It is a good thing that Saudi Arabia is not in the National Football League because if they were, they would have been penalized 15 yards for taunting, states Phil Flynn of PRICE Futures Group.
The Saudi energy minister Prince Abdulaziz bin Salman seemed to be taking a victory lap over the cartel’s decision to hold an output study in opposition to the wishes of an increase from the Biden administration and at the same time taking a slap at the International Energy Agency (IEA) for notoriously underreporting demand. Maybe that should be another 15 yards.
Prince Abdulaziz bin Salman said that OPEC Plus leaves politics out of its decisions on oil production. That was a reference to the reports that the Biden administration was pressuring OPEC to raise oil output ahead of the Mid Term elections. Yet the Saudis refused to interfere in a US election. Apparently, they have more respect for our electoral process than those that tried to bury the Hunter Biden laptop story.
He also said that “it would not be surprising if the issue of missing barrels resurfaces in early 2023 continuing the pattern of underestimating demand that began in 2022.” That is an obvious reference to the fact that the IEA lost 200 million barrels of oil, most likely the result of a massive misunderstanding of global oil demand and over-estimating supply. In my opinion, it most likely was an attempt to give the world the impression that we could further curtail investments in fossil fuels without any serious ramifications. The IEA flatly said that “Investors should not fund new oil, gas, and coal supply projects if the world wants to reach net zero emissions by mid-century. Yet now those calls are leaving the world undersupplied and a more dangerous place.
Oil could be on the verge of a major breakout as the realities of winter are upon us and we get more signs that China is reopening its economy from the Covid lockdown. Data from the American Petroleum Institute (API) shows that oil inventories are uncomfortably tight even with the record releases from the Strategic Petroleum Reserve. Make sure you are hedged.
The API reported that “US crude supply fell by 3.069 million barrels even after a 3.7 million barrel release from the SPR. We also failed to get a big increase in the distillate, increasing by only 830,000 barrels. We did get a big 4.510 in gasoline, but gas normally builds this time of year.
China is reopening and they are doing it mainly on Russian crude. It was reported that China’s imports of Russian energy increased by $27 Billion since the Invasion of Ukraine.
Natural gas got crushed but reports of the Freeport LNG terminal getting ready to reopen and the bomb cyclone are putting in at least a short-term floor. Fox Weather reports that “A dangerous blizzard could become a bomb cyclone as it wallops the Midwest and Great Lakes this week, with damaging winds also spreading toward the East Coast and creating a travel nightmare for millions ahead of the Christmas holiday weekend.
The winter storm will also usher in bitterly cold, life-threatening temperatures that will spawn a widespread flash freeze in the Plains, Midwest, and East as heavy rain is followed by temperatures rapidly falling below freezing all the way to Florida, which could see its coldest Christmas in more than 30 years. And on top of the dangerous wind chills, accumulating snow is expected across a large swath of the US.
Various winter weather alerts have been issued by the National Weather Service from the central and northern Plains eastward to the Midwest, Great Lakes, and parts of the interior Northeast. These include the cities of Buffalo in New York, Chicago, Cleveland, Detroit, Indianapolis, Kansas City in Missouri, Milwaukee, and Minneapolis-St. Paul, Omaha in Nebraska, and St. Louis. A Blizzard Warning is in effect in portions of southwestern Minnesota, and additional Blizzard Warnings could be issued later Wednesday or on Thursday.
Learn more about Phil Flynn by visiting Price Futures Group.
