The Energy Report: A Whole Bunch Of Emptiness

Empty policies, empty promises, and empty suits have raised the risk of another major oil price spike. Global oil markets are on edge as global spare oil production concerns are taking front and center as a potential major headwind to the global economy. President Emmanuel Macron’s warning to President Biden that the United Arab Emirates said that they are pumping to full capacity is raising major concerns that the global oil market it’s in danger of a major oil price shock. It also points out the fact that President Biden pushes to release global strategic petroleum reserves with a blunder that is causing the market to be in a much more dangerous position. 

Reuters reported that US crude inventory in the Strategic Petroleum Reserve (SPR) fell by 6.9 million barrels in the week to June 24, according to data from the Department of Energy. 

According to the data, stockpiles in the Strategic Petroleum Reserve (SPR) fell to 497.9 million barrels, the lowest since April 1986. About 1 million barrels of sweet crude and 6 million barrels of sour crude were released into the market.

Macron told President Biden that the UAE’s Mohammed bin Zayed Al Nahyan told him two things:

 “One, I am at maximum oil production capacity amounting to the UAE’s complete commitment. Second, he told me the Saudis could increase a little bit, about 150,000 barrels a day or a little more. They don’t have huge capacities. That can be activated in less than six months.”

Now it is being reported that the CEO of Shell (LON:RDSa), Ben van Beurden, is warning that OPEC’s spare production capacity is less than the market thinks it is.

The UAE did seem to back off those comments, but at the end of the day, we have suspected, along with many other people, that OPEC’s spare production capacity was limited. This only confirms the suspicions, but many in the market have already had President Macron’s comments to president Biden could be interpreted as a plea for President Biden to reverse his anti-fossil fuel policies and ask the US energy industry to unleash their talents and capital to help create a buffer against a potential global economic disaster. 

President Biden seemed to be confused about what the French president was telling him. One might wonder if President Biden has a grasp of energy issues. He once again snubbed the US energy industry just a week ago named instead decided to meet with green energy people and wind farm producers. I don’t think president Macron was talking about the spare production capacity of windmills.

In other words, don’t look to OPEC to try to bail you out. First of all, OPEC is in close cooperation with Russia; hence the OPEC plus moniker Saudi Arabia has never consistently produced over 12 million barrels of oil a day only for a short period. Most people doubt that they can do so for an extended period. The obvious answer would be an attempt by President Biden to work with EU S oil and gas industry to see what they can do to raise production.

President Biden refuses to meet with the oil and gas industry, and he is putting all his faith in OPEC. There is also talk, of course, that President Biden wants to renew the Iran nuclear deal, and talks are going to start over again. This is wrong on so many levels, but if he’s doing it to secure more oil supply, I think the president is going to be gravely disappointed.

Let’s play 2! The Energy Information Administration (EIA) will release two weeks of reports for the price of one as their computer problems seem to be solved! Last night the American Petroleum Institute (API) seemed to suggest that refiners were running like crazy. Even after that massive 6.9-million-barrel release from the SPR, US oil inventories, according to API still fell by 3.799 million barrels. Yet there was some good news for consumers! The API said that gasoline supplies did increase by 2.852 million barrels. The API also said that distillate inventories rose by 2.613 million barrels.

Those numbers suggest that the much-maligned US refining industry has done an amazing job with limited capacity to try to meet the incredible demand. Oh, sure, they were spurred on by near-record-high refining merchants, but that’s the way it’s supposed to work. Refining Margins reflect demand, and if demand is high, it will cause the refiners to run more. The problem, of course, is that we still have limited refining capacity, global oil supplies are too low, and we still have the risk of tropical weather in the Atlantic that could create even more havoc for the global oil market.

Fox Weather is reporting that a tropical disturbance speeding across the southern Caribbean Sea is expected to become Tropical Storm Bonnie within the next few days, according to the National Hurricane Center. The disturbance was designated Potential Tropical Cyclone 2 (PTC (NASDAQ:PTC)) on Monday. The NHC uses that distinction for a developing system to allow the agency to issue alerts. As of 5 a.m. Eastern, the storm system had winds of 40 mph. It was located about 200 miles east-southeast of Curaçao and was speeding to the west at 30 mph.

The NHC is tracking the potential for the system to intensify once it reaches the southwest Caribbean Sea late Thursday and Friday. However, that will depend on how much the system interacts with land over the next few days.

A Tropical Storm Warning is in effect for Islas de Margarita, Coche, and Cubagua, the ABC islands (Bonaire, Curaçao, and Aruba), the coast of Venezuela from the Peninsula de Paraguana westward to the Columbia/Venezuela border, including the Gulf of Venezuela, and the coast of Columbia from the Columbia/Venezuela border westward to Santa Mata. A Tropical Storm Watch is in effect for the coast of Venezuela from Pedernales to Cumana.

President Biden should do what he can to help the US oil and gas industry raise production and increase refining capacity. You have to give them some long-term assurances that investment in the space will not be penalized buying him in the future president Biden’s policies of killing pipelines and making it harder for oil and gas projects to come true fruition is a major problem not only for the United States but for the globe, especially in this time of war. one of the best long term strategic things that we could do she counteract Russian aggression is to invest in US energy resources.

Natural gas is at attempting to make a major bottom though it faces some overhead resistance. We still think that a tropical storm in the Gulf of Mexico could be double-edged storage for natural gas. Obviously, one of the reasons we’ve seen weakness and natural gas is because of the Freeport LNG export facility being shut down, limiting exports. A storm in the gulf could shut down production in the Gulf of Mexico, which would be bullish, but at the same time, if it shuts in exports, it could be bearish, so the market is trying to determine how these tropical storms are going to impact bulk production and exports.