Oil Misinformation? The Energy Report 10/03/2024

Is the Biden Administration creating fake oil news to manipulate oil prices? Are they conspiring with hedge funds to crash prices? This is an explosive charge being floated by Zero-Hedge after a series of articles in recent years from unnamed sources that failed to prove to be true but have had major impacts on prices led by massive hedge fund market participation.
Zerohedge Tweeted “So the Biden admin is now pretending to be “OPEC sources” and rotating Reuters, FT and WSJ to leak fake news that hammer oil.” While there is no proof of wrongdoing by anybody,  Zero Hedges charges has some eyebrows are being raised.
Especially after some recent stories that did not make a lot of sense and unprecedented short hedge-fund short positions that were starting to be amassed during a light volume Labor Day holiday trade.  Zerohedge also did not provide any evidence of its charge.

3 days ago, it was a story from the Financial Times that OPEC had abandoned its $100 barrel price target, A target I pointed out, did not exist in the first place.

The FT Story was not bullish for oil prices, and it wrote that “officials in the kingdom are committed to bringing back that production as planned on December 1, even if it leads to a prolonged period of lower prices, the people said.  The Ft said that that ‘The prospect of Riyadh ditching its unofficial target hit the price of oil and the shares of oil companies on Thursday.”

The Problem is that no one in the OPEC plus cartel confirmed that they were committed to bringing production back online. In fact, Russian Minister Alex Novak denied that any decision on that was made.
Yet the FT reported that “The shift in thinking represents a major change of tack for Saudi Arabia, which has led other Opec+ members in repeatedly cutting output since November 2022 in an attempt to maintain high prices.”
Yesterday it was a story from the Wall Street Journal that ‘The Saudi oil minister has said prices could drop to as low as $50 per barrel if so-called cheaters within OPEC+ don’t stick to agreed-upon production limits, according to delegates in the cartel. The remarks were interpreted by other producers as a veiled threat from the kingdom that it is willing to launch a price war to keep its market share if other countries don’t abide by the group’s agreements, they said.”
Yet while you must trust that OPEC is telling ther truth, but they denied that story.
OPEC put out a long tweet on X that started ‘With reference to the Wall Street Journal (WSJ) article, dated 2 October 2024, titled “Saudi Oil Min Said Prices May Fall to $50/B if Others Cheat, Sources Say,” the OPEC Secretariat categorically refutes the claims made within the story as wholly inaccurate and misleading.”

OPEC has been critical of many press services even banning some reporters from meetings because of what they view as false and misleading reporting.
There are two sides to every story there have been many questionable unnamed soured oil stories over the years that have been just to convenient.

Like for example during the Biden nuclear talks with Iran, when every oil got to resistance, a story would come out that the Biden Administration was lifting all sanction on Iranian oil. While Biden failed to enforce sanctions, the stories were not true but did cause some big price dops every time the headline came out.
I could sight other examples over the last few years, but we are a futures market that looks forward and not backward.

Headlines move oil prices, today oil prices pumped on war- risk pulled back on a report that Libya’s largest oil field to resume output Thursday. Libya to resume oil production today after a settlement of a political dispute.  Oil was waiting of Israel’s response to the Iranian attack. As Reuters reported Iran fired hundreds of missiles at Israel on Tuesday in response to Israeli airstrikes and attacks. Israel’s Prime Minister Benjamin Netanyahu said Iran made a big mistake and would pay for it, and Iran threatened a crushing response if Israel retaliated.
Yesterday oil ran right up to resistance and was looking for an excuse to break out higher but pulled back to support after the Energy Information Administration (EIA) reported a surprise crude oil supply increase of 3.9 million barrels from the previous week. That was different from the supply draw that was reported by the American Petroleum Institute (API).
EIA puts us crude supply in commercial inventories at 416.9 million barrels, U.S. crude oil inventories are about 4% below the five-year average for this time of year.
The SPR of course is still way down but increased by 700,00 barrels.
EIA said gasoline inventories increased by 1.1 million barrels from last week, different from the draw reported by the API.
and distillate fuel inventories decreased by 1.3 million barrels last week and are about 8% below the five-year average for this time of year.
Gasoline demand is rocking as EIA reported that over the past four weeks, motor demand averaged 8.7 million barrels a day, up by 4.9% from the same period last year.

Of oil is still concerned about an increasing risk of a supply disruption coming from Iran. President Biden yesterday said he did not support Israel attacking Iranians nuclear sites if they can’t attack the nuclear sites the best way to send them a message is to attack their oil infrastructure.
Yet Reuters says not to worry.  Reuters reports that “OPEC has enough spare oil capacity to compensate for a full loss of Iranian supply if Israel knocks out that country’s facilities, but the producer group would struggle if Iran retaliated by hitting installations of its Gulf neighbors.
The energy reports base case for some time it’s at the price of oil and products seem to be out of whack with the tight global supply situation and demand that continues to be at record highs around the globe we think the market could be sleepwalking into a supply spike if we find out that the emperor has no clothes , Be careful about a big upside extension the big spike
The potential risk has seen option prices really start to increase in the value Hopefully those that took advantage of the options here starting to feel a little bit of reward.
Natural gas prices as well are starting to make their move higher the tropical storm situation is an issue that the market must keep an eye on.  Today we will get the Energy Information Administration objection report. Reuters says that U.S. utilities likely added a smaller-than-usual 57 billion cubic feet (bcf) of natural gas into storage last week, according to the average estimate in a Reuters poll on Wednesday.
That compared with an injection of 87 bcf during the same week a year ago and a five-year (2019-2023) average increase of 98 bcf for this time of year. In the prior week ended Sept. 20, utilities added 47 bcf of gas into storage USOILN=ECI. If correct, the forecast for the week ended Sept. 27 would increase stockpiles to 3.549 trillion cubic feet, about 3.8% above the same week a year ago and around 5.7% above the five-year average for the week.

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