Charts Are Still Giving Slight Favor To Another Price Rally As We Move Into Spring

Energy futures are starting the week on a soft note, after a strong finish Friday had the charts pointing higher. The about face is being blamed on an “unambitious growth target” set by China’s version of congress over the weekend, which suggests the world’s largest oil buyer won’t be buying quite as much. 

Friday’s session had some good old-fashioned whiplash after a report suggested the UAE might be leaving OPEC had prices moving lower in the morning, before rallying to healthy gains after subsequent reports said those rumors weren’t true. If prices can manage to have a similar recovery today, charts are still giving slight favor to another price rally as we move into spring.

The CFTC is still struggling to get its weekly Commitments of Traders data back on schedule after a cyber-attack on a reporting company a month ago. The NYMEX data released Friday, which is 3 weeks behind, showed heavy liquidation by money managers as prices plummeted the first week of February. The ICE contract data which is staying on schedule shows that money managers were stepping back in to buy Brent and Gasoil contracts last week as prices rebounded.

Baker Hughes reported a decline of 8 active oil rigs in the US last week, bringing the total count to its lowest level in 6 months. The Permian basin accounted for half of the decrease.  Natural gas rigs did increase by 3 on the week but remain 2 rigs short of where they started the year. 

A decision from the White House is expected this week on the controversial “Willow Project” in Alaska, that could bring 180,000 barrels/day of new domestic oil production online in the coming years. Early expectations are the administration may attempt to compromise by further restricting the project to only 2 drill sites, down from 3 originally approved, and compared to the 5 originally proposed.  

Exxon is threatening to walk away from its commitments to buy renewable diesel from the beleaguered Global Clean Energy (GCE) facility in Bakersfield California if that facility isn’t producing by the end of June. The filing also says Exxon filed a complaint compelling a court order to inspect GCE’s books and records to investigate concerns of misconduct and mismanagement. 

Citgo reported a fire in a hydrocracking unit at its refinery in Corpus Christi on Friday afternoon. The report to the TCEQ said the fire was quickly extinguished and excess emissions were limited to just 90 minutes, suggesting operations may not be materially impacted.

Today’s interesting read from the FT: Why US environmental subsidies could backfire in a “global minimum” tax agreement.

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