Beyond The Mandate. The Energy Report 11/21/2024

 The incoming Trump Administration is sending a signal that they will not tolerate the shenanigans from the green energy lobbyists and globalists that have used their cash and influence to put America’s energy dominance and economic future at risk. 

They are calling out one of the biggest offenders; The International Energy Agency (EIA,) and threatening to cut off their US funding for going “beyond their mandate” an energy security organization. The IEA, that I have criticized for years, lost their way by becoming beholden to the green energy movement. They misused their data to try to convince the world that we should stop investing in fossil fuels and played a major part in the energy crisis in Europe that continues to hang over the head on the continent. Not to mention the part it played in increasing inflation and the war between Russia and Ukraine that has a subplot of energy dominance in the region that is really the driving force behind the conflict. It is always about money.

The Trump Administration also signaled to world that the US oil and gas industry is open for business by seeking to revive the Keystone XL pipeline. And it’s true that TC Energy said that they officially abandoned the project in June 2021 after Joe Biden, on his first day in office, killed the project for strictly vindictive political payback cost the company 9 billion dollars. The company rightly feels that the Biden administration did not deal with them in good faith as every study that was done showed that the Keystone XL Pipeline did not significantly add to the greenhouse gas emissions. So after getting totally screwed over by Biden,

no wonder the company threw up their hands after the administration proved not to be a reliable business partner. It was also a black mark on US credibility and more than likely caused others from thinking twice before investing in and creating jobs in America.

Now it’s unclear whether or not TC Energy will be enticed into restarting the Keystone XL pipeline after the Biden administration and others unjustifiably maligned and economically harmed the company, others from Canada can’t wait to start asking for other pipelines that can move the oil they are producing more safely and efficiently. Bloomberg News reported that, “Alberta’s government has been talking with domestic energy companies about building more oil export pipelines to the United States to take advantage of an incoming White House administration with a friendlier attitude toward oil.” If you look at Canadian oil imports to the US, they have surged under Biden. In fact in California, because of their anti-oil production policies, they are importing a record amount from our Canadian brothers and sisters.  The same oil that California politicians fought hard against because it was produced from oil sands. Now they are dependent on it. Funny how that works.

What isn’t funny is geopolitical risks and weather risks that is increasing the cost of oil and gas this morning. A report that the International Criminal Court issued arrest warrants for Israeli Prime Minister Netanyahu and former Defense minister Yoav gallant for committing war crimes was not helpful to the recent optimism about the possibility of a reduction in tensions in the Middle East.

Oil also rallied after it was reported that Russia fired an intercontinental ballistic missile as part of an overnight attack on Ukraine. This came after the Biden administration approved sending anti-personnel mines to Ukraine late Tuesday, according to Fox News. The Biden administration’s approval came the same day that Ukraine used American-made ATACMs in a strike on Russian soil. Biden had prohibited such uses until last week. It sure seems the Biden administration wants to leave an even bigger mess for the incoming Trump Administration to clean up. Maybe someone on their team should reach out to the guys on the Biden team that cleaned up his other messes, political and otherwise.

The market is also getting a boost from this rare global phenomenon called winter. You remember winter? Don’t you? An early start to winter is boosting natural gas and oil and products even after an Energy Information Administration report that contradict the American Petroleum Institute reports, especially in regards to gasoline supply and demand. The report caused a pullback in the gas crack spread that had hit a year high for the January crack.

Tom Kloza, the dean of U.S. oil analysts and foremost expert on North American fuel markets, a founder of Oil Price Information Service said, “Predictable EIA: As suggested in this space last week, the gasoline demand pop was a mirage. This week’s implied demand number of 8419-mil b/d suggests a 964k drop – – – demand is never that lumpy. Exports still keeping supply balances intact.”

On the other side John Kemp Founder of John Kemp Energy and former Reuters correspondent points out that US gasoline are at the lowest for the time of year for a decade since 2014. Inventories were 8 million barrels (-4% or -1.08 standard deviations) below the prior ten-year seasonal average on November 15 and the deficit had widened from 2 million barrels (-1% or -0.21 standard deviations) seven weeks earlier on September 27. Low gasoline inventories have attracted the attention of investors, with hedge funds and other money managers purchasing futures and options contracts equivalent to 56 million barrels in the nine weeks to November 12.

So for the record, the EIA reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.5 million barrels from the previous week. At 430.3 million barrels, U.S. crude oil inventories are about 4% below the five-year average for this time of year. Total motor gasoline inventories increased by 2.1 million barrels from last week and are about 4% below the five-year average for this time of year. Both finished gasoline and blending components inventories increased last week. Distillate fuel inventories decreased by 0.1 million barrels last week and are about 4% below the five-year average for this time of year. Propane/propylene inventories decreased by 0.7 million barrels from last week and are 10% above the five-year average for this time of year. Total commercial petroleum inventories increased by 3.0 million barrels last week.

Total product demand based on product supplied over the last four-week period averaged 20.7 million barrels a day, up by 1.2% from the same period last year. Over the past four weeks, the motor gasoline product supplied averaged 8.9 million barrels a day, up by 0.5% from the same period last year. Distillate fuel supplied an average of 3.8 million barrels a day over the past four weeks, down by 6.4% from the same period last year. Jet fuel product supplied was down 1.3% compared with the same four-week period last year.

Natural gas is breaking out and needs the cold to stay around to keep these levels. Yet the move is a reminder that complacency about natural gas inventories in the US could shocking change if we get cold weather. The EIA reports today and we could see our first withdrawal from supply for the season.

Javier Blas whose book, “The World for Sale” comes out in paperback this week. He reported that, “Europe is gaslighting itself about gas.  “If Europe remains so short of gas that it would need a deal with Trump for more American LNG, why isn’t Brussels pushing for incentives to boost domestic gas production, including lower taxes?” Great question! Maybe we should ask the International Energy Agency. Or is that going beyond their green energy mandate.

Make sure you download the Fox Weather ap that told you this cold was coming!  You also need to stay tuned to the Fox Business Network because they are invested in you!

You also need to open your futures trading account today! Call PhilnFlynn at 888-264-5665 or email pflynn@pricegroup.com.