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The Energy Report

The Energy Report

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


The Energy Report 10/04/17

Full Tank

Gasoline versus oil supply is one reason the petroleum markets are struggling. A full gasoline tank as far as supply goes is overshadowing the big crude oil supply draw. Oil prices are under pressure after the American Petroleum Institute (API) showed a surprisingly large 4.19-million-barrel increase in gasoline supply. The build in supply is rising concern that recent strong almost record gasoline demand may be cooling off. Still a large drop in overall crude supply is lending support. The API reported a big 4.079 million barrels drop in crude supply that would normally offset the gas number which should, at this time of year, build in Cushing Oklahoma, the WTI delivery point increased by a whopping 2.084 million barrels. The mixed signals are keeping the traders on guard. Future pressure on oil is being felt as Libya's Sharara oilfield restarted on Wednesday after being shut Sunday that was producing about 220,000 barrels of light sweet crude.

Yet a drop-in distillate supply of 584,000 barrels still shows that refiners will have to do more to build those supplies before winter. As refiner's max out diesel, we may see less gasoline produced. Product production numbers will be viewed closely in today's Energy Information Administration (EIA) report.

Traders will also look to the EIA for oil production numbers that have been coming under great scrutiny by some market players. The EIA reports U.S. production at 9.55 million barrels a day, that was less than they previously forecasted and still too high according to some shale producers. As reported previously, by Bloomberg and Fox Business Network, Harold Hamm the chairman of Continental Resources Inc, says that the EIA forecasts on oil production are wrong and adversely impacting the price of oil. Hamm says the EIA prediction of more than 1 million new barrels a day in U.S. production, is wrong and is distorting global oil prices. He says that U.S. production will only rise half of what they have been projecting. Hamm says that "When we're lagging the Brent world price by $6 a barrel, that's not putting America first, that's putting America last.

We are steadfast in our prediction that the global oil market is rebalancing. Reports of tightening global oil and product inventory should allow this market to stand tall to normal seasonal weakness. Still we may have to use some defensive strategies in the short term to overcome some short term negative bias. Despite reports of rising OPEC put non-Opec compliance to cuts is the highest it's ever been. OPEC compliance over the length of the agreement is also the best it's ever been.

Reuters reports that "The leaders of Saudi Arabia and Russia, the world's biggest oil exporters, are expected to discuss cooperation on oil production and differences over Syria and Iran on Thursday during the first visit to Moscow by a reigning Saudi Monarch. A slew of investment deals, including on a liquefied natural gas project and petrochemical plants, could also be signed during King Salman's trip and plans for a $1-billion fund to invest in energy projects are likely to be finalized. The visit, including talks in the Kremlin with President Vladimir Putin, reflects a rapid deepening of ties between Russia and Saudi Arabia, driven by a mutual need to stem a drop in global oil prices."

Andrew Weissman, of EBW AnalyticsGroup, reports that the November 2017 natural gas contract reached a 16-month low as spot market demand plunged 5.3 Bcf/d week-over-week-pulling cash market prices to as low as $2.72/MMBtu on Tuesday. It remains uncertain when sufficient support will materialize to prevent additional declines, but a further slide cannot be ruled out. The next two EIA Weekly Storage Reports, however, are projected to wipe out the existing storage surplus vs. the five-year average, providing support for NYMEX natural gas futures. At Tuesday's gas closing prices, the storage deficit vs. the five-year average may approach 200 Bcf by the end of the year in WDT's most-likely weather scenario-despite rampant Lower 48 production growth.

Prosper smart trader! Stay tuned to the Fox Business Network the only place where you get the Power to Prosper! Who is going to go to the Big D? I am back at the MoneyShow Dallas, October 4-6, 2017, at the Hyatt Regency Dallas. I will be there With Steve Forbes and many other fantastic speakers. I'd love for you to join us! Reserve your free spot! Call me at 888-264-5665 or email me pflynnn@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.