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The Energy Report

The Energy Report

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


The Energy Report 02/09/18

Stock Drops and Oil Gets Rocked

Many are saying that the reason that U.S. oil is falling is the projections for rising U.S. production. Predictions, by the IEA and the EIA about a surge in oil, suggests that U.S. oil production, that supposedly stands above 10 million barrels a day, will soon exceed 11 million barrels a day. Yet, the truth is that if demand growth stays at the rate we are currently at, then we will need that additional oil to meet global demand. Yet, worries about global growth in recent days surrounding the stock market correction is causing some to think an oil demand slowdown is in store. They fear that rising interest rates and inflation will slow down growth in a globe that is now consuming more oil than at anytime in history.

Yet the truth is that rising rates are a sign of a healthy economy and while the stocks may signal trouble down the road the reality is that this is just a correction in one of the strongest runs in stock market history. Tax reform will inspire businesses to expand and grow. This will lead to demand exceeding expectations even in this rising rate environment.

Another concern on the supply side is not oil production but a major potential release from the Strategic Petroleum Reserve, in fact the biggest Non-Emergency release in history. With record U.S. oil production, the U.S. government feels that they do not need to save oil for a rainy day. Reports say that the plan will allow the sale of 100 million barrels of oil through 2027 to raise money to balance the budget. This would reduce oil in the reserve to 303 million barrels, a reduction of 45 percent. That is down from 695 million barrels before the Obama Administration and Congress agreed to sell 590 million barrels for the reserve, oil that kept U.S. oil supplies higher in the beginning of 2017 and prices lower than they should have been. So this is another factor! Still I think the market will be able to gobble up that extra supply and it should cause some concern for producers that may want to make sure they are profitable before they bring on more supply.

It seems anytime I leave the office for a few days the world always seems to fall apart. Yet, I can tell after listening to great speakers like Larry Kudlow, Sam Stovall and Edward Yardeni, who have seen these corrections before, it was clear that message was that this correction soon will pass and we will look back in a few months or years and realize that this was the great buying opportunity for many.

Tune into the Fox Business Network (FBN) it is the best in business! Call to get my wildly popular daily trade levels. The MoneyShow Orlando is Wednesday. If you haven't made your plans you had better hurry. I have heard from many of you and while my master class will not be broadcast, my remarks at the Opening Ceremonies will be. I am looking forward to getting a chance to meet so many of you! For more INFO go to Flynn.OrlandoMoneyShow.com Or call me at 888-264-5665 or email me at 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 1-888-264-5665 or pflynn@pricegroup.com.