High Note. The Energy Report 01/19/2024

Oil is hitting a high note, posting its highest close of the year while US production and reefing are frozen out and geo-political risk factors continue to heat up. Reuters is reporting that Pakistan launched strikes on separatist militants inside Iran on Thursday in a retaliatory attack, while the U.S. launched new strikes against Houthi anti-ship missiles aimed at the Red Sea. That is a new wrinkle in the ongoing terror threat that is escalating risks.

Oil Price reports that 9 million barrels of oil from Saudi Arabia are being delayed. Houthi rebels are still active as they fired 2 antiship missiles at a US-owned chemical ship. Yet the Houthis, in a Houthi-like gesture, still wants to assure safe passage for Chinese and Russian ships transiting through the Red Sea.

This comes as our oil gas and refining capacity is trying to recover from the Polar Vortex deep freeze which reduced US refining capacity by over 15% and more than half of North Dakota’s oil production frozen in time.

Now oil seems to have broken out of the ‘Bermuda Triangle” formation on the daily chart which means you must be on guard for a potential major price spike.

Global demand forecasts from both OPEC and its nemesis are predicted record global oil demand. The IEA is lowballing demand as they try to defend their ridiculous green energy peak demand predictions. Mint reports that, “The IEA expects oil demand to peak by 2030 as the world shifts to cleaner fuels. However, OPEC dismissed this view in an article published on Wednesday. The IEA, which advises industrialized countries, on Thursday predicted global consumption would rise by 1.24 million barrels per day (bpd) in 2024. This is the third consecutive upward revision in as many months but was below OPEC’s 2.25 million bpd projection.

S&P Global Commodity Insights data said that the US oil and natural gas rig count fell by 11 to 663 for the week ended Jan. 10, S&P Global Commodity Insights data showed. The rig count is now the lowest since mid-November 2021 and has dropped by 33 in the last two months since mid-November. The pullback in rig counts is a sign that US output will not grow as fast as some had hoped. That should add to a supply versus demand deficit globally that we are predicting will happen. Crack spreads will also tighten and product prices should rise.

Natural gas pulled back after a bearish injection. Hopes for a warmup also is hurting prices. But buy cheap calls. If the Vortex returns we could see a spike. Working gas in storage was 3,182 Bcf as of Friday, January 12, 2024, according to EIA estimates. This represents a net decrease of 154 Bcf from the previous week. Stocks were 350 Bcf higher than last year at this time and 320 Bcf above the five-year average of 2,862 Bcf. At 3,182 Bcf, total working gas is above the five-year historical range.

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