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

It seems that the oil trade is backtracking on calls for ‘peak oil demand’ and is now more focused on the possibility of ‘peak oil’ production in the US and around the globe. Oil demand is on track to hit another record high. The failure of alternative energies to fill the void is raising concerns about the ability of the world to meet demand in the next few years. This comes as plunging natural gas prices may force a lot of US drillers out of business and some predictions that the shale miracle in the United States has seen its best days. I don’t believe that the shale revolution is behind us. I do believe that because of the push from the Biden administration away from US fossil fuel production, it will have long-term consequences for the US economy and the stability of the globe.

The Wall Street Journal reports that US crude oil output is expected to increase by just 170,000 barrels a day in 2024 from last year, that’s down from a jump of 1 million barrels a day in 2023, according to federal record-keepers. That is the smallest annual increase since 2016, not counting the pandemic. The Journals says that, “gushers of new U.S. crude have helped cap soaring oil prices despite OPEC production cuts and global turmoil, including most recently in the Middle East. The gains were driven by private producers that commandeered rigs after Russia’s invasion of Ukraine sent prices soaring to more than $120 a barrel in early 2022. Now, that growth is expected to slow dramatically. Declining oil prices led producers to lay down rigs last year. Then, many of the operators that had been drilling with abandon were acquired by bigger players looking for ways to expand in the U.S. Those big public companies have given priority to returning cash to shareholders over drilling new wells according to the Journal.

Oil prices are backtracking even after the Biden administration backtracked on their electric car push which is proving to be a disaster on so many levels. I am sure it will only be a matter of time before they blame President Trump for the lack of electric car sales that the Biden administration tried to force them to buy. The 2023 mandate by Biden to automakers required them to make sure that every 7 out of 10 cars that they sell is electric…whether we want them or not. The problem is they can’t force Americans to buy a product that they do not want, not only because it’s more expensive but also is not as reliable.

Reuter News reports that, “Joe Biden’s administration is set to ease proposed yearly requirements through 2030 of its sweeping plan to aggressively cut tailpipe emissions and ramp up electric vehicle sales, two sources told Reuters on Sunday. Automakers and the United Auto Workers had urged the Biden administration to slow the proposed ramp-up in EV sales. They say EV technology is still too costly for many mainstream U.S. consumers and that more time is needed to develop the charging infrastructure.”

Of course, the electric car transition was never based on science as it takes much more greenhouse gas emissions to build an electric car and the EV is only as clean as the power it uses to charge its batteries.

The Wall Street Journal reported in some parts of the world, such as China, the electricity used to charge the batteries of the country’s growing number of EVs comes largely from CO2-heavy coal, diminishing an EV’s impact on combating climate change. In 2022, China’s electric power production, which runs largely on coal and oil, pumped 530 grams of CO2/KWH into the atmosphere.

Now The New York Times is reporting that, “In a concession to automakers and labor unions, the Biden administration intends to relax elements of one of its most ambitious strategies to combat climate change, limits on tailpipe emissions that are designed to get Americans to switch from gas-powered cars to electric vehicles, according to three people familiar with the plan.”

Geopolitical risk factors for oil are providing support. Bloomberg reported that, “The crew of a commercial ship in the Red Sea abandoned the vessel following a Houthi attack — the first such evacuation since the militant group began menacing trade in the vital waterway late last year. Two ship ballistic missiles damaged the Belize-flagged Rubymar on Sunday evening local time, US Central Command said Monday on social media platform X.” The Houthi rebels, that have caused so much concern about the safe passage through the Red Sea, have been bought and paid for with Iranian oil money. That money also funds and supports Hamas and Hezbollah.

Even the New York Times acknowledges that the Biden administration has been a total failure when it has come to enforcing sanctions on Iran. The New York Times reports that there is a $2.8 billion hole in U.S. Sanctions on Iran a Times investigation reveals how lax government oversight allowed shadowy oil tankers, covered by American insurance, to fund Iran’s regime. The Times writes that, “Treasury Secretary Yellen told Congress that her teams were “doing everything that they possibly can to crack down” on illegal shipments, and a senior White House adviser said that “extreme sanctions” had effectively stalled Iran’s energy sector. But the sanctions failed to stop oil worth billions of dollars from leaving Iran over the past year, a New York Times investigation has found, revealing a significant gap in U.S. oversight. The oil was transported aboard 27 tankers, using liability insurance obtained from an American company. That meant that the U.S. authorities could have disrupted the oil’s transport by advising the insurer, the New York-based American Club, to revoke the coverage, which is often required for tankers to do business.

