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Energy Brief for Nov 27.23

by market analysts Stephen Platt and Mike McElroy

Price Overview

Since our last report, price weakness has returned to the market. Volatility spiked prior to Thanksgiving as a delay in the OPEC+ meeting concerned trade and the DOE reported an exceptionally large build in crude stocks. Today’s action saw the WTI register a loss of 68 cents to settle at 74.86, while the heating oil saw a small gain and the gasoline added just under 1 cent.

The delay of the OPEC+ meeting from this weekend until Thursday the 30th lead trade to believe that the cartel was having problems getting its members to agree to a continuation of output restraint. Reports since the announced delay have suggested that discussions are back on track, relieving some of the downside pressure. A temporary cease fire in Gaza coinciding with a prisoner swap over the weekend also calmed the market.

Last week’s DOE report showed the crude oil add 8.7 mb, while the gasoline gained .7 and distillates were lower by 1 mb. Refinery utilization gained .9 to 87 percent. The recovery in stocks at Cushing continued, with a .9 mb increase to 25.9 mb.

After testing the 78.50 area early last week, prices have retrenched back under the 9 and 200-day moving averages. The near-term bias is lower, with the 74 area the first line of support. A settlement below that level targets last week’s lows at 72.37. Today’s high at 76.24 was right on the 200-day, and a settlement above there will be needed to garner momentum for another attempt at 78.50.

DTN Jan Crude Daily chart for 11.27.23
DTN January Nat Gas daily chart 11.27.23

Estimates for Wednesday’s storage report suggest a loss of 2.0 mb from crude oil stocks, while gasoline and distillate are expected to gain 1.4 and .9 mb respectively. Refinery utilization is forecast to have increased .9 to 87.9 percent.

Natural Gas

The downtrend in prices was maintianed over the Thanksgiving holiday, with only one higher settlement trade last week. Today saw another leg down, as the January contract lost 5.3 cents to settle at 2.946. The recipe for weakness has remained unchanged as production shows no signs of slowing and the weather has yet to suggest any colder than normal trend change. At the moment the only hope for a bounce comes from the oversold level of the market, with the RSI nearing 20 percent today. Signs of short covering were seen late in the session as the market closed near the highs. If forecasts can start to trend colder, prices could quickly erase a substantial portion of November’s losses. Resistance will surface near 3.12 and then at 3.243 which would be a 38 percent retracement of the break. A continuation of the weakness will find support in the 2.70-2.75 range with a move below there targeting 2.50.

The authors of this piece do not currently maintain positions in the commodities mentioned within this report.

Charts Courtesy of DTN Prophet X, EIA, Reuters


Learn more about Stephen Platt here

Learn more about Mike McElroy here

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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