World running low on energy stocks, high on social unrest

Year End Storage

Natural gas is rising again as the predictions of another polar winter vortex is being forecast in March causing  many to worry about yearend storage and raises concerns that we may not be able to get back to full storage next winter. The Energy Information Administration reported another hefty 250 bcf withdrawal. The EIA reported that working gas in storage fell to 1,443 Bcf. That means the danger that we fall below 1 trillion cubic feet by the end of March is very real. Already stocks were 975 Bcf less than last year at this time and 741 Bcf below the 5-year average of 2,184 Bcf. As this dawns on the shorts they continue towards squeezing higher as hitting $700 may not be impossible.

Oil prices are already looking at the weather and the G-20 with a back drop of rising geopolitical risk. Violence in Venezuela, Ukraine and Sudan are providing price support. Reuters reports that Security forces and protesters fought around Venezuela on Thursday in streets blocked by burning barricades and a supporter of socialist President Nicolas Maduro was shot dead, the sixth fatality from more than a week of violence. Maduro said a "fascist bullet" killed Alexis Martinez, a brother of a ruling Socialist Party legislator, in the central city of Barquisimeto. A local journalist said Martinez was shot in the chest while passing an opposition protest. There have also been scores of injuries and arrests since the violence broke out eight days ago, the most serious unrest since Maduro was narrowly elected in April 2013. The protesters, mostly students, want Maduro to resign, and blame his government for violent crime, high inflation, shortages of goods and alleged repression of opponents. 

Reuters reports that violence flared again in Kiev on Friday as Ukraine's opposition politicians pondered a draft deal with Russian-backed President Viktor Yanukovich which EU foreign ministers brokered to resolve the country's political crisis. Police said anti-government militants had fired on security forces near the capital's central Independence Square, scene of a three-month-old protest vigil, after all-night negotiations to end Ukraine's worst violence since Soviet times. "Participants in the mass disorder opened fire on police officers and tried to burst through in the direction of the parliament building," a police statement said. It did not say whether riot police had returned fire. After visiting European Union foreign ministers suspended talks at dawn, the presidential press service said an agreement with the opposition would be signed at noon (10:00 GMT) but gave no details.

Reuters reports that the capital of South Sudan's main oil-producing region was divided between the army and rebels on Thursday, but the government said it remained committed to peace talks which have stalled this month. 

Rebels allied to former vice president Riek Machar on Tuesdayattacked Malakal, which lies on the edge of Upper Nile state's oil fields, triggering the fiercest clashes since a January ceasefire and adding to jitters in global oil markets.

International pressure is mounting on the warring factions to return to negotiations, although Western diplomats say in private that mutual recriminations over ceasefire violations raise questions about each side's commitment to talks. "Malakal is not yet fully calm ... there are pockets of resistance within the town. It is split between the two sides," South Sudan's Information Minister Michael Makuei told Reuters.

Yesterday oil pulled back as mixed weekly scenery Information Administration Supply report failed to provide any fireworks.  US crude inventories increased by 1 million barrels yet a big draw from Cushing.

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

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