The Phil Flynn Energy Report
Going into Thanksgiving Day we have a lot to be thankful for on the energy front. Our nation’s economy has prospered with the shale revolution and we have to thank all of those who risked their capital to make that happen. Many of those shale pioneers are struggling right now, being victims of their own production success. But our nation will always be grateful to those who had that incredible first vision.
Yet even with those major advancements, it does not mean that we can rest on our laurels. Heck, we have a propane shortage in some places as propane is being used by refiners. That is leaving many farmers short. Farmers have had a tough harvest and they can’t put their corn in the bin to dry it out without propane. I also hope that if you are planning on cooking your turkey with propane, I hope you got it early. I wonder where the Pilgrims got their propane.
Oil prices, on the other hand, are shaking off a bearish crude and gasoline reading from the American Petroleum Institute and instead are focusing on another distillate draw. The API reported that crude oil supply increased by 3.639 million barrels and gasoline supply by a whopping 4.378 million barrels. There was a drop-in distillates of 665,000 barrels. This is reigniting tight supply concerns ahead of the new IMO 2020 rules that are going into effect on January 1. Despite the rosy scenarios that we have been hearing about this historic shift in fuel for ships, the reality is that the amount of supply that may be needed is not quite there. This should be a very supportive factor in the coming weeks.
That, along with the fact that China’s economy slowed for 7 months in a row making it more likely they will sign a trade deal. President Trump says that a deal is in its “final throes”.
We will get the Energy Information Agency (EIA) report today. We have to be extra thankful for the EIA as we get not 1, but 2 reports! Natural gas and petroleum. Petroleum comes out at 9:30a and natural gas at 10a central. I guess they want to make sure you get an idea of how much natural gas you will need to cook your turkey. Or you can always deep fry it as well, but do not burn down your house. I am looking for a natural gas withdrawal of 30bcf.
Another reason oil may be finding some support are reports of military activity near Libya’s El Feel oil field, according to Libya’s National Oil Corporation. So far, no reports of damage but we must keep an eye on this situation. Another report says that Libya locked down its Sharara but is now lifted. El Feel operations back to normal, despite Tebu's military presence.
You better watch out! You better not cry, you better not pout I'm telling you why! OPEC is Coming to town! What town? Vienna! Along with their co-conspirator Russia Dec. 5-6th. They are expected to extend their supply cut agreement further into 2020 but there are rumors they may plan a bigger cut. Maybe, if you believe in Santa. Now I am not saying that I don’t believe, I have an open mind on the subject. Bloomberg reports that there will be a “standard agenda” for the OPEC+ meeting in Vienna in December, Russian Energy Minister Alexander Novak told reporters in Moscow. Of course, as you know, Russia is very close to the North Pole. I'm just saying.
God Bless you all and have a Happy Thanksgiving!