume growing to reach 80.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Why the oil industry’s pivot to carbon capture and storage – while it keeps on drilling – isn’t a climate change solution

By June Sekera, The New School and Neva Goodwin, Tufts University 

After decades of sowing doubt about climate change and its causes, the fossil fuel industry is now shifting to a new strategy: presenting itself as the source of solutions. This repositioning includes rebranding itself as a “carbon management industry.”

This strategic pivot was on display at the Glasgow climate summit and at a Congressional hearing in October 2021, where CEOs of four major oil companies talked about a “lower-carbon future.” That future, in their view, would be powered by the fuels they supply and technologies they could deploy to remove the planet-warming carbon dioxide their products emit – provided they get sufficient government support.

That support may be coming. The Department of Energy recently added “carbon management” to the name of its Office of Fossil Energy and Carbon Management and is expanding its funding for carbon capture and storage.

But how effective are these solutions, and what are their consequences?

Coming from backgrounds in economics, ecology and public policy, we have spent several years focusing on carbon drawdown. We have watched mechanical carbon capture methods struggle to demonstrate success, despite U.S. government investments of over US$7 billion in direct spending and at least a billion more in tax credits. Meanwhile, proven biological solutions with multiple benefits have received far less attention.

CCS’s troubled track record

Carbon capture and storage, or CCS, aims to capture carbon dioxide as it emerges from smokestacks either at power plants or from industrial sources. So far, CCS at U.S. power plants has been a failure.

Seven large-scale CCS projects have been attempted at U.S. power plants, each with hundreds of millions of dollars of government subsidies, but these projects were either canceled before they reached commercial operation or were shuttered after they started due to financial or mechanical troubles. There is only one commercial-scale CCS power plant operation in the world, in Canada, and its captured carbon dioxide is used to extract more oil from wells – a process called “enhanced oil recovery.”

In industrial facilities, all but one of the dozen CCS projects in the U.S uses the captured carbon dioxide for enhanced oil recovery.

This expensive oil extraction technique has been described as “climate mitigation” because the oil companies are now using carbon dioxide. But a modeling study of the full life cycle of this process at coal-fired power plants found it puts 3.7 to 4.7 times as much carbon dioxide into the air as it removes.

The problem with pulling carbon from the air

Another method would directly remove carbon dioxide from the air. Oil companies like Occidental Petroleum and ExxonMobil are seeking government subsidies to develop and deploy such “direct air capture” systems. However, one widely recognized problem with these systems is their immense energy requirements, particularly if operating at a climate-significant scale, meaning removing at least 1 gigaton – 1 billion tons – of carbon dioxide per year.

That’s about 3% of annual global carbon dioxide emissions. The U.S. National Academies of Sciences projects a need to remove 10 gigatons per year by 2050, and 20 gigatons per year by century’s end if decarbonization efforts fall short.

The only type of direct air capture system in relatively large-scale development right now must be powered by a fossil fuel to attain the extremely high heat for the thermal process.

A National Academies of Sciences study of direct air capture’s energy use indicates that to capture 1 gigaton of carbon dioxide per year, this type of direct air capture system could require up to 3,889 terawatt-hours of energy – almost as much as the total electricity generated in the U.S. in 2020. The largest direct air capture plant being developed in the U.S. right now uses this system, and the captured carbon dioxide will be used for oil recovery.

Another direct air capture system, employing a solid sorbent, uses somewhat less energy, but companies have struggled to scale it up beyond pilots. There are ongoing efforts to develop more efficient and effective direct air capture technologies, but some scientists are skeptical about its potential. One study describes enormous material and energy demands of direct air capture that the authors say make it “unrealistic.” Another shows that spending the same amount of money on clean energy to replace fossil fuels is more effective at reducing emissions, air pollution and other costs.

The cost of scaling up

A 2021 study envisions spending $1 trillion a year to scale up direct air capture to a meaningful level. Bill Gates, who is backing a direct air capture company called Carbon Engineering, estimated that operating at climate-significant scale would cost $5.1 trillion every year. Much of the cost would be borne by governments because there is no “customer” for burying waste underground.

As lawmakers in the U.S. and elsewhere consider devoting billions more dollars to carbon capture, they need to consider the consequences.

