Ongoing hostage negotiations and the delay of Israel’s ground invasion did technical damage to the oil charts. On the one hand, the risk to supply is still there with the possibility of cracking down on Iran and its oil It’s but the imminent risk to oil supply has been put off as Israel is holding off its ground invasion to get more hostages being held by Hamas released.
Hamas did release 2 more hostages from the Gaza Strip, but reports seem to suggest that further hostages may not be released unless Israel decides to give Hamas fuel. Israel of course does not want to give Hamas fuel because more than likely it will be used for military operations.
Reports say Qatar and Egypt had a hand in the negotiations but let’s face it Hamas still is holding around 200 hostages after they slaughtered about 1,400 people in its Oct. 7 raid so to think that this is going to put off the Ground invasion forever is wishful thinking. Hamas will want to drag this out and with close to 200 hundred hostages and by releasing 2 at a time, they can do so for months. Yet will Israel stand for that?
Yet the small bit of progress that they are seeing regarding releasing hostages in the fact that Israel has not started its ground invasion takes a lot of the war premium out of oil. Prices fell to hold key support yesterday as far as the 10-day moving average and the 20-day moving average and now look poised to go lower technically unless we get a headline.
Oil traders must be very cautious because if you’re following the charts you want to be bearish at least down to 82 or 81 but if you look at the fundamentals, we’re just one headline away from the oil market spiking.
There were all sorts of concerns surrounding the Chinese economy and in the banking sector yet again. UK Bank Barclays stock tanked by close to 7% as they announced cost-cutting as their margin pressure intensified.
Barclays raising concerns about the banking sector once again. That is also a headwind for oil.
The International Energy Agency (IEA) is going to have another go at it and make a bold prediction about “peak oil demand.” This is the same agency that was wrong about peak oil production and peak oil demand before and their base case is that they think you are going to buy an electric car. Do you have yours yet?
The IEA says that fossil fuel demand will peak by 2030 as more electric cars hit the road and China’s economy grows more slowly and shifts towards cleaner energy.
The IEA says:
“The transition to clean energy is happening worldwide and it’s unstoppable".
IEA Executive Director Fatih Birol said:
"It’s not a question of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us”.
“Governments, companies, and investors need to get behind clean energy transitions rather than hindering them".
There are immense benefits on offer, including new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access, and a safer climate for everyone. Taking into account the ongoing strains and volatility in traditional energy markets today’s claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”
So, they are discoursing new investments in fossil fuels even as the impact of the lack of investment based on their past predictions has put the world on the path of the biggest supply shortage in decades.
In April, the IEA warned that further planned OPEC+ output cuts this year together with China’s economic rebound meant the world oil market could be undersupplied by up to 2 million b/d in the second half of 2023.
That supply shortage has driven up the cost of oil, put more strain on governments, and really have taken food out of the mouths of the poor. That oil shortage has helped add to inflationary pressures as well.
And by the way, does the IEA know you have to charge electric vehicles?
Do they know that an electric car creates three to four carbon emissions to be produced in the first place?
Yet today MR. Birol says, ‘The current crisis in the Middle East could shock the oil market.” Yet it may have been less of a shock if we did not discourage investment in Fossil Fuels