Oil prices that were surging fell back after it appears there are some signs that perhaps the Russian war criminal in chief, Vladimir Putin, might be looking for an off-ramp in his failed invasion of Ukraine. Or not. Yesterday, the Russian President almost sounded sane when he said that Russia would honor their oil and gas commitments to what he called unfriendly nations. In other words, he suggested that he was taking his oil and gas weapon off the table.
Now, there is a report that the Russian President is saying that:
“There are certain positive movements in discussions with Ukraine.”
While Putin talks peace, more Russian troops are on their way to Ukraine. Or it could be another diversion before he attempts his invasion of Kyiv. The Russian President also seemed to directly contradict Biden’s assertion that the sharp increase in oil price was his fault by saying that Western nations should not blame him for the energy decisions they have made. I hate to say I agree with this murderer, but I do in this case.
It’s a sad day in America when the Russian President does a better job at fact-checking Joe Biden and his failing administration than the so-called fact-checkers in the United States that do not check facts but try to manipulate information to drive a narrative. They have enabled this administrator to wreak havoc on the economy and the US energy industry. Biden’s war on US energy is well documented and hurts the American people.
Inflation numbers soared 7.9%, the highest level since 1982. That is largely driven by Biden’s reckless and dangerous energy policies, not by Russia because the data reflected inflation before the war. Let the fact-check this – originally, when I started to write that Joe Biden’s energy policies would lead to energy shortages, I was fact-checked by many major publications that said that what I was saying was not true. Yet now global oil and product supplies are at dangerously low levels, and prices are not adjusted for inflation, record highs.
John Kemp at Reuters laid out the case for the greatest oil shock since the 1970s. Kemp lays out his case with real facts and writes that the US petroleum inventories are depleting to critically low levels as output fails to keep pace with the rapid rebound in consumption after the pandemic, putting intense upward pressure on oil prices.
Petroleum inventories were depleting at an unsustainable rate even before Russia invaded Ukraine and the disruption of Russia’s petroleum exports in response. US inventories of crude oil and refined products outside the strategic petroleum reserve have fallen in 63 out of the last 88 weeks, according to data from the Energy Information Administration (EIA).
Commercial stocks have depleted by a total of 315 million barrels since the middle of 2020, more than offsetting the 204 million barrels accumulated during the first wave of the pandemic and lockdowns. Inventories are now 99 million barrels (8%) below the pre-pandemic five-year seasonal average for 2015-2019 and at the lowest seasonally for seven years. Gasoline stocks are close to normal, but stocks of crude are 51 million barrels (11%), and distillate stocks are 30 million barrels (21%) below the pre-pandemic five-year seasonal average.
Distillate consumption is closely correlated with the business cycle because distillate fuel oil is used primarily as diesel in freight transportation, manufacturing, farming, mining, oil, and gas extraction. The distillate is also a near-substitute for jet fuel, so the inventory situation is affected by changes in aviation, especially long-haul passenger and cargo flying.
Distillate stocks have fallen to just 114 million barrels, compared with a five-year pre-pandemic average of 144 million, and the lowest for the time of year for more than 15 years. Stocks are on course to hit an expected low of just 103 million barrels before the middle of the year, with a possible range of 92-114 million barrels. That would put stocks below the previous low in the first half of 2008 when a shortage of distillate contributed to the spike in Brent crude prices to a record high of $147 per barrel.
This is why I warned hedgers of both oil and natural gas on numerous occasions to be prepared for substantial upside risks in the market. Time and time again, I called on people to get hedged for the coming energy crisis, and now that it’s here, I hope that most people did. The reality is is that you can try to spin this any way you want, but there has been no President in recent history that has done more damage to the poor and middle class than the Biden administration. It could have been avoided.
What’s worse is they don’t seem to care about the pain they have caused the American people. Instead, Biden tries to spin the story and blame everyone else for their failures. The spinning and their story continue to change, and they continue to offer excuses for everything that has gone wrong with the administration. Yet the sound bites do not help the American people and their weakness that helped encourage the War in Ukraine had all happened on their watch.
Where are the fact-checkers? Biden’s war on the US energy industry is well documented and is just clearly hurting the American people. Inflation numbers soared 7.9%, the highest level since 1982, and that is driven in large part by Biden’s reckless spending and dangerous energy policies.
The Biden administration also reaches out to unfriendly nations like Iran and Venezuela to fill the oil void. Bloomberg News reports that world powers and Iran suspended their efforts to revive the 2015 nuclear accord, reigniting a crisis that’s set to roil already surging oil markets and potentially plunge the energy-exporting Persian Gulf into a new cycle of violence.
A pause in the Vienna talks was required due to “external factors,” European Union foreign policy chief Josep Borrell said on Twitter, without elaborating. Borrell said the sides had come very close to an agreement but didn’t say when — or if — the negotiations would be able to resume.
Yesterday, White House press secretary Jen Psaki suggested that Venezuela was the biggest oil producer in the world. This is more misinformation coming out of the White House, or maybe it is just a mistake. Perhaps she meant to say that Venezuela has one of the largest amounts of proven oil and gas reserves in North America.
White House press representative for Fox News Peter Doocy asked the press secretary whether she’s going to continue to blame Putin on everything until the midterms. Don’t worry. I think they’ll find something else to blame before then.
Grain prices and potential grain shortages are also driving up anxiety in the US economy. The potential of fertilizer shortages and war in Ukraine that could derail planting is only adding to those worries. China, for their part, is taking steps to try to shore up supply. The Chinese finance ministry said overnight that they are allocating 20 billion yuan of subsidies to grain growers.