Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.
Trading positions
- Natural Gas [NGZ21] Long around $ 3.604-3.716 support (yellow band) with targets at $ 4.009 & 4.355 and stop just below $ 3.424 – See the previous analysis here
- WTI Crude Oil [CLF22] No position currently justified on a risk-to-reward point of view.
Did you miss my last article about biofuels to diversify your portfolio? No problem, you can have a look at my selection through the dynamic stock watchlist.
Fundamentals
WTI crude oil clearly rose above the psychological threshold of $70/barrel in the market that no longer believes in a significant effect of Omicron on the global economy. Its momentum was nonetheless slowed down a little by some profit-taking, and also by the publication of new estimates from the US Energy Information Agency (EIA) on Tuesday, which is now expecting a barrel of Brent around $70.05 on average in 2022, against $71.91 in its previous report last month.
Regarding current stocks, during the week that ended on Dec. 3, crude inventories fell only 200,000 barrels, to a total of 432.9 million barrels, while the analysts forecast a decline of 1.521 million barrels. However, even though this gap was likely to support prices, it was mitigated by the significant drop in the strategic reserves (1.7 million barrels) and the decline in the consumption of petroleum products and distillates in the US. Thus, prices went up not only with the change in market sentiment but also because the fundamentals are still there.
WTI Crude Oil (CLF22) Futures (January contract, daily chart)
In summary, the demand for black gold will depend on how the energy markets cope while still facing some risk of seeing new health measures taken across the world (despite some rather mild effects due to the Omicron), especially as we are entering into the pre-Christmas time and some governments want to set new restrictions.
As always, we’ll keep you, our subscribers, well-informed.
Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
