High Impact Events Trading... Energy Edition

In this thread, the focus is on high impact calendar events related to energy. Participation is welcomed!

EIA inventory data - Aug 21st

1. Crude Oil Inventories
2. Distillate Inventories
3. Gasoline Inventories

Market Expectations:

1. API data, released earlier today, showed crude and gasoline inventories lower, while distillates came in higher than expected.
2. The market is expecting a decline in inventories across the board.
3. The biggest drop is expected in Crude Oil inventories.

Notes:

1. On lower than expected inventory draws, prices are expected to move higher on the data.
2. On higher than expected inventory builds, prices will be expected to drop on the release.
3. Crude oil inventory data will usually have more impact, although that's dependent on deviations from forecasts.

Recent EIA inventory data impact on Crude, Heating Oil, and Gasoline (CL, HO, RB respectively)

Aug 14th - Prices, after the initial knee-jerk reaction, eventually moved lower on a higher than expected crude oil inventories.

Aug 7th - Good shorting opportunity.


July 31st

Overview:
This data is a good one to keep an eye on. Caution is always advised given that the three data releases can cause whipsaws. I generally stick to crude as that's where the liquidity is, along with tighter spreads. All three commodities will likely take the same direction after the data has been released. It usually depends on where the surprises in the data are.

There will be good opportunity for trading this event if all three inventory numbers come out in unison either higher or lower. I favor shorting on higher than expected builds. My longer term outlook on crude is in line with crude backwardation that's begun to steepen. However, impact could be somewhat limited ahead of Friday's Jackson Hole as the market's wait in anticipation of what Powell will say in his speech.

Be careful out there and good luck!

Heck yeah nice to have some great event analysis! Just what we needed.

Would have been better if your analysis supported my position, but beggars can't be choosers.

Great analysis. Thanks for the thread ET. I looked at your posts and you have a similar thread for metals too.

Excellent material EventsTrader! Thank you! Subscribed!

I'm enthusiastic about examining any and all inventory figures and their respective market reactions! Kudos!

Natural Gas Storage - Aug 22nd Preview

1. Natural Gas Storage
2. The graph below is a good reflection of how seasonal this data is. During the US summer months storage builds. As the weather gets colder, closer to the winter, demand starts to increase and storage will eventually begin contracting. Contraction will continue until warmer weather results in lower demand, and supply can build again.
   Attached Image (click to enlarge)

   
   

Notes:

1. The market consensus for the upcoming EIA Natural Gas storage data is about 57B.
2. This data is always expected to have significant impact on the price of natural gas.
3. Natural Gas prices are expected to move higher on a lower than expected build. Prices will fall if the data shows a higher than expected storage figure.
4. As demand increases leading up to the winter, that's when this data can turn negative. For now, we can expect the weekly change to continue to climb. The risk is in where the data comes out in relation to what the market is expecting.

Recent impact on Natural Gas (NG)

Aug 15th

Aug 8th

Aug 1st

Overview
This data triggers big moves in natural gas. Even though the data is seasonal, it's still very sensitive to deviations from forecasts. There is considerable trading opportunity in this event. Keep in mind though, it comes with extra risk. Any entries taken prior to the data is risky and should only be done if you enjoy sky-diving, bungee jumping, wing-suiting, bull running, or swimming with sharks. The smarter approach to trading this data is monitoring for surprises and take advantage of any continuation, or follow-through, after the initial reaction. As presented in the charts above, the potential exists. As always, caution is advised. Good luck out there fellow traders!

API inventory data - Aug 27th preview

1. API Weekly Statistical Bulletin

Recent impact on Crude (CL)

Aug 20, 2019

Aug 13, 2019

Aug 6, 2019

Jul 30, 2019

Notes
This data has never been one that offers significant trading opportunity. I thought it was worth previewing though to show how the recent data releases have impacted crude. As you can see by the charts above it might have some shorter term impact. Only once in the past four releases did it have any follow through. While we could see some volatility around when this data finally makes it to dissemination, I'd stay out of any trades ahead of the release. I wouldn't adjust positions either. As always, caution is advised.

Nice work ET! It usually creates a pretty big impact, but for some reason it didn't really do much last week. I'll be interested to see if we have a repeat of that tomorrow.

I think the risk is in a surprise build in crude. But with that Hurricane out there heading towards the US, energy prices might see some support. I'm bearish on crude but going to try to close out any short positions tonight.

Thank you EventsTrader! I always appreciate your beautifully written analysis! I'll be steering clear of API tomorrow .

As always my G.very informative and enjoy hearing your views more so around news centred events.

Big shout out my man
Keep it up

Thank you sir! Energy Edition! Nice to see you drop by. I'm hoping to have another preview up for tomorrow's EIA inventory data.

EIA inventory data - Aug 28th

1. Crude Oil Inventories
2. Distillate Inventories
3. Gasoline Inventories

Forecasts

1. Another draw in crude inventories is expected. Market consensus is about at -2.8M.
2. EIA crude inventory forecasts were revised lower after the API data showed a crude draw of -11.1M compared to -2.5M the market was expecting.
3. Gasoline inventories is also expected to show a draw of roughly -0.4M.
4. Distallate inventories are forecasted to show a build of about 1.2M.

Recent impacts

Last week's preview shows the previous four reactions prior to last week, Aug 21st.

Aug 21st - How Crude, Gasoline, and Heating Oil were impacted last release.

