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The Energy Report

The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn&pricegroup.com


The Energy Report 04/17/17

Whatever It Takes

Mario Draghi had his moment when he said he would do whatever it takes to save the Euro. Today Saudi Arabia's energy minister Khalid al-Falih said that OPEC and non-OPEC will do whatever is necessary to balance the oil market. The words so far have had less impact on the market than Drahi's declaration did because of concerns over rising U.S. oil output and a failed North Korean missile launch but, nonetheless, should be taken seriously. OPEC's determination to get the market in balance cannot be underestimated or just laughed off.

Even as the U.S. rig count increased for the 13th week in a row, U.S. oil output still lags when we were at the peak of the U.S. shale revolution. Global stockpiles declined in the first quarter. The IEA shows global inventories falling at a rate of 200,000 barrels a day during the first quarter of this year. It is expected that OPEC and non-OPEC will do a six-month production cut extension and that means even with expected increases in U.S. oil output, global oil supply could be drawn down at a rate of about 1.2 million barrels a day in the third quarter.

It seems like more folks are starting to realize that perhaps the crazy bearish oil calls are wrong. As we said a year ago, oil has put in a generational bottom and historic cuts in capital spending would eventually take its toll on future supply. We also predicted that not only would OPEC cut production, but their compliance would be high. By any stretch of the imagination OPEC has not only complied but exceeded expectations with full compliance, something that has never happened before in the history of the cartel. The dynamics for an era of higher prices are underway even as we still have some short-term hurdles to get through.

Geopolitical risk premium seems to have fallen as North Korea had a failed missile launch. Vice President Mike Pence warned that the era of strategic patience's was over and that the U.S. should not be tested. President Trump tweeted that the U.S. did not brand China a currency manipulator because that would help with North Korea. So, North Korea is without an ally as Kim Jong Un seems to descend further into madness.

While U.S. drillers added 7 oil rigs they reduced the natural gas rigs by 3. Natural gas production has not been stellar and the reduction of rigs is not really that comforting. Natural gas has held up well as demand could exceed expectations. Look to buy breaks.

Gas prices on the rise! The bulls are getting more popular. Former bears are now getting bullish and are starting to throw in the towel. The facts are getting in the way of the bearish calls as the bears are living in the past and not trading the futures!

The Power to Prosper can be yours! Tune to the Fox Business Network! Call for my wildly popular Daily Trade Levels on all major commodity markets! Call me at 888-264-5665, email pflynn@pricegroup.com.

There is a substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Phil is one of the world's leading energy 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. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

PLACING CONTINGENT ORDERS SUCH AS "STOP LOSS" OR "STOP LIMIT" ORDERS WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS. SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Contact Phil at 800-935-6487 or pflynn&pricegroup.com.