History is being made every day, and the sector is balancing itself against the fact that supplies of oil and demand is stronger than anticipated as fails to raise production as promised and President trump moves towards a historic meeting with Russian President Vladimir Putin to try to end the war and the killing in Ukraine. And with the U.S. administration’s threat about secondary sanctions for people buying Russian oil easing on these talks concerns about OPEC spare production capacity is making the rounds
OPEC recent output production increase didn’t quite meet its ambitious target, with production rising by about 560,000 b/d instead of the planned 1.35 million b/d, that was promised. Is that because OPEC can’t raise production or because of the voluntary compensation cuts from the OPEC cheaters. If the market senses that that extra OPEC oil in not coming then it presents a dynamic market outlook, even if demand cools off a bit seasonally.
Of course, the month of August traditionally is pretty strong for prices in fact if you look at the more research seasonal trades they have October going up 13 out of the last 15 years for an average profit of $3098 and while past performance is no guarantee of future results it does look enticing.
And it’s not just heating oil that goes up traditionally between August 7th and October 10th the price of RBOB gasoline futures go up 12 out of the last 15 years as well while that average profit is only $2335 and past performance is no guarantee of future results the trend does look kind of interesting especially if OPEC must deliver.
The heating oil crack spread is already underway according to more research and that goes from August 6 to August 27th, and it wins 12 out of the last 15 years and has got off to a decent start though it has been very volatile. And again, we’ll remind you of the past performance on these spreads is no guarantee of future results and we can see high volatility.
So the point is that the most critical thing for oil right now could be the fact that we need to have these peace talks with Russia go well or we’re going to face a very tight market because of the disruption to the free market with the releases from the Strategic Petroleum Reserve US producers were not able to respond correctly because of the flood of government law on the market because of the following root count we have installed a bit from many producers to output and even though there’s some more investment term in the US while and gas last week’s recount shows that in a short term they are still struggling.
We also get a data deluge coming this week. The U.S., , OPEC, and are dropping their monthly reports, and you better believe the market’s gonna dissect ‘em like a Thanksgiving turkey for any clues on supply and demand trends. Will we see tighter markets or more oversupply jitters? Stay tuned.
EBW reported that Natural gas prices continued to decline, dropping below $3.00/MMBtu last week, even as Plaquemines LNG hit new highs and EIA reported a smaller-than-expected storage injection. Technical indicators point to further downside. Over the weekend, forecasts lowered cooling demand, production remained high, and tropical activity increased, with few immediate bullish drivers for in the short term.
Fox Weather reports that just as the disturbance tagged Invest 96L continues its journey into irrelevance in the open Atlantic Ocean, a tropical wave that emerged off the western coast of Africa has caught the attention of the National Hurricane Center (NHC) and could become a tropical depression or Tropical Storm Erin soon. The NHC has already upped the odds of development for Invest 97L to a high chance over the next few days.
The market action for natural gas does look pretty bad today it’s going to have to reverse and close back above $3 or we could see some further downside.