Peak Out. The Energy Report 01/17/2024

Fox Chicago’s Dane Placko reported that, “desperate Tesla owners in and around Chicago were seen trying to charge their vehicles with no luck amid frigid temperatures that have gripped the Midwest. “Nothing. No juice. Still on zero percent,” Tyler Beard, who had been trying to recharge his Tesla at an Oak Brook, Illinois Tesla supercharging station since Sunday afternoon, told the news outlet. “And this is like three hours being out here after being out here three hours yesterday.” “This is crazy. It’s a disaster. Seriously,” said Tesla owner Chalis Mizelle.  Mizelle said she abandoned her car and got a ride from a friend after hers would not charge. “We got a bunch of dead robots out here,” one man said.

OPEC’s Secretary-General Haitham Al Ghais said in a statement on OPEC that, “Peak oil demand is not showing up in any reliable and robust short- and medium-term forecasts.” Bloomberg wrote that OPEC’s top official said forecasts that oil demand is heading toward a peak would prove just as misguided as earlier predictions that supply was reaching its zenith. “Ultimately, peak oil supply has never come to pass, and predictions of peak oil demand are following a similar trend,” Secretary-General Haitham Al Ghais said in a statement on the group’s website. “Peak oil demand is not showing up in any reliable and robust short- and medium-term forecasts.” Al Ghais said that, “technological advances — which thwarted some geologists’ fears in the last century that oil supplies would start to run out — will also extend fossil fuel demand According to Bloomberg. He shouted out to the US shale producers that ended talk of “peak oil supply or that world oil production had peaked and would go into terminal decline. He said, “Time and again, oil has defied expectations regarding peaks. Logic and history suggest that it will continue to do so.”

We are also seeing winter freezes in Germany and other parts of Europe which have slowed rail and caused flight cancellations as the region braced for snowfall and ice build-up. The green energy backlash is beginning and people revolting against the idiocy of these green energy policies that are starting to impact politics in Europe and the US as people are rising saying enough is enough. On Monday the AP reported that, “Farmers blocked Berlin streets with their tractors in protest at a plan to scrap tax breaks on the diesel they use, the climax of a week of protests that has tapped into wider discontent with Germany’s government. For weeks they have blocked highway entrances and slowed traffic across Germany with their protests, intent on pushing Chancellor Olaf Scholz’s government to abandon the planned cuts entirely.

They’re not satisfied with the concessions the government has already made. On Jan. 4, it watered down its original plan, saying that a car tax exemption for farming vehicles would be retained and the cuts in the diesel tax breaks would be staggered over three years. 

Still, oil prices, along with other commodities, are getting crushed as the dollar hit new highs based on fears that because of some Fed-speak, the pace of interest rate cuts might not be etched in stone. Federal Reserve Governor Christopher Waller caused a dollar surge and a commodity selloff after he said, “With economic activity and labor markets in good shape and inflation coming down gradually to 2%, I see no reason to move as quickly or cut as rapidly as in the past.”

Last week CPI was too hot and while the PPI was cool, the markets are pricing in a less certain cutting path. Inflation in the UK hit 4.0% in December which was up from November 3.9% and that is reducing the odds of a May rate cut from the Bank of England. Yet oil is facing a long-term supply squeeze that may not be solved by the Fed playing their monetary policy games. If you do not like what one Fed speaker said, then just wait until the next one.

We get the American Petroleum Institute supply data this afternoon. Hopefully the data will not be secured by year-end tax considerations as we’ve seen during the last two weeks. We expect to see drawdowns of 2,000,000 barrels in crude oil and 2 million in products. The recent cold will also impact future oil production and refining and we will see that in the coming weeks. Despite the dollar-related sell-off, we still think there are significant risks to the upside.

Yesterday for natural gas we recommended perhaps buying puts and calls and puts were the flavor of the day. The natural gas market is looking beyond record demand falling production, and hopes of a warm-up that is being predicted fairly widely. But after the warm-up, it is still going be critical that some are predicting another polar blast worse than the one that we’ve just experienced. If that’s the case, we could see a significant spike in natural gas but the market may find it insurmountable. Suppliers can’t stand up to the forces of Mother Nature if she decides to put her frosty mind to it.

So with all the geopolitical risk factors and weather risk factors, you need to stay tuned to the Fox Business Network and the Fox Weather Channel to keep up with the latest updates on all that is going on.

Also make sure that you get the full clean energy report in your inbox, if you’re reading it from secondary sources you may not be getting the special updates, you should also sign up for Phil Flynn’s daily trade-level seat covering technical analysis on all of the major futures markets. Call me at 888-264-5665 to get signed up you can also e-mail me at pflynn@pricegroup.com.