Big day for big oil

Daily Energy Market Analysis

Big oil is back, and we have earnings today but so is big LNG. OK, maybe the market for Liquefied Natural gas isn’t big yet but it is going to be. President Donald Trump boasted that “Europe will be a massive buyer of U.S. LNG as they will be able to diversify their energy supply.” Some dismissed the comments as not likely, but those who did are thinking small or not looking at the big picture. In coming generations, the United States will be the LNG supplier to the world.

On Mornings with Maria on the Fox Business Network, Energy Secretary Rick Perry spoke from the opening of the Dominion Energy Cove Point (DECP) LNG Liquefaction project. He pointed out that this was the opening of just the second LNG facility and that there will be four more on the way.

He pointed to phenomenal growth in the industry and pointed out that Europe needs U.S. natural gas as a strategic alternative to Russia. He also set a veiled shot to Europe by saying that Carbon Emissions in the United States fell by 14% because of U.S. natural gas usage even as Trump pulled out of the Paris Climate Accord. He also pointed out that we have phenomenal growth in production. Rick Perry with Maria from Dominion Energy Cove Point (DECP) LNG Liquefaction project points out that the United States will be a reliable supplier. Russia halted Natural gas exports as a political weapon in the past, so Europe is making a smart move getting ready to be a big buyer of U.S. LNG.

The EIA reported that working gas in storage was 2,273 Bcf as of Friday, July 20, 2018, according to EIA estimates. This represents a net increase of 24 Bcf from the previous week. Stocks were 705 Bcf less than last year at this time and 557 Bcf below the five-year average of 2,830 Bcf. At 2,273 Bcf, total working gas is within the five-year historical range. Tight range and needs more heat to keep the rally going. Use strength to buy long-term puts.

Look to RBOB for oil support. There seems to be a squeeze on RBOB as we head into expiration with near record demand and supplies are getting too close to the 10 year average.

About the Author

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor.