Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
There is something good going on in the global economy and that is translating to higher demand and higher prices for oil. While short-sighted and economically challenged people always think the lower price for energy the better, fail to grasp the realities of global trade and the real economics of production. With US gas demand at a record and global demand on the rise, it reflects good economic times to come.
Oil demand was stronger than the oil bears could believe and gasoline demand hit an all-time high according to the Energy Information Administrations (EIA). Global gold demand declined by 10 per cent due to significant slowdown in inflows into Exchange Traded Funds with many gold traders looking for safe-havens into the exotic world of crypto currencies.
Demand for oil based refinery runs surged to an impressive 17.4 million barrels of oil a day at 95.4% of capacity. Strong gasoline demand also helped support the oil complex even as US oil production increased by 20,000 barrels and crude supply fell by a less than expected 1.527 million barrels. Gas demand is at a record 9.842 million barrels a day and that should help drive retail prices higher with increased geo-political risk from Venezuela. The death of gasoline demand predicted by some analysts looks to be greatly exaggerated.
Still we did see a drop-in distillate demand which is somewhat seasonal but in recent weeks that sector has defied market expectations. US exports of diesel have been surging as global trade and shipment of goods is feeding to those strong demand futures. Reuters reported that, “world trade volumes grew by 5 percent in the three months to May compared with the same period a year earlier, according to the Netherlands Bureau for Economic Policy Analysis (CPB). Trade growth came close to a standstill in the first quarter of 2016 but has been accelerating gradually since then especially from the fourth quarter onwards. Slumping commodity prices between the middle of 2014 and early 2016 hit consumer spending and business investment in most developing countries hard. The result was a sharp slowdown in trade as household incomes fell and new oil, gas and mining projects were postponed or cancelled.”
But now we are seeing that rebound coming in the form of oil demand which is good even if we must pay 10 or 15 cents more at the pump. The economy is growing and we must see prices get even higher to keep our slowing shale industry solvent. While shale debt levels have been reduced sub $50 a barrel, crude may cause it to start to fail. They need to get leaner and meaner to enjoy the coming oil price boom.
The HINDU reported that gold demand in India jumped by 37 to 167.4 tonnes during the second quarter of 2017, buoyed by seasonal demand and improved rural sentiment, the World Gold Council (WGC) said in a report. The demand in the April-June last year stood at 122.1 tonnes, WGC said in its latest Gold Demand Trends report. However, the second quarter demand is lower than the five-year average and is mainly driven by the anxiety on the Goods and Services Tax (GST) roll out, which led to advance purchase towards the end of quarter,” WGC managing director, India, Somasundaram PR told PTI here.
Questions? Ask Phil Flynn today at 312-264-4364
A Subsidiary of Price Holdings, Inc. – an Employee Owned Diversified Financial Services Firm. Member NIBA, NFA
Past results are not necessarily indicative of future results. Investing in futures can involve substantial risk of loss & is not suitable for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses.
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 futures. The Price Futures Group, its officers, directors, employees, and brokers 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. Reproduction and/or distribution of any portion of this report are strictly prohibited without the written permission of the author. Trading in futures contracts, options on futures contracts, and forward contracts is not suitable for all investors and involves substantial risks. ©2017
Call the get my Energy Webinar and my gold report! Call me at 888-264-5665 or email me at firstname.lastname@example.org
SubscribeReceive daily summaries of all Market Insights blog posts.
Enter email below.
Most Recent Posts
- Morning Grains Report 10/20/17
- Morning Softs Report 10/20/17
- Corn Growers Look Ahead to Future. The Corn & Ethanol Report 10/20/17
- China’s Minsky Moment. The Energy Report 10/20/17
- AgMaster Report 10/19/17
- Equities down on turmoil in Spain. The Nemenoff Report 10/19/17
- Morning Grains Report 10/19/17
- Moring Softs Report 10/19/17