It looks like that the transition process is beginning to a Joe Biden administration and is already leading to higher energy prices. President Trump tweeted that he wanted “to thank Emily Murphy at GSA for her steadfast dedication and loyalty to our Country. She has been harassed, threatened, and abused—and I do not want to see this happen to her, her family, or employees of GSA. Our case STRONGLY continues, we will keep up the good fight, and I believe we will prevail! Nevertheless, in the best interest of our Country, I am recommending that Emily and her team do what needs to be done with regard to initial protocols and have told my team to do the same.
Oil prices are up on a risk-on attitude as Janet Yellen, who never met a printed dollar that she did not like, will likely become Treasury Secretary and John Kerry as a climate czar is causing oil and gasoline prices to rise. Both Yellen and Kerry’s inclinations, as far as the markets are concerned, are well known. Janet Yellen, the noted policy dove, and Kerry, the climate change hawk, set the stage for the new energy of anti-petroleum agenda and more energy regulation. The combination of Janet Yellen pushing for more accommodation and John Kerry’s support for the Paris climate accord means that the outlook for energy price will be substantially higher over the next four years.
Kerry is an internationalist that will allow other countries to pollute and put the screws to U.S. producers. Kerry will look the other way when countries like China cheat on emissions and will not hold them accountable because he would not want to offend them. Yet if you are a U.S. company, get ready for fines and oppressive oversight. Shale bankruptcies will continue to rise and the odds of the U.S. regaining lost energy production from before the pandemic, now looks slim. Factories in the U.S. will start looking to build offshore where environmental regulations will be less strict like in China because they will be viewed as a developing nation.
So for investors this is a great opportunity, The Biden distractions will create a long-term bull market. The biggest risk to that may be the lifting of sanctions on Iran. Yet we know that the U.S., like the Obama Administration, would rather have the world supplied with oil from Iran instead of the United States.
So oil and products look very strong. We should see product draw downs in tonight’s API report. We are in a buy the breaks mode.
Still there is the OPEC Plus drama. TASS reports that President Vladimir Putin is not planning any negotiations with the leadership of Saudi Arabia before the OPEC+ meeting on December 1, Kremlin Spokesman Dmitry Peskov told reporters on Tuesday. “So far there are no such plans,” he said responding to a question about possible talks with the leadership of Saudi Arabia. Peskov also said that there were no separate negotiations between the Russian leader and the leadership of Saudi Arabia during the G20 summit. The summit was held on November 21-22 via videoconference as chaired by Riyadh. There were no contacts on the sidelines of this virtual meeting,” the Kremlin spokesman said.
Of course Russia always plays hard to get and one would expect that the group should give the market one last extension before the vaccine starts to take hold.
Natural gas is in recovery mode as winter weather is coming so buy calls now.