Supreme Insult. The Energy Report 11/01/2023

Iran’s funding for Hamas and Hezbollah terror operations continues to be driven by Iranian oil revenue that by recent standards for Iran is just rocking.  Iran is boasting today that their oil production has risen to 3.4 million barrels of oil a day as Iran’s so-called Supreme Leader Ali Khamenei is calling on all muslim nations to stop all economic cooperation with Israel and cut their oil and food supply. And while its fellow OPEC members have already rebuffed calls by Iran to embargo oil, the reality is that Iran keeps on raking in the cash regardless.

Iran’s increasing oil production was one of the reasons that OPEC’s production reportedly increased. OPEC oil production rose by 180,000 barrels in September to 27.90 million barrels. The increases were led by Nigeria, Angola, Iran and Iraq. So as you can see, Iran produced so well that production isn’t adversely being affected by its funding of Hamas.

This comes a day after oil dropped after an AFP report that Hamas said it would release hostages in the coming days. Hamas is thought to be holding 240 souls. While the move was just a ploy to buy some time from the continuing onslaught by Israeli troops, the market is in a weak technical state and bought the story hook line and sinker. That caused the oil recovery rally to fail. Oh yeah, by the way, Hamas also “vowed to turn Gaza into a graveyard for Israel’s military.”

Oil demand fears yesterday are being replaced with new signs of demand optimism. India reported that the discount to buy Russian crude has narrowed suggesting that Russia can move its oil without impunity. It appears that Europe is continuing to fail at cutting Russia’s oil revenue. Russia has known this. Russia has long planned to use its energy dominance as a weapon, and it appears there is nothing Europe can do to stop it. Mainly because they need the oil.

The Energy Information Administration (EIA) also sharply increased their demand for just about everything petroleum instead of hitting peak oil demand like some have predicted. We are seeing the opposite, not only here but around the world. The EIA said that August oil demand hit 20.881 million barrels a day which is the highest for August since 2019. Oil demand increased consumption to 9.3 million barrels a day and they increased their demand numbers for diesel to 4.13 million barrels a day.

Their weekly demand estimates continue to have been underestimated in the previous months and now the market is getting the handle, and that is why we have seen resilience in the crude oil market. They also said that US petroleum inventories that include crude, refined products, and the  SPR fell by 10.365mb m/m to 1,608.521mb in August.

Senator Chuck Schumer, who blocked President Trump from refilling the SPR at $24.50 a barrel, now wants to block the recent wave of oil mergers. Oil Price is reporting that, “A group of Democratic Senators led by Senate Majority Leader Chuck Schumer have urged the Federal Trade Commission to investigate if the latest mega acquisitions announced by supermajors ExxonMobil and Chevron are violating antitrust regulations.

“Should the FTC determine that these mergers would violate antitrust law, we urge you to oppose them,” Schumer wrote in a letter to FTC, as carried by Bloomberg. The letter is the highest-profile call on the U.S. regulators so far to look into whether the deals announced last month would inflict damages to American consumers. The democrats who signed the letter are concerned that the mega deals could push up gasoline prices.

Natural gas prices surged yesterday as winter weather decided to stay around a bit. What is scary is this could just be a precursor to bigger moves this winter if we get a cold winter.

MarketWatch reports that gold purchases by global central banks reached a record for the first nine months of this year, according to a report from the World Gold Council released Tuesday. “In the current, macroeconomic and uncertain geopolitical context, central banks have turned to gold for its return characteristics, liquidity, and safety,” Joe Cavatoni, market strategist for Americas at the World Gold Council, told MarketWatch.

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