The captured carbon dioxide must be transported somewhere for use or storage. A 2020 study from Princeton estimated that 66,000 miles of carbon dioxide pipelines would have to be built by 2050 to begin to approach 1 gigaton per year of transport and burial.

The issues with burying highly pressurized CO2 underground will be analogous to the problems that have faced nuclear waste siting, but at enormously larger quantities. Transportation, injection and storage of carbon dioxide bring health and environmental hazards, such as the risk of pipeline ruptures, groundwater contamination and the release of toxins, all of which particularly threaten the disadvantaged communities historically most victimized by pollution.

Bringing direct air capture to a scale that would have climate-significant impact would mean diverting taxpayer funding, private investment, technological innovation, scientists’ attention, public support and difficult-to-muster political action away from the essential work of transitioning to non-carbon energy sources.

A proven method: trees, plants and soil

Rather than placing what we consider to be risky bets on expensive mechanical methods that have a troubled track record and require decades of development, there are ways to sequester carbon that build upon the system we already know works: biological sequestration.

[Science, politics, religion or just plain interesting articles: Check out The Conversation’s weekly newsletters.]

Trees in the U.S. already sequester almost a billion tons of carbon dioxide per year. Improved management of existing forests and urban trees, without using any additional land, could increase this by 70%. With the addition of reforesting nearly 50 million acres, an area about the size of Nebraska, the U.S. could sequester nearly 2 billion tons of carbon dioxide per year. That would equal about 40% of the country’s annual emissions. Restoring wetlands and grasslands and better agricultural practices could sequester even more.

Per ton of carbon dioxide sequestered, biological sequestration costs about one-tenth as much as current mechanical methods. And it offers valuable side-benefits by reducing soil erosion and air pollution, and urban heat; increasing water security, biodiversity and energy conservation; and improving watershed protection, human nutrition and health.

To be clear, no carbon removal approach – neither mechanical nor biological – will solve the climate crisis without an immediate transition away from fossil fuels. But we believe that relying on the fossil fuel industry for “carbon management” will only further delay that transition.The Conversation

About the Authors:

June Sekera, Senior Research Fellow, Visiting Scholar, The New School and Neva Goodwin, Co-Director, Global Development and Environment Institute, Tufts University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Speculators boost RBOB Gasoline bullish bets to 20-week high

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday November 16th 2021 and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Highlighting the COT Energy data this week is the gains in RBOB Gasoline speculative positions. Gasoline speculator bets jumped this week by the largest one-week gain (+9,145 contracts) of the past fifty-three weeks and rose for the sixth time in ten weeks. These gains have pushed the current speculative net standing (+54,214 contracts) to its highest level of the past twenty weeks, dating back to June 29th. RBOB Gasoline futures prices, like many energy markets, have been on a strong uptrend since bottoming in early 2020 and recently hit the highest level since 2014 in October.


Data Snapshot of Commodity Market Traders | Columns Legend
Nov-16-2021 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index
WTI Crude 2,057,633 18 415,785 44 -470,324 41 54,539 92
Gold 612,612 54 259,780 73 -287,539 27 27,759 48
Silver 152,404 18 45,625 68 -66,148 34 20,523 61
Copper 208,066 32 20,337 57 -30,805 38 10,468 86
Palladium 11,840 24 -2,038 7 1,976 91 62 48
Platinum 62,284 26 21,013 33 -28,225 69 7,212 63
Natural Gas 1,308,708 45 -144,620 35 98,415 62 46,205 96
Brent 199,930 39 -12,900 98 7,412 0 5,488 94
Heating Oil 380,887 26 17,029 67 -37,010 32 19,981 68
Soybeans 662,972 13 46,917 42 -4,927 65 -41,990 2
Corn 1,598,926 38 399,186 81 -340,672 23 -58,514 9
Coffee 286,343 48 66,081 97 -70,075 5 3,994 16
Sugar 906,385 21 227,389 83 -276,185 16 48,796 68
Wheat 427,786 49 36,761 78 -27,999 14 -8,762 60

 


WTI Crude Oil Futures:

WTI Crude Oil Futures COT ChartThe WTI Crude Oil Futures large speculator standing this week resulted in a net position of 415,785 contracts in the data reported through Tuesday. This was a weekly decrease of -5,527 contracts from the previous week which had a total of 421,312 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 44.4 percent. The commercials are Bearish with a score of 41.5 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 91.9 percent.

