Woke Versus Woke. The Energy Report 11/05/2024

America goes to the polls as they should contemplate whether the Biden Harris policies has made our country and the world a more peaceful place. Sadly and starting with the disastrous Afghanistan withdrawal, it led to the needless deaths of 13 American service people. The ‘go easy on Iran’ policy has backfired. Unfreezing Iranian assets and not enforcing Iranian oil sanctions raised billions for Iran to fund the terrorist turmoil we have seen in the globe such as the Iranian funded October 7th attack on Israel citizens with unspeakable acts of horrific violence against men, woman and even children. The Russian invasion into Ukraine that could have been avoided with strong leadership but instead was seemingly welcomed by the Biden administration that suggested that a small incursion by Russia into Ukraine might be ok. They also discouraged Ukraine from taking an earlier proposed peace settlement that may have saved over one million lives. And all this world turmoil is a driving force in the oil trade today.

Oil prices got a bid as record options plays in October ahead of the US Election and the growing risk that Iran will attack Israel or Israel may make a promotive strike on Iran. Other players are taking sides as Russia is threatening to give Iran nuclear and chemical weapons if Israel attacks Iran with the help of the United States.

North Korea wants to get in the mix after sending soldiers to fight with Russia in Ukraine while Rocket Man Kim Jong Un is back to shooting missiles to show how tough or deranged he might be. Reuters reported that, “North Korea fired at least seven short-range ballistic missiles on Tuesday off its east coast, Japan’s defense minister said, soon after Pyongyang condemned military drills by its rivals and just hours before the U.S. election.”

Canada wants to raise oil and gas prices as Canadian Prime Minister Trudeau is ordering gas and oil producers to cut their emissions by 35% which means that the cost of energy might go up by 75%. This comes as the fight to reduce carbon emissions gets caught up in a game of Woke Versus Woke after Meta gets stung by the bees! Meta plans to set up a nuclear-powered AI data center in the US have been thwarted because a rare bee species was found on the land according to the Financial Times reports. Meta is facing a problem as they are looking for access carbon-free energy for its AI data centers and nuclear is the only real option.

The FT reported that, “A 2017 report from the Center for Biological Diversity found that there are 347 endangered bee species in North America and Hawaii. It noted that 90% of wild plants require pollinator activity to survive, meaning that disrupting bee habitats could result in not only extinct species but also a loss of plant life, which could further accelerate climate change. It’s probably time for a bigtime celebrity to get on his private jet and fly to Hawaii to stand up for the bees to save the planet.

Mark Zuckerberg for his part will continue to say he is sorry for censoring a Hunter Biden laptop story ahead of the last election.

Is there a growing sense that after the election oil prices have a lot to go on the upside? Global demand is still at record highs so with OPEC pausing their production increase there is an increasing odd of a supply deficit as we head into the end of the year. Even the CEO of British petroleum says that global oil demand is growing much faster than he thought and others have to up their demand estimates going forward.

Ahead of the big election we’re looking for volatility. That is the reason why we’re seeing a lot of option plays. You can play both sides of the market but ultimately this market has a lot of risk to the upside. Hedge funds may have less incentive to push the short side after the election. The AFP reported that net Saudi Aramco reported a 15 percent year-on-year drop in third quarter profit on Tuesday, citing low oil prices. The fall in net income to $27.56 billion this year from $32.58 billion in 2023 “was mainly due to the impact of lower crude oil prices and weakening refining margins”, the firm said in a statement posted to the Saudi stock exchange. But it still paid a record dividend.

Saudi Arabia, currently producing roughly nine million barrels per day (bpd), well below its capacity of 12 million bpd. This reflects a series of output cuts since October 2022. “Aramco delivered robust net income and generated strong free cash flow during the third quarter, despite a lower oil price environment,” chief executive Amin Nasser said in a statement.

Bloomberg reported that he Russian government’s revenue from the oil industry fell by 29% in October from a year earlier due to lower crude prices and higher state payouts to the nation’s fuel producers.

Oil-related taxes, a key source of financing for Russia’s war against Ukraine, shrank to 1.05 trillion rubles ($10.7 billion) last month compared with 1.48 trillion rubles a year ago, according to Bloomberg calculations based on Finance Ministry data published on Tuesday. Total oil and gas proceeds, 86% of which came from oil-production levies and the so-called profit-based tax, fell by more than a quarter to 1.21 trillion rubles.

Natural gas prices are getting a boost from yet another hurricane that could impact production in the Gulf of Mexico. Fox Weather reports, “Tropical Storm Rafael is continuing to strengthen and remains on track to become a hurricane as parts of the Caribbean prepare to be battered by damaging, hurricane-force winds, flooding rain and a dangerous storm surge. The National Hurricane Center said Rafael is situated in an atmospheric and oceanic environment that is “quite conducive for strengthening.” In addition, forecasters say that computer forecast models show there is a “significant chance” that Rafael could rapidly intensify as it approaches the Cayman Islands and Cuba. Download the Fox Weather ap to keep up with this storm.

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Call Phil Flynn to open your futures trading account today at 888-264-5665 or email pflynn@pricegroup.com.