The “gap theory” holds true this week as the December 2024 NYMEX WTI futures contract steps up to fill the hole in Sunday’s chart. The price is above the 8-day moving average and the 13-day moving average, and is moving around the 21-day moving average. The volume shown in the second box has increased by over 200,000. The Relative Strength Indicator (RSI) is neutral at 48 marks. Anything below 30 is considered extremely oversold and above 70 is considered extremely overbought. Resistance is currently pegged at $71.45 (21-day moving average). Short-term support is at $69.85.
Looking to the future
OPEC+ faces tough decisions over plans to increase production next month as oil traders wait for developments in the Middle East. No doubt, prices will fall further once the estimated +2.2 million barrels per day of excess capacity is released.
Finally, the tropics are experiencing late-season activity with three systems being monitored. One is in the North Mid-Atlantic and poses no threat to the United States, but the other two could impact the Gulf of Mexico. A trough of low pressure has formed near Puerto Rico, and active storms are forming in the southwestern Caribbean Sea off the coast of Panama. On the other hand, kerosene consumption appears to be weak during the first two weeks of November.
Natural gas futures prices remain subdued due to excess storage and increased production heading into the winter. In fact, $3.00 does not exist between November and March. This week’s high was $2.92/MMbtu for the November-December “roll” on Wednesday, and the low was $2.20 on Tuesday.
Last week’s supply increased by 2.0 bcfd to 109.1 bcfd compared to the previous week’s 107 bcfd. Demand was 100 bcfd, up from 96.3 bcfd the previous week due to higher residential usage and electricity consumption. Exports to Mexico were 6.2 bcfd, compared with 6.3 bcfd the previous week. LNG export volume was 13.5 bcfd. compared to 13.7 the previous week.
Latest European natural gas prices are estimated at around $12.35/MMbtu despite storage levels being 95% full and calm weather.
EIA’s weekly natural gas storage report shows injections of 78 bcf versus a forecast of +82 bcf. Total gas in storage is currently 3.86 tcf, an increase of 2.8% over last year and 4.8% over the five-year average.
With just one week left in the traditional injection season, assuming average production of 80 bcf, total year-end storage could reach 3.94 tcf, a level rarely seen in the past 15 years.