WTI Crude Oil Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 24.8 34.6 5.0
– Percent of Open Interest Shorts: 4.6 57.4 2.4
– Net Position: 415,785 -470,324 54,539
– Gross Longs: 510,169 711,066 103,722
– Gross Shorts: 94,384 1,181,390 49,183
– Long to Short Ratio: 5.4 to 1 0.6 to 1 2.1 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 44.4 41.5 91.9
– COT Index Reading (3 Year Range): Bearish Bearish Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: 5.6 -8.1 13.5

 


Brent Crude Oil Futures:

Brent Last Day Crude Oil Futures COT ChartThe Brent Crude Oil Futures large speculator standing this week resulted in a net position of -12,900 contracts in the data reported through Tuesday. This was a weekly reduction of -1,049 contracts from the previous week which had a total of -11,851 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 98.1 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 94.1 percent.

Brent Crude Oil Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 22.6 40.8 4.4
– Percent of Open Interest Shorts: 29.1 37.1 1.7
– Net Position: -12,900 7,412 5,488
– Gross Longs: 45,201 81,608 8,790
– Gross Shorts: 58,101 74,196 3,302
– Long to Short Ratio: 0.8 to 1 1.1 to 1 2.7 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 98.1 0.0 94.1
– COT Index Reading (3 Year Range): Bullish-Extreme Bearish-Extreme Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: 44.4 -41.4 -5.9

 


Natural Gas Futures:

Natural Gas Futures COT ChartThe Natural Gas Futures large speculator standing this week resulted in a net position of -144,620 contracts in the data reported through Tuesday. This was a weekly fall of -2,429 contracts from the previous week which had a total of -142,191 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 35.2 percent. The commercials are Bullish with a score of 61.9 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 95.9 percent.

Natural Gas Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 19.2 43.8 5.1
– Percent of Open Interest Shorts: 30.3 36.2 1.6
– Net Position: -144,620 98,415 46,205
– Gross Longs: 251,501 572,761 67,164
– Gross Shorts: 396,121 474,346 20,959
– Long to Short Ratio: 0.6 to 1 1.2 to 1 3.2 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 35.2 61.9 95.9
– COT Index Reading (3 Year Range): Bearish Bullish Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: -3.3 0.6 23.1

 


Gasoline Blendstock Futures:

RBOB Gasoline Energy Futures COT ChartThe Gasoline Blendstock Futures large speculator standing this week resulted in a net position of 54,214 contracts in the data reported through Tuesday. This was a weekly increase of 9,145 contracts from the previous week which had a total of 45,069 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 25.3 percent. The commercials are Bullish with a score of 74.9 percent and the small traders (not shown in chart) are Bullish with a score of 58.8 percent.

Nasdaq Mini Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 32.1 45.7 6.6
– Percent of Open Interest Shorts: 16.0 64.2 4.2
– Net Position: 54,214 -62,114 7,900
– Gross Longs: 108,162 153,833 22,091
– Gross Shorts: 53,948 215,947 14,191
– Long to Short Ratio: 2.0 to 1 0.7 to 1 1.6 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 25.3 74.9 58.8
– COT Index Reading (3 Year Range): Bearish Bullish Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: 3.2 -3.3 0.7

 


#2 Heating Oil NY-Harbor Futures:

NY Harbor Heating Oil Energy Futures COT ChartThe #2 Heating Oil NY-Harbor Futures large speculator standing this week resulted in a net position of 17,029 contracts in the data reported through Tuesday. This was a weekly lowering of -2,993 contracts from the previous week which had a total of 20,022 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 67.5 percent. The commercials are Bearish with a score of 31.8 percent and the small traders (not shown in chart) are Bullish with a score of 67.6 percent.

Heating Oil Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 14.0 52.3 12.3
– Percent of Open Interest Shorts: 9.6 62.0 7.1
– Net Position: 17,029 -37,010 19,981
– Gross Longs: 53,501 199,252 46,852
– Gross Shorts: 36,472 236,262 26,871
– Long to Short Ratio: 1.5 to 1 0.8 to 1 1.7 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 67.5 31.8 67.6
– COT Index Reading (3 Year Range): Bullish Bearish Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: -30.2 31.8 -32.4

 


Bloomberg Commodity Index Futures:

Bloomberg Commodity Index Futures COT ChartThe Bloomberg Commodity Index Futures large speculator standing this week resulted in a net position of -13,973 contracts in the data reported through Tuesday. This was a weekly increase of 218 contracts from the previous week which had a total of -14,191 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 35.2 percent. The commercials are Bullish with a score of 63.7 percent and the small traders (not shown in chart) are Bullish with a score of 56.0 percent.

