Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Precious Metals & Energy - Weekly Review and Calendar Ahead

CommoditiesFeb 21, 2021 06:27AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Barani Krishnan

Investing.com - Jerry Jones, majority shareholder of Comstock Resources (NYSE:CRK), is being roasted on Twitter for suggesting the Texas-based shale gas driller hit the “jackpot” from skyrocketing gas prices as millions of Texans were freezing this week, some to death, without gas to heat their homes.

Without debating Jones’ morality, let’s analyze if the so-called jackpot in gas prices will continue. Let’s also study whether the bears in oil may get lucky with a deeper correction in crude markets after Friday.

As the week wound down, Texas energy firms prepared to restart oil and gas production after days of frozen shutdowns as electric power and water service slowly resumed at darkened oil fields and refineries.

It’s not yet clear how long it will take to restore all the lost supply. But oil traders and executives hope most of the production lost will return within days as temperatures rise and power becomes available.

At its peak, nearly 40% of U.S. oil output was shuttered due to the extreme cold and associated blackouts. Three-quarters of the U.S. frack fleet was lost this week, leaving 41 crews working to blast water, sand and chemicals underground to release trapped oil and gas, Matt Johnson, chief executive officer at Primary Vision Inc said.

Already, companies, including Marathon Oil Corp (NYSE:MRO) and Devon Energy Corp (NYSE:DVN), have begun using restored power from local grids or generators to restart output, according to people familiar with the matter.

Chevron Corp (NYSE:CVX) has also begun restoring shale output, although it said it will prioritize natural gas production.

ConocoPhillips (NYSE:COP), the top U.S. independent oil producer, is ready to bring back full operations across its U.S. operations outside of Alaska once power and other infrastructure outages end. But like Chevron, its focus will be gas first.

“The majority of our Permian and Eagle Ford volumes remain offline,” Conoco spokeswoman April Andrews said, referring to the two major Texas oil fields.

At Friday’s settlement, the front-month natural gas contract on New York’s Henry Hub did a final trade of $3.08 million metric British thermal units, after officially settling the session at $3.07 per mmBtu. It was up 5.4% on the week. The benchmark gas contract had, in fact, gained four weeks in a row, rising 26% since the week ended Jan. 15.

But Friday’s settlement in gas was also down 0.4% on the day and significantly lower than the week’s high of $3.32. That means one thing: gas prices are coming off — and could continue correcting.

Warmer temperatures are on the way, paving the way for a thaw in Texas and elsewhere.

“The worst of the coldest temperatures have passed as conditions gradually moderate in the days ahead,” forecaster NatGasWeather said, adding that rather than lows of minus 20 degrees, the mid-continental region to south east regions could see temperatures as high as the 30s.

But there’s also a theory that Henry Hub futures could hit $4 before this winter is through, in the event of more extremities like Texas.

“We do caution, the start of March needs close watching because it wouldn’t take much of a colder trend for the pattern to quickly look more intimidating,” NatGasWeather said in an advisory.

The last time Henry Hub gas got to $4 levels was between November and December 2018, when it traded at highs of between $4.50 and nearly $5.

As I noted in an analysis on Thursday, to get to $4, Henry Hub futures need to rise another 25%. That might be a big ask, especially if the worst of the winter is over. NatGasWeather cautions just as much, saying mild trends in temperature could take on “a rather bearish stance.”

So back to Jones: It appears that the jackpot for natural gas that the Comstock Resources billionaire was so besotted about this week might start dwindling soon — unless there are more Arctic surprises ahead.

On the oil front, crude prices tumbled more than 2% Friday for their biggest slump since January on worries that refineries could be the next casualties from the Texas storms — resulting in a pile-up of crude stocks.

While oil production was resuming again in Texas on Friday, lack of demand from refiners will likely lead to builds in crude stocks over the coming weeks, even though around 3.5 million barrels per day of U.S. oil output has been shut, ANZ Research said in a note.

Analysts at Citigroup said in a separate note that some U.S. refineries might bring forward about 500,000 bpd of maintenance work normally scheduled for the spring over next month, ahead of the summer driving season.

Crude prices were also pressured Friday by reassurances from Iran’s foreign minister that the Islamic Republic will “immediately reverse” its nuclear program once U.S. sanctions are lifted.

Mohammad Javad Zarif reiterated Tehran’s position in response to Washington’s offer to revive talks between the two sides.

