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Welcome to 321energy.



The Energy Report

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


Biden’s Oil World. The Energy Report 04/17/2024

Wars, rumors of war, record deficits, raging inflation and threating more taxes and regulations on US energy as Iran’s Oil production is allowed to hit a 5 and a half year high and they secretly meet with the Maduro regime while having to decide this week as to whther or not to impose sanctions. And now with the supplies of aluminum platinum tightening ask the CME Group and the London metals exchange decides to not deal with the Russian supply the Biden administration is now suggesting tariffs on Chinese metals.

Oil prices are pulling back as Israel has yet to respond to Iran’s unprecedented attack and stubborn inflation has Jerome Powell said that “If price pressures persist, the Fed can keep rates steady for “as long as needed” and the Biden administration and White House senior adviser John Podesta hinted at another release from the Strategic Petroleum Reserve to try to ease rising gas prices and try to improve his boss’s political fortunes. The Biden Administration has made no bones about it that the mission of the SPR not just to be used in an emergency but as a political piggy bank where he can use taxpayer paid for oil to improve his political fortunes. Kind of like defying the Constitution and the Supreme court to use your money to pay off some college loans. Yes, President Biden has done this before releasing oil from the SPR before he welcomed a ‘minor incursion” by Russia into Ukraine and before his failed policy of deterrence with sanctions on Russia.

This comes as the American Petroleum Institute released a report that shows that gasoline inventories are tightening as well as diesel but did see an increase in crude oil supply. API reported that gasoline supplies fell by 2.51 million barrels in the current week. AAA pots gas prices at $3.660 A gallon up from $3.644 yesterday and up from $3.461 a month ago, Year over year they are about a penny lower, and that was when the market was getting regular released from the SPR that could be exported to China and India and Europe. Yes, oil exports in the US did hit record highs as we drained our SPR.

So, it’s probably good news that the API reported that we saw crude inventories rise by 4.09 million barrels, but it is more than likely that that’s going to change as refiners have to ramp up production. Gasoline supplies are below normal and so we’re distilling inventories and they fell to 427,000 barrels. The smaller than expected 169,000 drawdown and Cushing OK may be a sign that the crude oil supply increases could be coming to an end and that may pressure the Biden team to use SPR oil once again in an attempt to keep down gasoline prices.

First behind the backdrop is the market waiting to see how Israel is going to respond to that unprecedented attack by Iran on its own soil it seems like Iran is taking steps because I think they are starting to realize that after their failed assault maybe they bit off a little bit more than they can chew. Today Iran is talking about letting in nuclear weapons inspectors from the International Atomic Energy agency which would be the first time this year.

Bloomberg reported that Rafael Mariano Grossi, director-general of the UN’s nuclear watchdog, will visit Iran “soon,” the head of the Atomic Energy Organization of Iran said on Wednesday, according to the state-run Hamshahri newspaper. Mohammad Eslami said the date of Grossi’s visit had not yet been decided, Hamshahri reported. He also said that International Atomic Energy Agency cameras were installed and “constantly monitoring” Iran’s nuclear facilities. Remember the AP reported that the head of the International Atomic Energy Agency said Wednesday that Iran’s decision in September to bar several experienced U.N. inspectors from monitoring the country’s nuclear program constituted “a very serious blow” to the agency’s ability to do its job “to the best possible level” last November.

And while traders may be selling futures at the same time, we’re seeing a record amount of call buying for just in case scenarios some of the calls amazingly enough our way out of the money $250 Brent crude calls. If you buy enough of those options and you’ll get a spike in the price of crude oil you don’t have to get anywhere near $200 a barrel to do very well on a very cheap investment still it’s a long shot but it’s interesting that some serious money is making that bet. of course geopolitical events sometimes really put a different perspective on good old fashioned supply and demand fundamentals. Once we see a significant change in the economic outlook the global oil market is going to continue to be undersupplied for the rest of the year. Misuse of strategic petroleum reserves around the world have discourage investment along with ESG responsible for taking away much needed funds from fossil fuel investment and putting them into other types of things that will not be able to help the global economy in the short run so it’s no wonder that these losing ESG investments s that were based more in false virtue instead of common sense Have some investors fleeing the sector and droves.

The American Petroleum Institute also is warning that Bidens lessee ban on Federal land is going to be bad for US economy and taxpayers. The API says “As energy demand continues to grow, oil and natural gas development on federal lands will be foundational for maintaining energy security, powering our economy and supporting state and local conservation efforts. Overly burdensome land management regulations will put this critical energy supply at risk. We are reviewing the rule to ensure the Biden administration is upholding its responsibilities to the American taxpayers and promoting fair and consistent access to federal resources.”

They point out some of the benefits that we will forgo such as the fact that “In FY 2022, onshore federal oil and natural gas development supported nearly 250,000 jobs, generated $19.4 billion in labor income, and contributed $36.7 billion to GDP.

In FY 2022, oil production on federal lands averaged 1.2 million barrels per day and marketed natural gas production averaged over 9 billion cubic feet per day. Between FY 2013 and FY 2022, oil and natural gas production on federal lands generated a total of $35 billion in disbursement revenue from bonuses, rents, and royalties, averaging approximately $3.6 billion per year. 53% of this disbursement revenue, totaling more than $19 billion, went to the federal government or programs, while state and local governments received the remaining 47%, totaling $16 billion.

In FY 2022, federal oil and gas development in the five highest producing states supported more than 170,000 jobs and more than 75,500 jobs in other U.S. states mainly through the supply chain and other purchasing. New Mexico: 105,300 jobs/ Wyoming: 24,400 jobs/Colorado: 21,000 jobs/Utah: 11,200 jobs/North Dakota: 10,000 jobs.

I guess we all wonder why that the Biden Administration is not as tough in enforcing Iranian sanctions and sanctions on Venezuela.

Who winters over winter is not over until we say it is. OK maybe that’s a little bit strong but we did get a little bit of a rebound in the beleaguered natural gas market after a report that we could get a may freeze. This is why here in Wisconsin you better not plant those flowers until Mother’s Day. Yet the overall outlook for natural gas continues to be bleak. EBW Analytics says that The mini rally in the May contract crashed lower last week as daily heating demand collapsed and acute weakness in LNG exports emerged alongside a bearish EIA storage surprise. Henry Hub prices in the $1.30s/MMBtu remain an alarming bearish warning sign of downside risks ahead of May expiration.

Acute weakness in LNG feedgas demand collapsing sub-10 Bcf/d represents near-term risks, although a probable rebound higher could help stabilize prices.

Natural gas production scrapes continue to descend more rapidly than projected, offering bullish upside into summer. Still, weak EIA storage figures pose a risk that imprecise pipeline scrapes may overstate supply losses. Near-term difficulties in sustainably lowering the storage surplus indicate likely continued weakness for near-term NYMEX futures. As weather headwinds ebb and storage surpluses decline into summer, however, natural gas may rise.



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.



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April 18th, 2024

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