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 dems of course will promise to replace the energy jobs with the so-called green energy jobs but have no plan at this point to do that. What we will see is that U.S. oil production will be stymied by more regulations and banks who want to be politically correct and will refuse to lend money to U.S. energy producers. This is not a surprise and democrat voters know that a vote for democratic control was a vote for higher oil and gas prices. And OPEC plus is doing their part to help.
Oil prices are back above $50 a barrel on an explosive upward move as Saudi Arabia moved to end the debate at the OPEC Plus meeting and take it upon themselves to cut production by over a million barrels a day while allowing Russia and Kazakstan to increase production slightly. This is in return for Russia forgoing the push for a larger production cut setting the stage for a very bullish oil scenario. While the surprisingly bearish American Petroleum Institute report, along with Georgia and the U.S. still hanging in the balance, is keeping prices on oil flip-flopping near the $50 a barrel area.
The API reported that crude supply fell by 1.663 million barrels but a big 5.473 million barrels in gasoline supply and a whopping 7.136 million barrel increase in the distillate is keeping wraps on the bullish enthusiasm.
Yet the oil story today is much bigger than one week’s report. It is about the future of our country, the energy industry, and our national security. Get ready for the new era of higher prices that are coming to a gas pump near you.
Chinese refiners are breaking demand records! S&P Global reports that, “Chinese independent refiners’ 2020 crude imports jump 42% to record high. Crude and bitumen blend import for China’s independent refineries jumped 42.2% on the year to a record high of 188.11 million mt in 2020, latest data collected by S&P Global Platts showed Jan. 6. The private refining sector’s annual crude import growth in 2020 outpaced the 25% increase in 2019, and 13.9% rise in 2018. The sharp increase was mainly attributed to low oil prices during the first half of 2020. Independent refineries had actively purchased feedstock cargoes when prices were hovering between $20/b and $30/b. The refineries’ aggressive bargain-buying approach during the period was one of the primary reasons behind the longstanding port congestion in eastern Shandong over May-September 2020, according to market sources. The total imports in 2020 was also 4.9% higher than the sector’s import quota ceiling of 179.4 million mt.
The fact that the refineries ended up buying more than the official government import quotas allocated to them for 2020 explains the reason behind their severe shortage of quotas towards the year-end.
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