Bloomberg Index Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS
– Percent of Open Interest Longs: 55.7 37.9 1.9
– Percent of Open Interest Shorts: 90.4 5.0 0.1
– Net Position: -13,973 13,252 721
– Gross Longs: 22,471 15,268 772
– Gross Shorts: 36,444 2,016 51
– Long to Short Ratio: 0.6 to 1 7.6 to 1 15.1 to 1
NET POSITION TREND:
– COT Index Score (3 Year Range Pct): 35.2 63.7 56.0
– COT Index Reading (3 Year Range): Bearish Bullish Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index: -3.2 2.6 12.3

 


Article By InvestMacroReceive our weekly COT Reports by Email

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

What Does The Release Of The SPR Mean For Oil Prices?

By Orbex

Because of supply chain issues, oil prices are one of the biggest factors causing higher inflation.

After oil futures crashed into negative last year, they have “overcorrected” and are trading above pre-pandemic levels. This has been a headache for most policymakers, but it’s particularly troublesome for the Biden Administration. In fact, higher gasoline prices can become a political issue, and with the President expanding his net disapproval rating, it’s necessary to do more.

For most of the year, the Biden Administration has been asking OPEC+ to increase production faster to tamp down energy prices.

However, the block has generally stuck to its gradual 400Kbpd per month increase program. And they have insisted that they don’t see any reason to change it.

The Strategic Petroleum Reserve

One of the ways the US could affect the price of crude in the short term is by taking a page out of the Chinese commodity playbook. That would be to sell part of their strategic reserve.

The US has around 714M barrels stored up in case of emergency. The last time the US made use of it was in 2011, during the war in Libya. As a measure of comparison, the US consumes about 20M barrels a day, while the whole world consumes 91M per day on average.

This idea was discussed at different levels. But this option took on more weight after the Senate Majority Leader Schumer called for it on the Senate floor at the start of the week. Since then, US diplomats have been working on coordinating action with other countries affected by the high price of crude.

That said, coordinated action by large oil consumers, such as China and India, could have a bigger impact on bringing down prices.

The responses and price action

Some thought that the threat of releasing the reserves would put pressure on OPEC+ to address the price issue. However, they have been undeterred.

Both their and the IEA assessment suggest that the oil market will balance out next year. A release of the SPR is a temporary measure. And it’s unlikely to move the needle in the long term.

Last night, Goldman Sachs, for example, expected that a release of the SPR wouldn’t affect the price beyond a fluctuation following the announcement. Moreover, they joined several other analysts who agreed that the market has already priced in a release from the US Strategic Petroleum Reserve.

Where things are going

In their earnings reports, both BP and TotalEnergies were budgeting crude prices to average $60/bbl through next year. So, there is a pretty strong consensus that the current crude price situation is largely transitory.

Analysts point to unusual weather during autumn that lead to increased demand for peaking power. In addition, there was an unexpected depletion of stocks going into what’s expected to be an unseasonably cold winter. However, that situation will likely be resolved in the coming months, and crude prices would then return to their normal trajectory.

The SPR might do more than just push crude prices down. Specifically, it could prevent prices from going higher. The release of the reserve is based on the notion that crude prices are being driven higher due primarily to speculation. The SPR has the potential of knocking them out of the market.

On the other hand, if the price is being driven by underlying factors, including inflation and slow growth in production, then the reserve release could have a minimal effect.


Orbex-LogoArticle by Orbex

Orbex is a fully licensed broker that was established in 2011. Founded with a mission to serve its traders responsibly and provides traders with access to the world’s largest and most liquid financial markets. www.orbex.com

USOIL Final Leg Of The Bullish Impulse Could Have Just Begun

By Orbex

We can assume that USOIL is currently developing a global upward impulse. This includes the primary wave ③.