The Biden administration said on Thursday the United States was ready to talk with Iran on reinstating a 2015 agreement aimed at preventing the country from acquiring nuclear weapons.

“There was some selling on reports that Iran is promising to behave and that the U.S. may once again join the Iranian nuclear talks,” said Phil Flynn, analyst at Chicago’s Price Futures Group.

The nuclear deal, signed under former president Barack Obama, was abandoned nearly three years ago by his successor Donald Trump.

President Joseph Biden, who was vice president to Obama, says he’s keen to revive the agreement if Iran, which has enriched uranium capability by up to 20% to protest Trump’s crippling sanctions on Iranian oil, rolls back its actions.

Iran, at its height of production before Trump’s sanctions, pumped as much 4 million bpd and exported at least half of that.

Analysts said the impact of Tehran’s production might be mitigated by output cuts by Saudi Arabia and other members and allies of the Organization of the Petroleum Exporting Countries (OPEC), although market jitters over the nuclear talks could still put a lid on oil’s three-month long rally.

On the precious metals side, gold prices advanced for a second straight day on Friday, halting a six-day slide that took it to June lows.

Despite the yellow metal's ability to staunch more bleeding, support for the so-called inflation hedge and safe haven appeared feeble at best.

“Gold is having a torrid time,” said Craig Erlam, markets’ strategist for the online brokerage, OANDA.

“Even the pullback we've seen in gold the last couple of days couldn't save it, with higher real yields in the U.S. instead piling the misery on the yellow metal. It fell below $1,760 today, the lowest it's been since early July, in another sign that its near-term outlook is looking far from bright.”

The idea of gold as an inflation hedge, or safe-haven against most economic and political troubles has broken in recent months, since vaccine breakthroughs for Covid-19 pressured the yellow metal off August record highs of nearly $2,090.

With President Joe Biden embarking on a new $1.9 trillion stimulus after the near $4 trillion issued under his predecessor Donald Trump, the potential fiscal U.S. deficit and debt under such spending should weigh on the dollar rather than gold.

Yet, the Dollar Index has risen instead, spurred by a spike in the U.S. 10-year Treasury yield, dealing gold a series of setbacks.

Fawad Razaqzada, analyst at Think Markets, agreed with Erlam that things haven’t been — and aren’t looking — great for the bullion crowd.

He said investors “wondered whether rising bond yields were a good thing (as they point to better economic conditions) or a bad thing (as they reduce the likelihood for further stimulus),” Razaqzada added.

The geopolitical risk component that has held up gold for decades has almost vanished too, with the yellow metal falling instead of rising from a recent flare-up in Middle East tensions.

Oil Price & Market Roundup

New York-traded West Texas Intermediate crude, the key indicator for U.S. crude, last traded at $59.04 on Friday. It officially settled the session at $59.26, down $1.27, or 2.1%. For the week, WTI dropped just 0.5%.

London-traded Brent, the global benchmark for crude, last traded at $62.72 on Friday. It officially settled the session at $62.91, down $1.02, or 1.6%. For the week, it gained 0.8%.

Energy Calendar Ahead

Monday, Feb 22

Private Cushing stockpile estimates

Tuesday, Feb 23

American Petroleum Institute weekly report on oil stockpiles.

Wednesday, Feb 24

EIA weekly report on crude stockpiles

EIA weekly report on gasoline stockpiles

EIA weekly report on distillates inventories

Thursday, Feb 24

EIA weekly report on natural gas storage

Friday, Feb 25

Baker Hughes weekly survey on U.S. oil rigs

Gold Price & Market Roundup

Benchmark gold futures for April delivery on New York’s Comex last traded at $1,783.35. It officially settled Friday’s trade at $1,777, up $2.40, or 0.1%, on the day. For the week though, April gold lost 2.5%.

The spot price of gold last traded at $1784.13, up $8.38 or 0.5%. For the week, it rose 0.4%, its first rise in six weeks.

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. As an analyst for Investing.com he presents divergent views and market variables.

Comments are welcome and encouraged. Inappropriate comments will be reported and removed.

