Crude oil is up because production is down. We are also getting a boost from better than expected manufacturing data in China and the increased risk geopolitical risk premium because of Russia's actions in the Ukraine.
U.S. oil output fell 40,000 barrels a day for the seventh time in eight weeks and Organization of Petroleum Exporting Countries production also fell by more than 233.000 barrels a day, according to a Bloomberg survey. Talk of tanking demand for fracking and is signaling that we will see more U.S. oil riggs come offline. We should see oil output dropping dramatically as we start a new quarter.
Russia launched airstrikes on targets they claimed to be ISIS strongholds but critics say are really enemies of Syrian strongman Baser Assad. Talk that U.S. backed Syrian rebels is angering U.S. officials. This tension is raising concerns that this war could escalate and put supplies at risk. Iran's actions in Syria also may make it harder for the American people to stomach President Obama's Iranian nuclear deal.
President Obama is also not concerned about helping out the energy industry save jobs. His White House slammed an attempt by the Senate to bring a bill that will lift the export ban. White House spokesman Frank Benenati said "The administration does not support efforts to move this bill, Congress should be focusing on meeting America's clean energy needs and our transition to a low-carbon economy," Benenati said. Maybe he should give that speech in front of the energy industry workers that have lost their jobs because of the White House's disdain for oil. Oh, sure, they will take credit for all of the positive things the U.S. energy Industry has done for the economy but will not lift a finger or lift a ban to help them. Besides they have been too busy trying to save and create Iranian oil jobs.
Output from the OPEC fell by 233,000 barrels to 32.048 million a day this month, according to a Bloomberg survey of oil companies, producers and analysts. Last month's total was revised 35,000 barrels lower to 32.281 million a day because of changes to the Iraqi, Nigerian and Ecuadorean estimates.
We still like the long side and feel a major bottom is in the process of being put in place.