OIL NEW YEAR. The Energy Report 12/29/2023

On the one hand, the Energy Information Administration (EIA) is reporting record-breaking US petroleum exports of 11,126  and a year-end 6.9 million barrel plunge in oil supply that normally would suggest robust global oil demand. On the other hand record US production that held at 13.3 million barrels a day and a perceived reduction in geopolitical risk as more ships decided to traverse the Red Sea routes not to mention speculation about weakening Chinese demand, caused oil and product prices to plunge. Now there is talk about OPEC losing market share to the US and a growing debate as to whether we will see a supply surplus or deficit in the New Year. That has given the bears an end of the year edge.

Yet as we head into the New Year, the upside risks remain both from a geo-political risk side as well as old-fashioned supply not keeping up with demand. Demand that is based on the forward-looking stock market will most likely be better than the market fears. The EIA shows that total motor gasoline inventories decreased by 0.6 million barrels from last week and are about 2% below the five-year average for this time of year. Distillate fuel inventories increased by 0.8 million barrels last week and are about 9% below the five-year average for this time of year. Total commercial petroleum inventories decreased by 17.3 million barrels last week.

So if you look at supplies and if you look at demand we’re not really over supply expectations. So will demand increase, yes. Probably the key is going to be the global insecurity for oil if we continue to see supplies get disrupted we’re going to have the risk of potential shortages going into the new year we still recommend it be hedged.

Natural gas is the best of times and worst of times. We saw a very bullish report yesterday that helped rally prices. Yet we’re still going to need record-breaking cold to keep the rally going. Working gas in storage was 3,490 Bcf as of Friday, December 22, 2023, according to EIA estimates. This represents a net decrease of 87 Bcf from the previous week. Stocks were 348 Bcf higher than last year at this time and 316 Bcf above the five-year average of 3,174 Bcf. At 3,490 Bcf, total working gas is within the five-year historical range.

Thanks to all of my loyal readers! I appreciate all of you! Happy New Year and have your best year ever.

Make sure you stay tuned to the Fox Business Network! Invested in you!

Time to subscribe to the Daily Energy Report and the Daily Trade Levels as well as special updates! Just call 888-264-5665 or email me to open your account at pflynn@pricegroup.com.