Precious Metals & Energy - Weekly Review and Calendar Ahead
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (12)
Jordan Middleton
Jordan Middleton Feb 21, 2021 9:53PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I feel like the "vaccine optimism and quick economic recovery" crowd has been on this theory for over 9 months now. When will the markets wake up to the fact that did not happen and "re-price" ?
Barani Krishnan
Barani Krishnan Feb 21, 2021 9:53PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Interesting question, Jordan. Since November, it's been risk on, with little care for anything else.
Ravi Arora
Ravi Arora Feb 21, 2021 9:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani sir correct dates.
Manish Manish
Manish Manish Feb 21, 2021 8:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
all commodity prices soaring sky high. covid is a big scam by top politicians to ******* the citizens by higher inflation
Norman Kraker
Norman Kraker Feb 21, 2021 8:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Couldnt agree with you more
Jack Drummond
Jack Drummond Feb 21, 2021 7:29PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Cool article. I can't agree more with avoiding cryptos. How well did distressed Texans fare trying to buy goods and services with no electricity to power their access to wealth ?? Please illuminate me on Silver outlooks. I've decided that it's time to add some to my pm's. Gold is becoming more affordable and I'm on track saving funds to buy additional gold. I'm ready to tip my toe in the silvery waters. (Pun intended)
Barani Krishnan
Barani Krishnan Feb 21, 2021 7:29PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Nice pun, Jack :) More than happy to add silver to coming iterations of this weekly update. And yes, what a profound and relevant anecdote to tie cryptos to: Texas! If that's isn't an example of how screwy things can get in the new age of electro-finance, wonder what is.
AmericaIsKing oftheGalaxy
AmericaIsKing oftheGalaxy Feb 21, 2021 4:01PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Gold is a colored metal and not even as abundent or helpful as things like iron and copper. How that ever held worth is beyond me. Sure a tiny tiny bit is used in phones and stuff but what a joke lol
Barani Krishnan
Barani Krishnan Feb 21, 2021 4:01PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Norse Winter, seriously? Do you know how much of gold is consumed by India and China alone, the world's two largest physical users of the metal, not to mention the amount of hoarding their central banks do for reserves (in this regard, don't forget Russia). You seriously need to read more.
SunilKumar Dixit
SunilKumarDixit Feb 21, 2021 4:01PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Norse Winter As a matter of fact gold's demand in jewelry is ever increasing on a broad perspective. India and China continue to retain the top two spots when it comes to buying gold jewelry, according to figures published in the latest Thomson Reuters GFMS Gold Survey report. Jewelry consumption worldwide accounted for almost 46% of the total gold demand for the fourth quarter of 2019. According to the reports India alone accounted for 136 tonnes of Gold demand as jewelry followed by China 132 tonnes. This was just in one quarter.
Dead Cat Bounce
DeadCatBounce1 Feb 21, 2021 4:01PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
There is only 26 g of gold for every person on Earth. It mean 0.08 cubic inch. Now maybe you reconsider how rare it is.
Carl Houle
Carl Houle Feb 21, 2021 3:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
interesting, would love to have silver in the review
Barani Krishnan
Barani Krishnan Feb 21, 2021 3:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Will do futurely, Carl.
Stockfool Guruji
Stockfool Guruji Feb 21, 2021 2:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I believe in tangible gold more than bitcoin that could become a bubble or completely manipulated by institutions. I can see whybits growing. Take away power from individual traders and make the institutions stronger. I am long for gold. Crypto still scares me, too risky.
Shane Gg
Shane Gg Feb 21, 2021 2:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Same here and I used to trade crypto for a living. I only quit because doing the taxes is more work than it's worth. Precious metals will never stop being precious.
Barani Krishnan
Barani Krishnan Feb 21, 2021 2:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
S.Guruji and Shane Gg. Exactly my sentiments.
SunilKumar Dixit
SunilKumarDixit Feb 21, 2021 2:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Shane Gg Crypto in general and bitcoin in particular is a risky adventure as long as it evades regulation by government. Retail investors are at elevated risk with such a hyper volatile instrument which sheds 20%-30% value in a matter of few days.
Barani Krishnan
Barani Krishnan Feb 21, 2021 12:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
