U.S. energy is under assault by factors that will have both bullish and bearish consequences over time. For the bearish side, it is energy demand's old foe the coronavirus, but a potential new bullish force is Vice President Joe Biden. His policies will restrict U.S. energy production and jobs and look to California as a model for a national energy policy. You better keep a lot of batteries on hand because if Biden gets his way, the lights will, at some point, go off. Things are getting so extreme in California that despite a summer of rolling blackouts, San Francisco is now going to ban the use of natural gas in new buildings starting next year to combat climate change.

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The International Energy Agency cut its forecast for oil demand growth by 400,000 barrels a day to a decline of 8.8 million barrels per day this year because they believe it is too early to get excited about a coronavirus vaccine. The IEA predicts a recovery in oil demand next year of 5.8 million barrels per day, but this is only 300,000 barrels per day higher than its forecast a month ago.

That is why OPEC plus is sending strong signals that they will maintain current production cuts for 3 to nine months. Saudi Arabia's Prince Abdulaziz has warned that it would be unwise for short sellers to bet against him. Oil misters continue to drop hints of a potential surprise production cut to shock and awe the oil speculative shorts. You have been warned.

Bloomberg reports that Saudi Arabia and Russia, leaders of the 23-nation coalition, have already indicated that they are thinking twice about easing production cuts in January as the resurgent pandemic hits fuel demand. The presidents of both Russia and the Organization of Petroleum Exporting Countries have even mentioned the option of cutting production deeper. This idea hasn't garnered widespread support so far among other members, one delegate said. It is less than three weeks before members meet to make a final decision. Stay tuned.

There is almost belief that we will see demand for oil kick in in the second half of the year, assuming a vaccine is approved. Moderna will announce its trial results, and it is widely expected that it will report positive results similar to Pfizer at a 90% effective rate. If that is the case, oil traders will start pricing in that possibility now, giving oil support against the short term risk of more second wave shutdowns. That means more people will work from home.

You may get taxed for working at home in Europe. The Business Insider reports that Deutsche Bank researchers call for a 5% 'privilege' tax on people choosing to work from home, with the money given to low-income folks. Deutsche said the tax could raise $49 billion per year in the U.S., 20 billion euros ($23.6 billion) in Germany, and £7 billion ($9.3 billion) in the U.K. They say it won't hurt the work from home folks because they will save money on travel and lunch. Hey, I bring my lunch to work and I eat more at home, so this is double taxation of my lunch! Don't let these Deutsche Bank folks get anywhere near Joe Biden. I hate to give him any ideas.

Petroleum will get its ideas from the one day delayed the Energy Information Administration (EIA) inventory report. If it is anything like the American Petroleum Institute (API) version, it should be supportive. To refresh your memory, the API reported that crude supply fell by 5.137 million barrels, two million barrel more than my projection, and much more than the average guesses. That included a 1.17 million barrel draw in Cushing, Oklahoma, making the drop in oil products even more bullish. The API reported a substantial 3.397 million barrel drop in gasoline supply and an even more spectacular 5.619 million barrel drop in distillate supply. Now, as we head into the most vital part of the global demand season, the market looks a lot tighter as global rig counts have fallen by over 50% from a year ago, and refineries shut down, and the U.S. will process much less oil. Later in the year, expectations will be that a more harsh regulatory environment means your days of record oil and gas production may be behind us. 

Natural gas should eke out a small one bcf withdrawal in today's report, with the prospects of lower U.S. production. With increasing demand and exports, the outlook looks very bullish, assuming that we get a typical winter.