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Monday, 23 March 15
IS OIL GETTING READY TO PLUNGE BELOW $40? - FORBES
 KNOWLEDGE TO ELEVATE
In my last crude oil market update in late-February, I expressed my skepticism toward the oil price rebound. Since then, crude oil has given up its gains and fell to new lows in the past week. I have been consistently bearish on crude oil since publishing my viral crude oil crash warning in June 2014, just a couple weeks before it topped and fell from $105 to under $45 today. Many market participants have been expecting oil to finally bottom, but have been wrong each time as crude oil plunged to new lows.
I am still concerned that crude oil has lower to go before finally bottoming, but I am actively analyzing the technical situation to be sure. In January and February, West Texas Intermediate crude oil traded in a range between $44 and $55 per barrel, and finally broke underneath this range this week. This break below the $44 support level represents an important technical breakdown that may signal even more weakness ahead, provided that the bearish signal is not negated by a convincing break back above $44 (and, ideally, $55).
Brent crude oil is still in its trading range between $50 and $65 per barrel. Brent may try to test the $50 support level soon, and if it breaks and stays below that level, it would represent a notable bearish technical signal.
One of the reasons why I have been so skeptical of crude oil’s rally attempts so far is because the all-important $40 psychological level has not been reached yet. This level goes all the way back to the first Gulf War oil panic in 1990, and it doesn’t make sense that oil would fall so far without at least trying to touch $40.
Brent crude oil also bottomed at $40 per barrel during the Global Financial Crisis in early-2009:
In addition, the U.S. dollar’s relentless rise continues to put pressure on crude oil and other commodities due to their inverse relationship. The U.S. Dollar Index is still in a confirmed uptrend, but it is sitting just underneath its key 100 resistance level that must be surpassed to give another bullish signal. If the Dollar Index breaks above 100, it will likely contribute to another bearish move in crude oil. On the other hand, if the Dollar Index is unable to surpass 100 and experiences a technical breakdown below its uptrend lines, crude oil may bounce. How the Dollar Index acts at this level is vital for understanding crude oil’s next move.
The massive glut of crude oil will certainly not help prices recover anytime soon either. According to the EIA, commercial crude oil inventories are sitting at an eighty-year high of 458.5 million barrels. To make matters worse, Iran could add an additional million barrels of oil per day once it comes back online after a deal to lift sanctions – a scenario that I discussed in my original June 2014 oil crash warning. Adding to oil’s woes this week was a comment from an OPEC oil minister stating that the group has “no choice” but to maintain the current rate of oil production to preserve market share.
Another important, but little-discussed, scenario that could lead to crude oil prices hitting $40 or lower is if crude oil speculators finally liquidate their still-sizable long position of nearly 300,000 futures contracts in WTI crude. These crude oil speculators are considered to be the “dumb money” and were most bullish at the very top of the market in June 2014 before oil crashed.
Before markets bottom after a bear market, speculators typically liquidate or capitulate their bullish positions in a panic, which causes powerful sell-offs. This has not happened yet in crude oil and there is a big risk that this event is still ahead. Crude oil speculators had a flat position as recently as 2010, so it certainly isn’t inconceivable for them to go flat once again.
In addition, the commercial hedgers still have a significant short position of nearly 300,000 futures contracts, and they tend to have flat or even net long positions when commodities such as crude oil finally experience bottoms. This has not happened yet, which should be a reason to doubt that the bottom is in.
For now, I am watching if WTI crude oil can sustain its breakdown below $44 and if Brent crude oil can hit $50 or below. The U.S. dollar’s bullish trend should also remain intact in order for this bearish crude oil thesis to play out. If WTI reverses its recent bearish breakdown and rises above $44 and $55, and if Brent crude oil rises above its $65 resistance level, I would consider this bearish thesis nullified for the time being. I do not make hard predictions about short-term price movements, nor do I have to; I simply watch key psychological or technical levels and take a reactive approach. I always have a contingency plan to help determine when a trade thesis is nullified.
Source: Forbes | Hellenic Shipping News
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Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
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- Merrill Lynch Commodities Europe
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- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
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- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
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- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
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- Dalmia Cement Bharat India
- Eastern Energy - Thailand
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- TeaM Sual Corporation - Philippines
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- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
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- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
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- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
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- PTC India Limited - India
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- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
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- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
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- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
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- White Energy Company Limited
- SMC Global Power, Philippines
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- MS Steel International - UAE
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- Economic Council, Georgia
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- Minerals Council of Australia
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- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Wilmar Investment Holdings
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- Directorate Of Revenue Intelligence - India
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- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
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- Global Business Power Corporation, Philippines
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- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
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