The earth just seems to be one big, massive ball of collusion, says Phil Flynn of PRICE Futures Group.
Russia, the country that famously was accused of colluding with the Trump campaign before that was proven to be a setup by the Clinton campaign, is now being accused of colluding with Iran in its support for terrorism. The Wall Street Journal reported that the US has intelligence that the Wagner Group, the Russian paramilitary group, may provide an air defense system to Hezbollah, the Iran-backed Lebanese militia, US officials said. If this is true, it would help make the case to skeptics in Congress to approve funds to support Ukraine in its war against Russia, and the noble cause to support Israel in its war against the terrorist group Hamas can be all tied together because, at the end of the day, it’s just one big, massive ball of collusion.
This came after the US attacked Iranian-backed positions in Iraq after getting attacked again and again. Fox News reported that US forces stationed at Ain al-Asad air base in Iraq were attacked early Tuesday prompting a US military aircraft to strike back, officials said. Pentagon spokeswoman Sabrina Singh said Iran-backed militias used close-range ballistic missiles against US and coalition forces, resulting in “several non-serious injuries and some minor damage to infrastructure.”
Reuters reported that” The United States carried out two series of strikes in Iraq against Iranian-backed militants, US officials said on Tuesday, in the first publicly reported US responses in Iraq to dozens of recent attacks against troops in the region. Until this week, the United States had been reluctant to retaliate in Iraq because of the delicate political situation there.”
Fox News also reported that Israel and Hamas have agreed to a temporary cease-fire for humanitarian purposes that includes a hostage release deal, Fox News has confirmed. “The Israeli government is committed to the return of all hostages home. Tonight, the government approved the outline for the first stage of achieving this goal, according to which at least 50 hostages—women and children—will be released for four days, during which there will be a lull in the fighting,” the Prime Minister’s Office said in a statement.
Despite all this turmoil oil prices are lower in part because one noted oil bull seems to be pulling in his horns. In a light volume morning ahead of the Thanksgiving Day holiday, oil prices broke sharply after hedge fund manager Pierre Andurand reversed course and after making very bullish calls on oil he now says that he no longer expects oil to hit $100 a barrel. He also took it a step further by saying that OPEC Plus may need to make an additional production cut because of strong US oil production growth. He also raised doubts that Saudi Arabia will continue their production cuts unless he gets more help from other OPEC members.
His comments came about the same time Russia’s Deputy Prime Minister Alexander Novak said that the oil market is balanced and the prices objectively reflect the current situation and they are not quite at a good level. Mr. Novak also said that he declined to comment on whether there will be changes to the OPEC plus deal which is typical of Mr. Novak as he always plays a little bit hard to get ahead of these meetings.
What’s kind of funny about this is that the market broke hard on these comments yet in the past when Mr. Andurand came out with bullish calls the market barely moved.
The point is not whether Mr, Andurand is right or wrong, but it is interesting how the market reacted. As I wrote yesterday, you have to be careful about crazy moves right around the Thanksgiving holiday. We get these strange things that caused the market to move lower although we’re seeing increased risk to global supplies and the fact that the globe is in a supply deficit, and we are seeing global inventories tighten so it’s almost amazing that the market drops because of his comments. Maybe they should move on a call by Goldman Sachs that sees a 35% chance of a deeper OPEC+ supply cut at the meeting.
That is why around the Thanksgiving holiday you must be extra cautious. From a technical viewpoint, the key continues to be the ten-day moving average which is 7678. Despite Mr. Andurand’s calls, we still believe that oil does have a chance to get to $100 a barrel next year. In the shorter term, a target of $85 a barrel is in the cards.
This will be especially true if we get cold weather. Yesterday, we saw the diesel crack spreads explode after the American Petroleum Institute reported a substantial drop of 3.51-million-barrel drop in US distillate inventories. While that was offset by a larger 9.05-million-barrel increase in crude supply most likely due to low refinery runs, the drop of 1.79 million barrels in gasoline supply gave the complex underlying support.
We should also get support from reports of Chinese oil inquiries. S&P Global reports that China’s independent refiners have begun looking for crude cargoes for late-December and early January deliveries amid expectations that new import quotas for 2024 would be allocated by the end of the year, sources told S&P Global Commodity Insights. Now as buying interest grows, the price of those cargoes, including ESPO and Malaysia-blended crudes, have started to climb in the last few days, sources said.
Today because of the Thanksgiving holiday, not only will we get the Energy Information Administration’s viewpoint on petroleum at 9:30 CST we will also get a release of the natural gas report at 11:00 am.
An estimated 1.1 million gallons of crude oil have spilled into the Gulf of Mexico off the southeast coast of Louisiana, Fox News reported that the US Coast Guard reported the oil spill off the coast of New Orleans has released more than a million gallons of crude oil into the Gulf of Mexico. Officials said the spill happened near the Main Pass Oil Gathering (MPOG) company’s pipeline system, near Plaquemines Parish, southeast of New Orleans. The Coast Guard, MPOG and the Louisiana Oil Spill Coordinator’s office have formed a Unified Command team to investigate the source of the spill, which is as of yet unknown. The 67-mile-long pipeline operated by MPOG was closed Thursday morning after crude oil was spotted around 19 miles offshore of the Mississippi River Delta.
To all my readers I wish you all a very blessed Thanksgiving Holiday!
Learn more about Phil Flynn by visiting Price Futures Group.
