As a parting gift to Americans, the Biden administration added billions to the deficit because of their misuse of the Strategic Petroleum Reserve. As {{oil}} gives up early gains on another pop in the US Dollar and weak demand data for China, traders are still scratching their heads about the fuzzy math provided by the Biden administration. They are suggesting that they are going to leave office with 180 million barrels of the Strategic Petroleum Reserve replaced that they had depleted.
Yet it won’t be filled by real barrels of oil because the Biden administration did not have the funding to buy back that oil. No, it will be filled by canceling congressionally mandated sales of 140 million barrels of SPR oil through 2027 that was supposed to be sold in order to reduce our trade deficit. The Biden administration brags that they made money by buying back 59 million barrels after the 2022 sale at an average price of less than $76 a barrel, far lower than the $95 a barrel it sold oil in 2022. That resulted in a profit of about $3.5 billion, the DOE said. Yet the money that they were going to net from future sales will be picked up by the taxpayer and the SPR will have less to use during an emergency.
Oil is also getting a bump from the Trump Peace dividend. The surge in the dollar is from the confidence about the outlook for the US Economy under Trump. We are seeing record highs in stocks and Bitcoin.
The FT reported that, “Qatar has told the leaders of Hamas to leave the country following pressure from Washington, in a significant shift in policy by the Gulf state. The request was made around 10 days ago after intense discussions with US officials, according to one person familiar with the matter.
Fox News reported that, “President-elect Trump’s transition team would not confirm or deny that the 2024 election victor told Russian President Vladimir Putin not to escalate the war with Ukraine during a call last week. The Washington Post reported that Putin and Trump spoke on Thursday, marking the first conversation between the two leaders since Trump won his way back into the Oval Office last Tuesday. Trump reportedly took the call from Florida and advised Putin to not escalate the war in Ukraine. The president-elect also reminded Russia’s president about the amount of U.S. military in Europe, a person familiar with the call who spoke on anonymity told the publication.
Strength in the dollar is waning. We should see a sold support area near 6750 and that should be a potential low for the month. Reuters wrote that, “A stronger dollar makes greenback-denominated commodities such as oil more expensive for holders of other currencies and tends to weigh on prices. In China, consumer prices rose at the slowest pace in four months in October while producer price deflation deepened, data showed on Saturday, even as Beijing doubled down on stimulus to support the sputtering economy.
Crack spreads are solid in both gas and diesel. With product supply below normal we will need some refiner’s incentive.
Natural Gas Futures may have finally bottomed as winter may be on the way! With natural gas production falling and demand rising, the shorts are covering. The EIA showed that according to data from S&P Global Commodity Insights, the average total supply of natural gas fell by 1.1% (1.2 Bcf/d) compared with the previous report week. Dry natural gas production decreased by 1.3% (1.4 Bcf/d) to average 101.8 Bcf/d, and average net imports from Canada increased by 2.2% (0.1 Bcf/d) from last week.
Yet the EIA reported that total U.S. consumption of natural gas rose by 2.7% (2.0 Bcf/d) compared with the previous report week, according to data from S&P Global Commodity Insights. Natural gas consumed for power generation rose by 2.1% (0.7 Bcf/d) week over week. Consumption in the industrial sector increased by 0.9% (0.2 Bcf/d) and in the residential and commercial sector by 6.3% (1.1 Bcf/d). Natural gas exports to Mexico decreased 5.7% (0.3 Bcf/d). Natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 12.7 Bcf/d, or 0.8 Bcf/d lower.