Instead, the 27 tankers were able to transport shipments across at least 59 trips since 2023, the Times found, with half the vessels carrying oil on multiple journeys. The Treasury Department did not respond to a question about whether it was aware the ships had transported Iranian oil while insured by the American Club. The tankers exhibited warning signs that industry experts, and the Treasury, have said collectively warrant greater scrutiny.”

That is not a surprise to readers of the Energy Report as we have mentioned the fact that these sanctions have not been enforced. Anybody who’s been following this situation realizes that the Biden administration’s decision to try to allow Iran to export oil in return for some Iranian nuclear deal in better relations, was a major miscalculation based upon what’s been happening with Iranian oil money and its support for these terror groups around the globe.

Oh, by the way, the Houthi rebels are once again considered a terror group by the Biden administration. You remember they took them off of the terror list that President Trump put them on.

Also, the so-called sanctions on Russia, the toughest ever according to Biden, are not working either. Even CNN reports that, “Russia is entering its third year of war in Ukraine with an unprecedented amount of cash in government coffers, bolstered by a record $37 billion of crude oil sales to India last year, according to new analysis, which concludes that some of the crude was refined by India and then exported to the United States as oil products worth more than $1 billion. CNN says, “This flow of payments, ultimately to Moscow’s benefit, comes from India increasing its purchases of Russian crude by over 13 times its pre-war amounts, according to the analysis by the Centre for Research on Energy and Clean Air (CREA), exclusively shared with CNN.

More climate policy calamities. The FT reports that, “ExxonMobil has warned it is willing to withhold billions of dollars in climate-related investments in Europe unless Brussels cuts environmental red tape which the company blames for the “deindustrialization of the European economy”.

Oil prices continue to be solid but pulled back in a light volume Presidents Day trade. Oil demand concerns continue to be the mantra of the bears while with tightening global market is the base case for the bulls.

The bears are having a much harder time ignoring the tightening global oil supplies that we’ve been talking about was going to happen for many months more of the big banks are turning very bullish on oil despite today’s action.

We still see significant risk to the upside. OPEC is going to make sure that they regain control of prices and Russia can afford to help with their sanction money windfall. Tass Reports that, “Russia intends to fully meet its OPEC+ quota in February despite a decrease in refining, Deputy Prime Minister Alexander Novak said. “We will fulfill our obligations,” he told reporters when asked whether Russia will boost the export of oil in February to offset a decline in refining. Russia’s OPEC+ obligations imply a reduction of both supplies of oil and petroleum products.

The natural gas crash on the other hand is creating major issues and could put many producers out of business. When the second polar vortex did not materialize, we flipped to an extremely warm pattern that just crushed demand for natural gas. The production continues to be high because of associated gas. Prices hit an inflation-adjusted 30-year low when front-month futures touch $1.58/MMBtu. That allowed gas inventories to hit a six-year high. This will force cutbacks in drilling. Since January 13, the price of gas has fallen by more than 40% to $1.6 for an MMBTU. Probably a time to buy some puts and calls.

Make sure you stay tuned to the Fox Business Network! The number 1 business network in America.

Also, sign up for the Phil Flynn Daily Trade Levels that cover all major futures markets with entry, exit and stop points! Call 888-264-5665 or email me at pflynn@pricegroup.com.



Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

141 West Jackson Blvd., Suite 1920, Chicago, Illinois 60604

312 264 4364 (Direct)  |  888 264 5665 (Direct)  |  800 769 7021 (Main)  |  312 264 4303 (Fax)


Please do not leave any instructions for orders in your message, as we cannot execute instructions left through email or voicemail. Orders must be entered via direct verbal communication with a representative of our firm. We cannot be held responsible for orders left in any other manner.  PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Investing in futures can involve substantial risk & is not for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses. Member NIBA, NFA.


Questions? Ask Phil Flynn today at 312-264-4364        
Tagged with: