About The Author

Phil Flynn

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 prices are trying to stabilize after plunging to a 9-month low as commodities get crushed as the dollar soars and the British pound hits record lows against it. Yet oil prices are one thing and supplies are another as the challenges to meet demand this winter do not look that much better than they did before the price cratered. Slowing oil demand due to a recession may be giving some a false sense of security, but a strong dollar is not going to keep your house warm unless you plan on burning them.

In Europe the Nord stream pipeline drama continues as Russia is making it clear that they are suing and will use energy as a political weapon in their aspiration in the war in Ukraine and beyond. Bloomberg News reports that, “Germany suspects the damage to the Nord Stream pipeline system used to transport Russian gas to Europe was the result of sabotage. The evidence points to a violent act, rather than a technical issue, according to a German security official, who asked not to be identified because the matter is being probed.

In response to the pipeline leaks in the Baltic Sea, Denmark is tightening security around energy assets. It’s the clearest signal yet that Europe will have to survive this winter without any significant Russian gas flows, as European Union leaders repeatedly accuse Moscow of weaponizing energy supplies.” Denmark steps up security after unprecedented damage to links and benchmark European gas prices rise as much as 12% on Tuesday.

This new threat comes as the EU price caps seems to be falling apart perhaps because they realize that a price cap isn’t going to work anyway. The US also cancelled the idea of putting in secondary sanctions on Russia by the Treasury Department as proposed by some in the Congress and the Senate. The December 5th price cap may only serve to make supplies tighter and inspire Vladimir Putin to restrict supplies.

U.S. oil inventories may get a surprise draw this week as the smaller than expected 4.6 million barrel release from the Strategic Petroleum Reserve could tip us towards a drop. The last couple weeks the focus has been on weak demand numbers in the weekly numbers but the monthly numbers should be a lot better. The question people have to ask is once we stop releasing oil from the reserve where are we going to get oil from. That’s a big question. Our SPR release has been mainly exported overseas and now with Russia potentially cutting off supply it means that we’re going to see significant upside price risk as we head into winter.

Joe Biden, whose anti fossil fuel policies have had a major detrimental impact on Americans and American workers, now is threatening US oil companies. Fox News reported that, “We haven’t seen the lower prices reflected at the pump though. Meanwhile, oil and gas companies are still making record profits, billions of dollars in profits,” Biden said at a meeting with the White House Competition Council. “My message is simple. To the companies running gas stations and setting those prices at the pump: Bring down prices you’re charging at the pump to reflect the price you’re paying for the product. Do it now.”

Of course as Biden continues to try to strangle U.S. oil companies he’s doing everything he can to support the green energy companies in China. Fox News reports that, “The Natural Resources Defense Council (NRDC), a major U.S. green group that has influenced Biden administration policymaking, has deep ties to the Chinese government. The NRDC, a non-profit organization based in New York City with total assets exceeding $450 million, has worked on climate issues extensively in China since the mid-1990s and several of its top officials have worked for the Chinese Communist Party (CCP) or government-sponsored institutions.  The NRDC maintains a close working relationship with President Biden’s administration. The NRDC’s former president, Gina McCarthy, served as Biden’s climate czar up from January 2021 until earlier this month. Current president, Manish Bapna, has attended at least two White House meetings, visitor logs reviewed by Fox News Digital show.

Natural gas is showing strength. S&P Global reported that, “The winter weather forecast for Japan, released Sept. 20 by the Japan Meteorological Agency, showed that most regions are forecast to experience either a 30-year-average, or below average, temperatures over December-February, in a sign that the country’s winter gas, power and oil demand are likely to be supported during peak demand months. S&P Global reported, “The latest weather outlook is bullish for Japan’s additional LNG demand for winter as local utilities have secured sufficient fuels for the average winter weather, while the country’s oil industry is heading into winter with relatively low kerosene and fuel oil inventory levels. The northern Japan region is forecast to have a 40% chance of experiencing below average temperatures, with 30% chance each of experiencing average or above average temperatures during the winter demand months, the JMA said. The eastern and western Japan regions are forecast to experience below 30-year average or average temperatures with a 40% probability each, and a 20% chance each of above temperatures during the three months period, the agency said. The southwestern Okinawa and Amami regions are forecast for a 40% chance of the below average temperatures with a 30% chance each of average or above average temperatures for December-February, the JMA said.

The severity of the country’s winter weather has direct impact on city gas and kerosene demand for heating as well as on power generation fuels — coal, LNG, and oil. The JMA weather forecast is closely watched by the energy industry as an indicator of Japan’s potential demand for winter fuels.

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Phil Flynn

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