What to expect?
Expect impact and significant volatility. If the API data was any indication, we are in store for a big one. Unless data comes in as expected, the market usually moves big. There's probably significantly more potential in Crude moving lower on higher than expected number, due to the recent selling pressures and overall trend. But don't think crude can't move higher on lower than expected draws. It can and will. The great thing about this release is that on a big enough surprise, we can lower our risk and enter the market when a direction has clearly been taken. Again, I personally think that any upside move is limited, while a move lower could have some follow through depending on the data. As always, caution is advised. Good luck out there!

Natural Gas Storage - Aug 29th Preview

1. Natural Gas Storage

Forecasts
The market consensus forecast is around 55B, although forecasts vary and range from the around 42B to a little over 60B.

Notes
We can continue to see Natural Gas storage build. It's not until closer to November when we begin to see some uncertainty in the data.

Previous Impact (view more prior impacts in last week's preview)

Aug 22nd

Overview
There might not be a lot of deviation from forecasts, but this data has big impact. It consistently triggers a big impact in Natural Gas and can sometimes present trading opportunities. I'd be careful in trying to trade this event until later in the year closer to winter. When the cold weather comes, there will be greater risks of surprises in the data and we'll get the chance to take advantage of stronger trends with higher volume. Until then, I'm saying lay low unless you see something different. Then go for it.

As always caution is advised.

Just a reminder that this week's US holiday changed the scheduling for all inventory data. Natural gas inventories remain at it's regularly scheduled day and time. API got pushed back by a day. AIE inventories are now scheduled for Thursday and 30 minutes later than it's normal time slot.

API inventory data - Sept 4th preview

1. API Weekly Statistical Bulletin

Recent Impacts

Aug 27 (more prior impacts here)

Overview
Crude has been trending lower, but this data tends to have impact regardless of the longer term trend. I'd expect a bigger move to occur on a build or higher than expected draw. The previous showed a draw of -11.1M, which was the largest draw since June of this year. Remember, to be cautious with the other inventory data as they can sometimes overshadow crude inventories, if significant deviations from expected or priors occur.

My recommendation is to stay clear of this data for a couple reasons. First, I'm not a big fan of trading this one because of the nature of how API poorly disseminates their data. Also, it comes out within 30 minutes of the close so there's a limited window of opportunity. It'll probably be the last preview for API inventories, unless there's a good reason to preview it in the future. Good luck out there!

Natural Gas Storage - Sept 5th Preview

1. Natural Gas Storage

Forecast

1. General consensus is for a build in natural gas storage of around 77B vs 60B prior.
2. Notes on this release here.

Recent Impacts (view prior impacts here and here)
Last week the actual was almost in line with market expectations, therefore it had a relatively muted impact.

Trade Opportunity
This data is underestimated and is one of the better events to trade. Follow through is common with a deviation of at least 5B to 7B from forecast. However, this week is different. The Labor Day holiday pushed the EIA Weekly Petroleum Data back to Thursday. Crude oil inventories (along with distiallates and gasoline) is scheduled for 30 minutes after the Natural Gas Storage figure. I would recommend staying out of trying to trade within that 30 minute window. Wait for the EIA data.

EIA Weekly Petroleum Data - Sept 5th Preview

1. Crude Oil Inventories
2. Distillate Inventories
3. Gasoline Inventories

Forecasts

1. Crude inventories are expected to continue to show a draw. General consensus is for about 2.4M vs -10.0M prior.
2. Gasoline inventories is forecasted to show a draw of -1.4M vs -2.1M prior.
3. Distillates is supposed to show a small build, if any.

Recent Impacts (view here and here)
Last week's data showed a bigger than expected draw across the board. The reaction is evidence there could be some limited upside potential on bigger than expected draws (or long Crude).

Overview
API data has recently served as a decent indicator ahead of the EIA data. It's not always reliable, but recently it has provided some insight into what to expect. Check out the impact of this week's API inventory data. A big drop in crude on a surprise build:

Crude is very sensitive to any data or news that has the potential to move prices lower. According to recent volume trends, CL (CME) has had consistent heavy selling pressure. Risk is skewed towards a surprise build or a smaller than expected draw. Expect crude to have a lot of room for prices to drop in the scenario that the data surprises and shows a build in crude inventories. Don't forget that all three inventory figures should be considered and it's not always the crude data that moves energy markets. It's the most important and while it usually does have the highest impact of the three, it's not a certainty. That's part of what's tricky in trading this EIA inventory data.

I'd recommend potentially shorting crude on an inventory build. I'm already short crude so I'll be looking to exit ahead of the US employment data on Friday if possible. If I can close a short term trade ahead of NFP, I usually do. This one could be interesting. Good luck out there!

I can't see storage levels being as high as the forecasted number and even if they are the winter draw is coming up.

I absolutely agree though, this wave of data will probably be a minefield for traders to navigate.

US Employment Data - September Preview ---->Click here for the full preview<----

1. Non-Farm Employment Change
2. Unemployment Rate
3. Average Hourly Earnings m/m

It generally doesn't trigger large moves in the energy market like it does in others, unless risk sentiment is affected. Tomorrow, the potential is there. Crude prices could move tomorrow, especially if growth fears creep up after the data is released. As I mentioned in the preview, be ready four hours later for Powell's event in Switzerland. Big day tomorrow!

August Impact
Last month's employment figures didn't have too much impact on crude. As displayed in the charts below (WTI and Natural Gas) impact was somewhat limited. The move that took place about 30 minutes later was related to Trump commenting on Chinese tariffs.