The Energy ReportPhil Flynn
The Energy Report 06/17/19
When the Lights Go Down
When the lights go down in the city, you are using less energy and it could be a cyber-attack. Oil futures are trying to weigh concerns about demand but also rising geopolitical risk. A power blackout in Argentina and across South America could be a cyber-attack. Could the Blackout be in response to a New York Times story? The New York Times reported that the "United States is stepping up digital incursions into Russia's electric power grid in a warning to President Vladimir V. Putin and a demonstration of how the Trump administration is using new authorities to deploy cyber-tools more aggressively. This comes as Iran is more aggressively enriching uranium saying they could purify uranium to 20%, prompting a warning from European Foreign ministers that their support for Iran depends on compliance. Iran says they could exceed those stockpiles in 10 days.
The U.S. is reaching out to Iran's allies to try to avoid a war. Secretary of State Mike Pompeo on Fox News Sunday "reiterated Trump's claim that Iran was behind last week's attacks on oil tankers near the strategic Strait of Hormuz and that the United States is ready to take action if necessary". Pompeo said that Washington does not want to go into an armed conflict with Tehran but hoped that the threats of force will be enough to draw Iranian leaders to the negotiating table.
"These were attacks by The Islamic Republic of Iran on commercial shipping, on the freedom of navigation, with a clear intent to deny transit through the strait," Pompeo said in an interview on "Fox News Sunday." "There's no doubt. The intelligence community has lots of data, lots of evidence -- the world will come to see much of it." Pompeo added: "We don't want war. We've done what we can to deter this. The Iranians should understand very clearly that we will continue to take actions that deter Iran from engaging in this kind of behavior."
Donald Trump calls it treason that the New York Times would report that the Trump Administration is using cyber-attacks on Russia's Electric Power grid.
For trade we believe that oil has overpriced in the drop in global demand. More global stimulus should give demand a big pop. While some markets suggest a slowdown, U.S. Lumber prices are on a tear for their best run in almost 24 years. It shows that rate rut expectations and mill closures should tighten as we get an increase in building. This comes as U.S. Oil production growth should slow as producers cut spending and cut rigs.
Baker Hughes Friday reported that the number of active U.S. rigs drilling for oil fell by 1 to 788 this week. That followed a decline of 11 rigs last week. The total active U.S. rig count, meanwhile, decreased by 6 to 969, according to Baker Hughes. The count is down 90 units from the 1,059 rigs working this time a year ago. The number of rigs drilling on land dropped 7 units week-over-week to a total of 941 units. The number of rigs drilling in inland waters was unchanged at 4 units for the week. The number of rigs drilling offshore increased by a single unit to 24.
Natural gas in a big down trend may get a bit of an oversold bounce. Summer has taken a holiday record production is easing any concern about supply.
There is a substantial risk of loss in trading futures and options.
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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.
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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.
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June 17th, 2019
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