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
The U.S. says it will hit Iran with more sanctions. Secretary of State Mike Pompeo said that the U.S. will announce “significant” sanctions on Iran. Get ready to pay more for pistachios.
This comes as Iran lashes out promising to shut down more U.S. drones, an event that almost led to a U.S. air strike. Bloomberg news reports that “State-backed Iranian hackers have stepped up cyber-attacks on the U.S., according to the Department of Homeland Security’s Cyber Agency. There has been a “recent rise in malicious cyber activity directed at United States industries and government agencies by Iranian regime actors and proxies,” Christopher Krebs, the director of the Cybersecurity and Infrastructure Security Agency, said Saturday in a statement.
Oil prices are on the rise as demand is strong and risk is high. We expect to see big draws this week. 3 million barrels down on crude, gasoline down 2 and distillates down 2 million barrels. Not only is demand near records it will get better with low rates. Farmers are working hard still planting and we should get support for geopolitical issues. While we are getting a bit overbought after last week’s run, we like the long side .
In the meantime, U.S. oil demand is on fire and the East Coast may have some gas price fallout after the Philadelphia Energy Solutions fire. Reuters reports that “The alkylation unit involved in a massive fire on Friday at Philadelphia Energy Solutions Inc’s oil refinery has been completely destroyed, which will hamper the supply of gasoline from the U.S. East Coast’s largest refinery, sources familiar with the matter said on Sunday. The destruction of the unit, coupled with damage from the fire that ripped through the 335,000 barrel-per-day (bpd) refining complex, could force the 200,000 bpd Girard Point section of the two-section complex to remain shut for an extended period. Even when the Girard Point section restarts, it will run at reduced rates due to the loss of the alkylation unit, two sources told Reuters on Sunday. Natural gas is trying to bottom but still faces weaker than normal power generation demand.
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