Covid cases are going up, but oil supplies are going in a different direction, says Phil Flynn of the PRICE Futures Group.

The Wall Street Journal reported that the seven-day average of daily reported Covid-19 cases in the US reached a pandemic record 403,385 on Sunday, according to their analysis of Johns Hopkins University data. Yet oil supplies, oddly enough, are falling and not just a little bit but a lot.

Not only should we see another substantial draw in US oil inventory this week, but globally supplies are also tightening. Alexander Stahel pointed out that global crude inventory declined by 16.4mb last week again. So global supply is falling by 2.3 million barrels per day. Reuters reports that the oil supply is likely to have fallen by 3.4 million bbls last week, according to a Reuters poll. Gasoline and distillate fuel stocks are seen rising by 3 million and 2.7 million bbls, yet we see a draw of 4 million barrels of crude and draw gasoline of 2 million, and distillates by 2.5 mb.

Perhaps that fact is why OPEC had to raise their demand forecast as they head into today’s big meeting. OPEC increased its forecast for global oil demand in the first quarter substantially, as some of this year’s recovery is delayed by omicron but the overall risk from the new virus strain remains limited. The Organization of Petroleum Exporting Countries boosted estimates for consumption in the period by 1.1 million barrels a day—equivalent to annual world consumption growth in a typical year before the pandemic—according to a monthly report from the group’s research department according to Bloomberg.

There should not be any surprises and the group should plow ahead with its 400,000 barrel a day production increase but it’s clear the way things are going with demand. Reuters reports that OPEC’s secretary general-elect said on Monday that global oil demand should return to its pre-pandemic levels by the end of 2022, Al Arabiya news channel reported. Haitham al-Ghais, a former Kuwaiti governor to OPEC, also told the Saudi-owned TV channel that the OPEC+ alliance—which gathers OPEC and other crude producers—was important for the stability and balance of oil markets.

A must-read in Bloomberg. Texas’s natural gas industry had almost a year to prepare for last weekend’s cold blast and avoid another loss of production. But yet again, instruments froze, output plunged, and companies spewed a miasma of pollutants into the atmosphere in a bid to keep operations stable. Though Saturday’s cold front wasn’t as severe as the February storm that killed hundreds and knocked out power to much of the state, nearly one billion cubic feet of gas was burned or wasted due to weather-related shutdowns, according to filings with the Texas Commission on Environmental Quality. At the same time, production plunged to the lowest level since the last freeze, Bloomberg NEF data shows.

Learn more about Phil Flynn by visiting Price Futures Group.