Oil prices shook off supportive data from the Energy Information Administration (EIA). Inflation pressure is easing as oil demand in the US spikes above 20,523 million barrels a day and while crude oil supply broke its streak of drawdowns with a build of 1.4 million barrels from the previous week crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.7 million barrels.
Products were bullish as gasoline inventories fell by 2.9 million barrels from last week and are about 3% below the five-year average for this time of year. Distillate fuel inventories decreased by 1.7 million barrels last week and are about 7% below the five-year average for this time of year.
Chinese economic data was not overly exciting. The retail spending expectations coming in at 2.7% but industrial production just missed at 5.1% yet the data didn’t suggest that the Chinese economy is contracting dramatically and if they hold steady, oil supplies will continue to be tight if they improve, they’ll be very tight.
The ongoing supply deficit in the continued failures of many green energy projects, the outlook for the fossil fuel industry looks exceedingly bullish.
President Donald Trump is vowing to reduce energy prices by half which would be interesting, but there’s no doubt that we need a more realistic energy policy to avoid massive price spikes.
Norway has one and they are going to invest in beautiful fossil fuels.
Reuters reports, “Norwegian oil and gas investments are expected to hit a record this year and stay at elevated levels in 2025, driven by ongoing field developments and rising inflation, a national statistics office (SSB) survey showed on Thursday."
Norway in recent years sanctioned a string of new field developments as companies took advantage of pandemic-era tax breaks to fast-track projects, part of its strategy to extend oil and gas production for decades to come.
In the meantime, the supply deficit is going to accelerate as we get into the end of the year, which means you need to be hedged for a potential price spike.
With the futures market already pricing in over a 50% chance of a quarter percent cut in September and the rest dedicated to a 50 basis point cut could cause the oil market to soar.
Natural gas prices continue to rally as we get ready for what could be our first possible withdrawal of the season.
The charts and natural gas look very supportive, so it’s probably a good time to be prepared for winter.