The Energy Report

The Christmas Comeback

What selloff? Oil prices are coming back from the Black Friday massacre as, along with OPEC plus optimism, the American Petroleum Institute (API) gives the algorithms a reality check. The API reported that U.S. crude supply fell by 3.7 million barrels last week, signaling an even bigger draw when we get today’s Energy Information Administration (EIA) version of the report.

Oil is also realizing that the erroneous rumors that OPEC Plus might not get a deal, a reason for the major selloff on Black and Blue Friday, was basically fake news. Iraq’s oil minister Thamir Ghadhban said that an extension of a cut is already in the bag and there are serious discussions of an even larger cut. He says he also supports cutting another 400,000 barrels a day from the market, taking the total reduction to 1.6 million. Of course, other OPEC members are pointing at Iraq for cheating.

They are also pointing at Russia. Russia says that its overproduction is condensate and should not be counted because they do not export it. Stay tuned.

Still, the Saudis want this market to pop so the odds of a bigger cut should be priced in.

The API also reported a bigger than expected increase in gasoline supply to the tune 0f 2.93 million barrels. Gas demand is weaker in part due to snow and online shoppers shopping from home. Yet distillates increased only 749,000 barrels, leaving diesel valuable ahead of the new International Maritime Organization 202 rules on clean-burning diesel fuel for ships.

China talks are going well, at least for today. Stocks are rallying after President Trump said talks are going well. The Wall Street Journal reports that U.S. stock futures and European equities rallied Wednesday as investors gauged comments from President Trump on his willingness to delay any trade deal to be rhetoric used to further negotiations, Bloomberg News reported, citing people familiar with the talks, stoking further optimism among investors.

That is a turnaround from Tuesday when stocks fell sharply on concern that a trade agreement—seen as key for bolstering global economic growth—could be in jeopardy after Mr. Trump suggested the negotiations could continue well into next year.

“Those comments from Trump were off-the-cuff,” said Mr. Spencer. “The trade talks—or the lack of them—have been around for a year now and they’re losing their strength over the market.” What sell-off?

Oh my gosh did the weather forecast change again? Nat Gas giving up gains. If you don’t like the weather forecast, just stick around, it will change.

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In case you missed it! Phil’s guest appearance on the McKeany-Flavell Hot Commodity Podcast last Friday, September 20th talking about current energy market dynamics. LISTEN HERE!

Phil Flynn
The PRICE Futures Group
Senior Market Analyst & Author of The Energy Report
Contributor to FOX Business Network

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