Oil prices are overcoming the hearings on climate change and we'll have to deal with the reality that the COP 26 UN climate summit will unlikely yield a major deal, says Phil Flynn of the PRICE Futures Group.

China and India are still refusing to say that they will stop using coal anytime soon and, in the meantime, OPEC's control on the global oil space is getting more powerful every day. The bottom line is that if OPEC thinks that demand is down, then oil production will not go up more than they had already planned. The oil market had false hope that Vladimir Putin’s comments that the EC plus might pump a little more oil last week. This may not happen because OPEC's outlook on oil demand is looking murky.

Reuters reported that the OPEC+ committee trimmed its forecasts for global oil demand growth this year to 5.7 million barrels per day from 5.8 million, two sources said, amid a continuing strong recovery in consumption from 2020's collapse. The Joint Technical Committee, which met on Thursday, left its demand forecast for next year steady at 4.2 million bpd, one source said.

Oil traders will see this as bullish. If OPEC sticks to its plan, then we will see global oil supplies trend lower as refiners start to come out of maintenance. Inventories will fall and that should give the oil market a floor.

After its big sell-off yesterday, crude oil came back to close higher. Technically, oil needs another strong close today to reestablish upward momentum.

Natural gas futures are pulling back here a little bit today. We expect that natural gas is going to be a pretty good buy on this dip. We recommend maybe putting on some butterfly spread options, because the strike calls are very expensive but the sell-off might be an opportunity to get hedged. At some point natural gas futures will get back above $6 and may get towards $7 this winter, especially if we get cold weather.

Learn more about Phil Flynn by visiting Price Futures Group.