The Energy ReportPhil Flynn
The Phil Flynn Energy Report Friday September 19, 2014
Buying OPEC Some Time
France launching airstrikes against ISIS and production issues in Libya and Nigeria may buy the cartel some time before having to mandate production cuts. OPEC is feeling the pain of lower prices and Saudi Arabia has already reduced production yet is seems that with demand faltering and the dollar rising prices look to continue lower. While some in the cartel like the OPEC Secretary General have talked about production cuts, the fear is that if the cartel does cut it may do little to raise prices and may only succeed in having some countries losing market share. Part of the reason is the fact that the U.S. is producing the most oil since 1986. Yet global turmoil may support things just enough to buy the cartel time before they have to adjust output.
Brent Crude bounced after reports of the French airstrike came out. The BBC reported that "French jets have carried out their first strikes against Islamic State (IS) militants in Iraq, the office of President Francois Hollande says. A statement said planes had attacked an IS logistics depot in north-east Iraq. France was already carrying out reconnaissance flights over Iraq and providing weapons to Kurdish fighters. President Hollande said on Thursday he had agreed to an Iraqi request for air support, but it would only target IS in Iraq and not in neighboring Syria. He also insisted that he would not send ground troops. On Friday, Mr. Hollande's office said Rafale planes had carried out the attack and "the objective was hit and completely destroyed". It did not give details on the type of material at the depot, nor its exact location. "Other operations will follow in the coming days," the statement added.
Less uncertainty should help The Scottish independence referendum results, are a slight price negative to price. The El Sharara field Libya's biggest oil field production that was shut as a precaution after a rocket attack will be watched to see if there is any word on a restart. Nigeria's oil workers are still on strike so the oil will also be looking at any signs of progress there as well.
Petroleum products are weak but it looks like that RBOB gasoline will perform better than heating oil/ultra-low sulfur diesel. Over all with gas prices hitting the lowest retail level in four years more and more people are grasping my prediction of a new era of low gas prices!
Bloomberg News is reporting that cocoa futures rose for a sixth day, the longest streak in a month in London, on speculation the spread of Ebola is putting crops at risk in West Africa. United Nations Secretary-General Ban Ki-Moon announced the creation of an emergency UN mission after Ebola spread to five West African nations. Two of them, Liberia and Guinea, are right next to Ivory Coast, the largest cocoa grower. Cocoa futures in London jumped 3.8 percent this week.
Listen to my Interview with Gary Meir on WGN/FM http://wgn.fm/2014/09/18/why-are-gas-prices-going-down/.
Make sure you check out Price Links! https://www.youtube.com/playlist?list=PLDq9JQANqxRxCBaHqunzBT4Frxitjw-XV.
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