Oil Prices Are On The Defensive After A Huge Miss On Friday's Jobs Report

September 7, 2021 12:30 PM
The U.S. energy industry's comeback from Hurricane Ida is proving to be a bigger challenge than many expected
U.S. rig count plummeted, falling by 11 units to 497 for the week ended Friday, September 3
Record-breaking natural gas prices in Europe may be a preview of what we could see this winter here in the U.S.
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The Phil Flynn Energy Report 

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Oil prices are on the defensive as a huge miss on the Friday jobs report is raising more questions about the direction the country is headed. The government on Friday said the economy created 235,000 new jobs last month, just 1/3 of Wall Street’s forecast and the smallest gain since January. Biden blamed the Covid-19 Delta variant, yet it's clear that more Americans question his leadership on all issues including energy and economic policy.

Even Biden's supporters acknowledge that he’s had a terrible month. Both the failure and disgrace of the tragic withdrawal from Afghanistan and falling confidence in the administration's ability to get ahead of Covid-19 have plummeted his poll numbers. Now there are real concerns that his economic policy, one of massive government spending, could derail the economy as a whole.

Biden's energy policy is also headed towards failure as it’s based on pie-in-the-sky ideals as opposed to reality. There’s a real disappointment regarding the fact that the Biden administration continues to call on OPEC+ to raise oil production while he simultaneously discourages oil production at home.

This comes at a time when the U.S. energy industry is trying to battle back from Hurricane Ida, which is proving to be a bigger challenge than many people believed in the days after the storm. The Bureau of Safety and Environmental Enforcement (BSEE) reported that 83.87% Gulf oil and 80.78% gas is still offline. We also saw the U.S. rig count plummet, falling by 11 units to 497 for the week ended Friday (Sept. 3), according to the latest figures published by Baker Hughes Co. (BKR). Net changes in the United States included a 16-rig decrease in oil-directed drilling.

The storm's aftermath means product supply for gasoline, diesel, and jet fuel could fall pretty dramatically. The Louisiana Offshore Oil Platform— the LOOP— is still shut down and because of that, the oil numbers will be skewed for the next couple of weeks. Ultimately this is going to be very bullish for oil and products.

Natural gas prices pulled back after hitting a new high. Global natural gas prices are on fire as global demand is exceeding supply. Hurricane Ida is slowing U.S. exports to the world and it’s causing places like China to switch from liquefied natural gas to dirtier burning fuels to meet demand. Natural gas is the bridge fuel that we need to reduce our carbon emissions, but still meet the demands of electricity around the globe. Record-breaking natural gas prices in Europe may be a preview of what we could see this winter here in the United States.

On a very sad note, my good friend and natural gas legend, Founder and CEO of EBW Analytics Andy Weissman, passed away over the weekend. Andy was not only a great analyst, but a really great human being. I learned a lot from him and he will be missed. Keep him in your prayers.

Don’t miss out on my wildly popular trade levels on all major markets, as well as special subscriber-only updates. Call me at 888-264-5665 or email me at pflynn@pricegroup.com.

About the Author

Phil Flynn is a senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. Phil 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.