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
Oil is lower as the market has a lot to watch as the seasonal summer peak demand time is here. Seasonal weakness in August seems to be overshadowing a jammed packed oil news day. OPEC meets about compliance as the US oil rig count slows. Storms in the Atlantic could impact shipping and Mexican oil production. Gas Buddy reports retail gas prices hit an 8 -week high and the Venezuelan military puts down a coup. Hedge funds went long on oil, gas and heating oil for the first time in months according to CFTC data. There are a lot of things that could juice oil but for the moment, the market is taking it all in stride.
OPEC Is meeting in Abu Dhabi with Russia in attendance to try to get to the bottom of why some members are cheating on output. Even though OPEC compliance is better than it ever has been, they want to clamp down. The market also wants to see Nigeria and Libya finally agree to a quota that is the main reason why OPEC production has crept back to the highest levels since the production cuts have gone into effect. The Saudis want to make it clear that they intend to do whatever it takes to reduce the global oil supply overhang.
Venezuela said it put down an attempt by military group to take power away from Nicolas Maduro that the US believes stole power in a “sham election”. The attack at a military base that killed two people raises concerns that Venezuela may end up in a civil war. Poilu is unmoved because oil exports were not disrupted and globally Venezuela is only about 2.8% of supply. Still a cut off of Venezuelan oil would lead to higher gas prices in the US.
Gas prices are already rising at the pump according to Gas Buddy. Gasoline prices across the United States continued to move higher over the last week, rising in 46 states to a national average of $2.35 per gallon today, the highest level since June as prices continue to play catch up to crude oil prices that edge closer to $50 per barrel.
Tropical Strom Franklin has formed in the Atlantic and threatens Mexico’s production areas in the Yucatan Peninsula. A hurricane watch has been issued by the government of Mexico for a portion of the Yucatan Peninsula from Cheetal to Punta Allen. This does not include Cancun or Cozumel. This means hurricane conditions are possible in these areas. Tropical storm warnings extend over most of the rest of the Yucatan Peninsula, including Cancun and Cozumel. A tropical storm warning means that winds more than 40 mph are expected within 36 hours and that preparations for the storm should be rushed to completion. A tropical storm watch extends southward to Belize City, meaning tropical storm conditions are possible according to the Weather Channel.
A second storm is also brewing. The National Hurricane Center issued advisories on, “elongated area of low pressure located about midway between the Cabo Verde Islands and the Lesser Antilles is producing limited shower and thunderstorm activity. Environmental conditions are forecast to be unfavorable for development during the next several days. Upper-level winds could become more conducive for some gradual increase in organization by late week while the system moves generally west-northwestward across the tropical Atlantic at about 15 mph. Formation chance through 48 hours…low…near 0 percent. Formation chance through 5 days…low…20 percent.” Stay Tuned.
There are more signs of a shale slowdown. Baker Hughes reported that the U.S. rig count fell by 4 to 954. Oil-directed rigs fell 1 to 765. Gas rigs fell 3 to 189. In the Permian Basin, there are growing concerns that fracking is drawing down too much water from the area’s limited supply. The Houston Chronicle reports that, “as the oil patch demands more water, West Texas fights over a scarce resource”. They report that since 2011, water demand has gone up by 55 million gallons. By 2020 that could increase to as much as 92 million gallons. That is going to be tough in an area that is mainly a desert and it’s leading to tensions.
Get your prosper power all week! Tune to the Fox Business Network.
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 to get my webinar and special reports at 888-264-5665 or email me at firstname.lastname@example.org. Use weakness to build long option strategies!
SubscribeReceive daily summaries of all Market Insights blog posts.
Enter email below.
Most Recent Posts
- Unemployment Data This Morning. The Corn & Ethanol Report 12/08/17
- What slowdown? The Energy Report 12/08/17
- Analysts expect these energy stocks to rise the most in 2018 as oil rebounds
- Oil prices recover on GDP gains in Europe, U.S. labor
- Rare December Injection No Surprise For NatGas Futures as Bears Already in Control
- 76 Years Ago Today A Day That Will Live in Infamy. The Corn & Ethanol Report 12/07/17
- Silver turns slightly lower for the year. The Nemenoff Report 12/07/17
- Home for The Holiday. The Energy Report 12/07/17