Our Oil Price Analysis // FED is Willing to Break the Market
Our Oil Price Analysis // FED is Willing to Break the Market
The Commodity Report #94
Renewable energy capacity in the US soared in Q4
According to S&P Global, the renewable output by the grid operator MISO averaged 333,012 GWh in Q4. Despite Bonneville Power Administration's (BPA) renewable output slipping 12% in Q4, it remained the footprint with the most renewable market share at 75.6% of its total fuel mix for Q4.
The latest ACP data shows that the total installed solar capacity in the US grew by 17% year on year, reaching 74.126 GW in Q4. California remains the leader in solar capacity with 17.61 GW, which increased by 14% year on year, followed by Texas with a 46% jump to 12.445 GW in Q4. Florida also rose to third place with 6.079 GW, a 24% increase from the previous year.
According to ACP, only two states, North Dakota and West Virginia, have no solar capacity, while 11 states have less than 100 MW and 15 states have over 1 GW of solar capacity.
According to the latest ACP data, California is the leading state in the US in terms of battery storage capacity, with 4.938 GW, which increased by 101% year on year. Meanwhile, Texas saw a remarkable surge of 127% year on year, reaching 1.867 GW of battery storage capacity by the end of Q4.
Although 40 states have some storage capacity, only nine of them have more than 100 MW, as reported by ACP. The total installed storage capacity in the US increased by 81% year on year, reaching 9.024 GW in Q4.
Fundamental Oil Price Analysis
Today I will provide you with some exclusive insights into my commodity research - the fundamental part of the equation I’m looking at - which is not OPEC quotas or US production but other correlations and indications. Kuemmerle Research’s commodity analysis is a bit more practical and definitely differently structured than the classic research you know. Today I’ll introduce you to the way we look at the crude oil market at the moment.
First of all, it is very important to note that we have no bias in any direction. Crude oil corrected 40% from June of last year and is now trading in a range. What we’re looking for is a breakout of this range.
The oil product inventory data is catching up again and it seems like the gap between price and inventory levels is closing again (bearish for price - excess supply)
The oil correlation to the global PMIs/economic momentum expectations remains an important one to watch. We expect FED Chair Powell will crash the manufacturing economy into a recession in order to drain the service sector strength out of the market and the core inflation component. Moreover, the FOMC will continue to hike rates in order to get back the target of price stability. (that was his message before the senate this week)
The Baker Hughes Rig Count trend is by now also down - this metric works as a contra indicator - oil shows weakness and rigs become less and the other way around.
The Chinese Credit Impulse (leading indicator) is still pointing up but momentum will reverse already in a few months’ time according to the indicator.
What remains another bullish indicator is the positioning and so far technicals as well as the cycle momentum. Many people don’t like drawing cyclical sinus curves across charts but I think this approach works great as a momentum indicator. Momentum continues to indicate a bullish tailwind till May for Crude. We continue to see a range-trading market - which will eventually break to one or the other side - and we’ll trade both sides as the fundamental picture isn’t everything in trading.
We expect even lower oil prices now (talking about sub 60USD/barrel) and once the economic cycle turns back up again same problems as during 2021 and 2021 = scarcity and a strong move up and back above 100$/barrel.
Of course, we show how and when one can trade these setups exactly in The Kuemmerle Report every Sunday.
FED is Willing to Break the Market // Intermarkets #6
In this week’s episode, Jordan and I discuss Powell’s testification before Congress through the week and what we learned from it.
It seems that the FED is willing to break the market in order to contain service inflation!
Watch or hear it on Youtube Video or Spotify Podcast.
Check this out as well
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This week look out for the following:
CPI data on Tuesday
PPI data, Retail Sales data, Empire State Manufacturing Index and NAHB Housing Market Index on Wednesday
Philly Fed Manufacturing Index on Thursday
Prelim UoM Consumer Sentiment on Friday
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Till next Monday, Lukas
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