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
It is time to seize the day or at least an Iranian oil tanker. Oil prices are lower as global growth concerns seem to be outweighing rising geopolitical risks on a light volume jobs Friday.
Fox News reported that “ Iranian leaders have summoned the British ambassador as Tehran fumes over Britain’s Thursday seizure of an Iranian tanker believed to be violating the European Union sanctions by providing crude oil to the Syrian regime.
“The Iranian vessel was believed to be headed to the Baniyas Refinery in Syria, a government-owned facility under the control of Syrian President Bashar Assad and subject to the EU’s Syrian Sanctions Regime. The Iranian state-run news agency called the situation “an illegal seizure of an Iranian oil tanker” while an Iranian foreign ministry spokesman called the actions a “form of piracy” – prompting the UK’s foreign office to dismiss the claims as “nonsense.”
Oil though seems focused on global growth concerns over increasing pressure on the increasingly isolated Iranian regime. Overnight data was not too thrilling.
Reuters reports that ‘German industrial orders fell far more than expected in May, and the Economy Ministry warned on Friday that this sector of Europe’s largest economy was likely to remain weak in the coming months. In the United States, new orders for factory goods fell for a second straight month in May, government data showed on Wednesday, stoking economic concerns.”
So if oil is concerned about growth todays US jobs report should be the main price driver. A strong report should bode well for oil. Normally oil bulls would worry about it being too strong, increasing odds that the Fed will have to be more cautious about raising interest rates but with weak global data, The Fed swill have cover. There is enough uncertainty about the global economy so the Fed won’t have to change from its dovish stance with just one blockbuster report. A dismal report may hurt oil initially but it would then rebound as it might convince the trade that we have at least 3 more interest rate cuts in the US ahead of us.
The powerful 6.4 magnitude earthquake in Southern California may impact oil and gasoline demand negatively. Yet overall holiday demand looks like it should meet or beat expectations in the rest of the country.
Natural gas is caught between strong power generation demand because of hot temperatures versus strong production. Production seems to be wining. The EIA reported Working gas in storage was 2,390 Bcf as of Friday, June 28, 2019, according to EIA estimates. This represents a net increase of 89 Bcf from the previous week. Stocks were 249 Bcf higher than last year at this time and 152 Bcf below the five-year average of 2,542 Bcf. At 2,390 Bcf, total working gas is within the five-year historical range.
I wanted to correct an error. In rushing my report on Wednesday I wrote that the Philadelphia Energy Solutions produced oil, when I meant to say gasoline. One loyal reader of The Energy Report pointed this out with the tag line “ignorance”. I want to assure him and all of you that I know that oil does not come out of refineries but go through refineries. We all know that oil comes from Leprechauns.
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