Fire, fury and a barrel of oil
Even the EIA is acknowledging that in their Short-Term Energy Outlook report. They are calling for a record 9.9 million barrels per day of oil production in 2018 and that’s lower than previous forecast that was at one point over 10 million barrels a day. They warned that, “U.S. oil production growth could slow as some U.S. energy companies plan less investment spending for the rest of this year and the number of drilling rigs has recently increased at a slower clip.”They also say that, "the monthly increase in U.S. onshore oil production during the second half of 2017 is expected to slow from the pace seen during the first six months of this year."
This should be welcome news to OPEC who met and then put out a statement that producers like the UAE, Iraq, Kazakhstan, and Malaysia all expressed full support for the existing monitoring mechanism and willingness to fully cooperate in the months ahead to achieve the goal of reaching full conformity. In other word’s they swear they are going to stop cheating on production and the monitor committee will be watching.
Gas prices are on the rise, but that is a good thing according to the Energy Information Adminstrations. (EIA). They say, “U.S. consumers are buying record amounts of gasoline this summer, even though pump prices are higher than last year. A growing economy and more people working are major contributors to higher gasoline consumption this summer.” Sometimes rising prices are a good sign especially when it is more reflective of people going back to work. Gas demand will be watched today as the API reported a surprise 1.529 million barrel.
The $50 a barrel mark is the key resistance. The best thing the bears have going is a seasonal top in demand. The bulls have falling supply and geopolitical risk on their side. We should see oil break out higher soon especially if we see a big draw in oil in today’s EIA report.
Tropical storm watch. The U.S. National Hurricane Center said Topical Storm Franklin is gaining momentum. The storm was expected to gain more power as it moved across the lower reaches of the southern Gulf of Mexico and likely would be a hurricane by Wednesday evening, the center said. Franklin's center was 240 miles (386 kilometers) east-northeast of Veracruz early Wednesday and it was heading west at 13 mph (21 kph). A hurricane warning was in effect for Mexico's coast from Puerto de Veracruz to Tuxpan. A tropical storm warning was in effect for the Mexican coast east of Puerto de Veracruz to Ciudad del Carmen and from north of Tuxpan to Barra del Tordo.