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
Expect more oil price volatility as the global oil market can flip from a global supply surplus to a global supply deficit at the drop of a hat. The market is trying to assess whether more sources of oil will get us to the point where daily global oil production is once again ahead of our daily consumption. So far it has not.
Oil prices had stayed up a little longer, that its seasonal peak point on supply deficits caused by soaring US oil demand along with falling production from many OPEC Countries. Venezuela of course is in shambles. Libya’s political issues caused a major loss of supply and trying to guess whether Saudi Arabia and Russia can offset the loss of Iranian supply. The report that Saudi Arabia had raised output by 500,000 barrels a day was encouraging but overall OPEC production increased less than that. Oil is hoping that we may see some 700,000 barrels from Libya down the road, but you had better not count all those barrels until they are pumped.
Syncrude is going to come back on-line and reports that President Trump is going to pressure Russia to raise output is also causing prices to drop. But once we see those increases global spare oil production capacity ravaged by trillions of dollars of Cap-X spending cuts leaves us vulnerable to future price spikes .
So, get ready for some more rocking and rolling on prices. Even though more oil will help ease prices short-term, the balance between daily production and global demand is too tight to be ignored and eventually will demand higher oil prices. While the next few weeks will be crazy, our beginning of the year target of above $80 a barrel remains firmly in place.
Fiscally responsible, Iran is calling out President Trump claiming that a rise in oil prices caused by the United States’ sanctions policies will hurt economic growth in China, Europe and other consumers. Iran, the former oil price hawk, all of a sudden is worried about rising oil prices. In the meantime, U.S. crude oil exports to India hit a record in June and so far this year are almost double last year’s total as the Asian nation’s refiners move to replace supplies from Iran and Venezuela in a win for the Trump administration, according to Reuters.
Wild oil volatility as the market is trying to balance the fact of an increase in OPEC production, along with oil returning from Canada and Libya, against the fact that spare oil production capacity is down to fumes. Iran says U.S.-caused oil spike will slow growth, add to that, the tariff impact is taking off some bullish heat as there are hopes that more oil can tip the global oil balance back into a slight surplus versus the supply deficit the world is in today.
Go Frackers! Dry natural gas production in the Lower 48 hits record 81 Bcf/d!!
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