To all our readers here: Thank you for your valuable thoughts and energy in transforming Investing.com into a place for dynamic market communication. While we laud the vibrant chatter on our site, we will not, repeat -- NOT -- tolerate any abuse of our platform. Over the past week, our administrators have spent much time tracing and removing highly abusive posts from a particular individual (our investigations show it to be one person, though there could be more) who had organized concerted attacks against our writers and even some users like you. This individual(s) had used IDs such as Bob MM, Jason Nyugen, LeGoat Taylor, Dereck Zales, Kim Zales, Dereck Tudor,  Moscardo Trikkon and Jacky Chan (there are probably more) to try and build hatred against our writers and other users by creating so-called "multiple voices" of dissent on the same subject. This is clearly an abuse of the privileges we grant to those who visit this platform (more to follow ...)
Barani Krishnan
Barani Krishnan Feb 21, 2021 12:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Invariably, the comments posted under these IDs are in poor taste and language. They also pay no heed to the context and market history in the story and, instead, cherrypick words that can help the attack narrative. After this week's clean-up, we will be watching for more abuses like these and will alert these IDs to you as well, so that you can join us in responding to trolls that try to undermine you and our brand. Thank you for your cooperation.
Stockfool Guruji
Stockfool Guruji Feb 21, 2021 12:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I appreciate the hard work put in by all the writers although sometimes may not agree with their observations and i really aprreciate that abusive language and direct attacks to the writers will be looked out for. We can all express our views and differences in a civilised way. Thank you for all the information shared in your articles.
Barani Krishnan
Barani Krishnan Feb 21, 2021 12:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Stockfool Guruji  Thanks much. You're really the sort of reader/commentator/user this site wishes to grow. Bests.
ELLIOT MILLER
ELLIOT MILLER Feb 21, 2021 10:21AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Natural gas daily price trends are primarily important to traders. For those who, like me, invest in natural gas midstream infrastructure, the medium and long term trends for gas and its derivatives (NLG, NGLs, LPG, petrochemicals, etc.) are positive irrespective of the daily price changes.
Barani Krishnan
Barani Krishnan Feb 21, 2021 10:21AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks much for this, Elliot! Great perspective from a non day-trader.
Νίκος Μυτακίδης
Νίκος Μυτακίδης Feb 21, 2021 8:30AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I see Copper to the sky
Barani Krishnan
Barani Krishnan Feb 21, 2021 8:30AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yup. Copper already at multi-year highs above $4
Jan Chojnacki
Jan Chojnacki Feb 21, 2021 8:14AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
gold will go up to 2000$
Show previous replies (11)
Lawrenti Berija
Lawrenti Berija Feb 21, 2021 8:14AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani, thanks again. Like the new Potus i wake up every morning and ask myself "where the h... am I?" - of course I'm asking for another reason, because after checking the quotes in this app i conclude, that the hole world must have gone mad. whatever " market" you look at, it seems to be wrong priced with the exception of several not so precious commodities. As a consequence I started to question my own sanity and reasoning. In that sense your last comment is really comforting, at least I'm not feeling so alone anymore.
Lawrenti Berija
Lawrenti Berija Feb 21, 2021 8:14AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
excellent indeed. thanks.
Barani Krishnan
Barani Krishnan Feb 21, 2021 8:14AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Lawrenti Berija  Be safe and be prosperous, brother. God bless! :)
Shane Gg
Shane Gg Feb 21, 2021 8:14AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan  There are actually companies putting all their cash reserves into crypto. That is probably one of the craziest things I've ever heard of. If the price tanks, good luck to these companies.... that's about all they're going to be able to count on... is luck.
Barani Krishnan
Barani Krishnan Feb 21, 2021 8:14AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Shane Gg  Like you, I'm speechless if this is true. To buy the BTC hype and put some of your own money in it is one thing. But it's sheer madness for company CFOs -- whether you're publicly traded or a small LLC (even crazier if you're a small firm) to be converting liquid cash reserves into cryptos. If it's using blockchain for cash management, I can understand. But plonking cash reserves into something like BTC is taking risk to a different dimension altogether because of exactly what you've said: the price can tank anytime. Fine, BTC is about $50k now. But it could lose 10k a week over more. That's how volatile these things are. Unless it's money you're not going to need a long time, then probably your wager will pay off. Yet, with today's economy, I wouldn't take that sort of risk. Yes, good luck to these people. Hope they really multiply their moolah!
Sonu Tiwari
Sonu Tiwari Feb 21, 2021 8:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
nice
Barani Krishnan
Barani Krishnan Feb 21, 2021 8:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks much, Sonu. Wishing you a great week ahead.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email