The current chart shows the final part of the primary third wave, where we see the complete correction wave (4) of the intermediate degree. This wave is in the form of a double zigzag W-X-Y.

After the completion of the correction (4), the market began to rise in the final intermediate wave (5). This took the form of a 5-wave impulse consisting of minor sub-waves 1-2-3-4-5, as shown in the chart.

In the short term, the price could rise to the level of 97.44 in sub-wave 5. There intermediate wave (5) will be at 100% of wave (3).

USOIL

An alternative scenario suggests that the intermediate correction wave (4), which is part of the primary third wave, is not complete yet.

We can assume that the impulse movement in the bullish intermediate wave (3) has just recently ended. And the intermediate correction (4) is still developing.

Thus, in the near future, we could see a correction decline of the market in the minor double zigzag W-X-Y as shown in the chart near 69.38. At that level, wave (4) will be at 38.2% of impulse wave (3).

After reaching the specified price mark, the market may rise above the maximum of 85.50. This level was marked by wave (3).


Orbex-LogoArticle by Orbex

Orbex is a fully licensed broker that was established in 2011. Founded with a mission to serve its traders responsibly and provides traders with access to the world’s largest and most liquid financial markets. www.orbex.com

Will Europe See Rolling Blackouts This Winter?

By Orbex

There has been quite a bit of commentary on a Daily Telegraph article published yesterday. The commotion is a result of the article’s suggestion that Europe could see rolling blackouts throughout winter.

Media sensationalism is not new, but given the stratospheric price of energy and the latest developments in the sector, it warrants some looking into. Most notably, this isn’t the first time that the Daily Telegraph has mentioned this possibility. In fact, they wrote back at the start of October that the UK’s National Grid was a warning of rolling blackouts.

Generally, electricity supply instability isn’t something that Western Europeans worry about. But this can be a rising problem. That is because more and more Europeans rely on electricity not just for cooking and refrigerating, but also for heating their homes. The proliferation of heat pumps throughout Europe means that even more homes are reliant on a stable supply of electricity.

What happened?

The latest catalyst is another delay in the approval of the Nord Stream 2 pipeline, connecting Germany and Russia to supply LPG. The regulatory delay was based on a legal technicality, that presumably the company will be able to resolve in the coming weeks.

However, it exacerbates an already delicate situation. And gas prices in Europe jumped 23% in one day as a response. That said, they were already at near a record high before the spike.

Natural gas and LPG are in high demand, as the energy sector looks to offset costs from higher crude prices. With many utilities locked into fixed-price contracts, the over 300% price in natural gas since the start of the year has put extraordinary pressure on those companies.

Several UK firms have already declared bankruptcy. Supply concerns led to massive shortages across the UK a couple of months ago, largely blamed on the lack of truck drivers. However, the underlying issues of supply aren’t all that different in the European continent.

Why things aren’t getting better

Europe has virtually no supply of its own crude or natural gas and relies on imports for well over 90% of its supply. Part of the drive for energy independence has led to significant investment in renewables.

However, unseasonably clam weather conditions throughout autumn (due to climate change) led to less production in wind power. Electrical grids were forced to use natural gas to compensate. In turn, this further depleted the meager reserves.

Last winter was unusually cold. And crude supplies were constrained by covid, meaning that the usual stocks of natural gas and oil were already depleted in the summer. As prices rose, generation firms failed to build inventory as they waited for crude and natural gas prices to drop. Geopolitical pressures due to the supply of natural gas from Russia through Belarus and Ukraine simply exacerbated the problem.

Now, long-range forecasts suggest that the coming winter will likely be unusually cold, with less wind than normal. Not only does that mean less production from wind farms, but also more cloudy weather. Additionally, snow could reduce solar production as well.

And the outlook?

Nord Stream 2 would be the main way to decompress the supply problems. The pipeline has completed construction and is technically ready to supply. It just has to pass the regulatory hurdles.

Presumably, if the threat of blackouts becomes imminent, the red tape’s resolution would be a lot quicker. Unfortunately for traders though, that means energy prices are up to two very uncertain factors: political will and geopolitics.


Orbex-LogoArticle by Orbex

Orbex is a fully licensed broker that was established in 2011. Founded with a mission to serve its traders responsibly and provides traders with access to the world’s largest and most liquid financial markets. www.orbex.com