Some Bearish Hopes!
Reports of rebel advances gave some hope that perhaps Libyan oil might be back on the market faster than expected. Reports that rebels moved in and took back some major oil towns such as Brega and are moving into the Sirte Basin where 80% of Libya's proven reserves are located. Rebels are claiming that they could quickly increase production to 300,000 barrels per day. Now that Qatar has officially recognized the rebels as legit, it is possible that they could facilitate rebel oil sales.
Still that may be sticky as contracts that are in place may make sales more difficult. The International Energy Agency says that they do not expect oil for months. At the same time, Saudi Arabia is talking about increasing production by a whopping 20% to 30% and Fed officials are still sending signals that QE 3 will be dead on arrival.
Reuters News reports that, "Saudi Arabia, the world's top oil exporter, has unexpectedly called on top oilfield service companies to help quickly boost the country's oil rig count by 30 percent to expand production capacity, Simmons & Company analyst Bill Herbert said on Monday. Saudi state-run oil giant Aramco met with leading oil service companies, including Halliburton, over the weekend to announce ambitious plans to increase its rig count, Herbert wrote in a research note. It was not immediately clear whether Saudi Arabia was seeking more rigs to increase its idle spare production capacity beyond an estimated 3 million barrels per day currently, or simply ensure it can maintain the extra pumping power to meet any disruptions in international oil markets."
Naturals gas pulled back a bit despite reports of more cold weather as supplies dipped below year ago levels. The supply that was not supposed to ever dip below year ago levels saw supply give in after this brutally cold winter. Last week the Energy Information Agency reported that working gas in storage was 1,612 Bcf as of Friday according to EIA estimates. This represents a net decline of 6 Bcf from the previous week. Stocks were 12 Bcf less than last year at this time and 34 Bcf above the 5-year average of 1,578 Bcf. In the East Region, stocks were 61 Bcf below the 5-year average following net withdrawals of 22 Bcf.
Now with the hurricane season ahead of us and a lingering winter, natural gas has put in a good performance. Still beware of a correction as winter should end eventually! At least I think it will.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.