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Monday, February 13, 2023 10:30:01 AM
Waiting On Inflation. The Energy Report
By: Phil Flynn | February 13, 2023
Oil prices are down to start the week on concerns that this week’s January consumer price index (CPI), which is set to be released at 8:30 am Eastern on Tuesday, may come in hotter than expected even after Federal Reserve Jerome Powell declared that “the disinflationary process” is underway. Yet a rebound in oil prices, strong jobs data, and an uptick in consumer confidence is raising concerns that the CPI will be too hot for the Fed to handle. Oil prices are ignoring geopolitical risks that seem to be rising every day that Biden is been in office. The market seems unconcerned that the US has had to shoot down objects in the sky violating US air space and even shot-down aviation over Lake Michigan which for me is getting too close to home.
Yet it is inflation data fears and a rising dollar that seems to be holding oil back. Yet the fundamental backdrop for oil is still very strong. Russia is cutting supply and OPEC says that the market is balanced.
Reuters is reporting that, “Russia’s seaborne oil product exports fell about 10% on Feb 1-12 from the same period in January due to the European Union’s embargo, the lack of available tankers, and the closure of ports due to storms, traders said and Refinitiv data showed.
Now it is being reported that the UAE Energy Minister H.E. Suhail Mohamed Al Mazrouei says that the oil market is balanced and that there is no need for an extraordinary OPEC+ meeting.
With oil producers restricting supply and demand on the rise, we will see a supply squeeze. In simple terms, with China reopening, we will see more demand and from Russia and OPEC the same or less supply which is bullish. We expect to see supplies of crude tighten. Refiners in maintenance should mean that we will have a hard time building up product supply.
Can natural gas find a bottom? The natural gas market is a classic riches-to-rags story. Soaring late last year on fears of shortages became a story of supply. A historically warm winter along with the shutdown of the Freeports LNG export facility changed the dynamics. Now could things finally be bottoming? Scott Disavino of Reuters reported Friday that Freeport LNG’s long-idled liquefied natural gas (LNG) export plant in Texas was on track to start receiving small amounts of natural gas from pipelines on Wednesday after receiving no gas on Tuesday, Refinitiv Eikon data showed. The restarting of Freeport could help cut into the oversupply. Yet will the regulators let the recovery continue? Reuters reported that, “Texas residents grilled U.S. energy regulators on Saturday over their supervision of liquefied natural gas processing plants at a meeting to discuss conditions at the fire-idled Freeport LNG plant. When fully running, Freeport LNG processes about 2 billion cubic feet per day of natural gas and exports up to 15 million tonnes of LNG per year. Its progress toward reopening is closely watched because of the impact on U.S. natural gas prices.”
Naureen Malik of Bloomberg reports that the operator of the largest US grid should scrap its method of using the threat of fines to ensure power plants are available to operate in any weather and instead require them to have backup fuel, the watchdog for the system says. The independent monitor for the 13-state grid stretching from New Jersey to Illinois said in a report Friday that plans to issue up to $2 billion in fines to power plants that couldn’t supply the grid on Dec. 23-24 “was a failed experiment.” “There is no reason that in a rational market design, two cold days would result in a crisis,” Monitoring Analytics, the independent market monitor of PJM, said Friday in a report. The watchdog recommends scrapping the penalties. Instead, generators should be required to demonstrate on a weekly basis that they have the ability to burn an alternative fuel, like a gas plant having the ability to burn oil; access to more than one gas pipeline; or on-site fuel storage, according to the report. PJM has sent generators preliminary estimates for their share of the penalties, and final bills will be issued on April 7, according to a notice Friday.
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By: Phil Flynn | February 13, 2023
Oil prices are down to start the week on concerns that this week’s January consumer price index (CPI), which is set to be released at 8:30 am Eastern on Tuesday, may come in hotter than expected even after Federal Reserve Jerome Powell declared that “the disinflationary process” is underway. Yet a rebound in oil prices, strong jobs data, and an uptick in consumer confidence is raising concerns that the CPI will be too hot for the Fed to handle. Oil prices are ignoring geopolitical risks that seem to be rising every day that Biden is been in office. The market seems unconcerned that the US has had to shoot down objects in the sky violating US air space and even shot-down aviation over Lake Michigan which for me is getting too close to home.
Yet it is inflation data fears and a rising dollar that seems to be holding oil back. Yet the fundamental backdrop for oil is still very strong. Russia is cutting supply and OPEC says that the market is balanced.
Reuters is reporting that, “Russia’s seaborne oil product exports fell about 10% on Feb 1-12 from the same period in January due to the European Union’s embargo, the lack of available tankers, and the closure of ports due to storms, traders said and Refinitiv data showed.
Now it is being reported that the UAE Energy Minister H.E. Suhail Mohamed Al Mazrouei says that the oil market is balanced and that there is no need for an extraordinary OPEC+ meeting.
With oil producers restricting supply and demand on the rise, we will see a supply squeeze. In simple terms, with China reopening, we will see more demand and from Russia and OPEC the same or less supply which is bullish. We expect to see supplies of crude tighten. Refiners in maintenance should mean that we will have a hard time building up product supply.
Can natural gas find a bottom? The natural gas market is a classic riches-to-rags story. Soaring late last year on fears of shortages became a story of supply. A historically warm winter along with the shutdown of the Freeports LNG export facility changed the dynamics. Now could things finally be bottoming? Scott Disavino of Reuters reported Friday that Freeport LNG’s long-idled liquefied natural gas (LNG) export plant in Texas was on track to start receiving small amounts of natural gas from pipelines on Wednesday after receiving no gas on Tuesday, Refinitiv Eikon data showed. The restarting of Freeport could help cut into the oversupply. Yet will the regulators let the recovery continue? Reuters reported that, “Texas residents grilled U.S. energy regulators on Saturday over their supervision of liquefied natural gas processing plants at a meeting to discuss conditions at the fire-idled Freeport LNG plant. When fully running, Freeport LNG processes about 2 billion cubic feet per day of natural gas and exports up to 15 million tonnes of LNG per year. Its progress toward reopening is closely watched because of the impact on U.S. natural gas prices.”
Naureen Malik of Bloomberg reports that the operator of the largest US grid should scrap its method of using the threat of fines to ensure power plants are available to operate in any weather and instead require them to have backup fuel, the watchdog for the system says. The independent monitor for the 13-state grid stretching from New Jersey to Illinois said in a report Friday that plans to issue up to $2 billion in fines to power plants that couldn’t supply the grid on Dec. 23-24 “was a failed experiment.” “There is no reason that in a rational market design, two cold days would result in a crisis,” Monitoring Analytics, the independent market monitor of PJM, said Friday in a report. The watchdog recommends scrapping the penalties. Instead, generators should be required to demonstrate on a weekly basis that they have the ability to burn an alternative fuel, like a gas plant having the ability to burn oil; access to more than one gas pipeline; or on-site fuel storage, according to the report. PJM has sent generators preliminary estimates for their share of the penalties, and final bills will be issued on April 7, according to a notice Friday.
Read Full Story »»»
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Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
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