Energy Report: Nuclear Talks On Hold

The Wall Street Journal says that if higher prices persist Americans can expect bigger utility bills. The work from home class could feel a pinch in the pandemic shifted energy costs from employers to employees who have to heat and cool their home offices and run electronics when they would normally be at work. “These are the consequences of the underinvestment we’ve seen in natural gas,” said Colin Fenton, chairman of investment banking at Houston’s Tudor, Pickering, Holt & Co. “What’s notable is these prices are happening with industrial demand, more than a quarter of the market, so early in its recovery.”

There are plenty of warning signs not only in natural gas but in the oil market as well. The gasoline market and refining capacity as we forge ahead foretell a potential energy crisis too. The Biden administration is going to have to stand up and face the reality that we're going to continue to need fossil fuels for the foreseeable future. The Biden administration must also acknowledge that natural gas is probably a fantastic bridge to carry us over to a point where we can get to a more carbon-neutral world. But the Biden administration's drilling moratoriums as well as their disdain for pipelines and other fossil fuel production means it will be almost impossible to meet that demand.

China may try to cool commodity prices but it's going to be a tough job. Javier Blass of Bloomberg tweeted this morning that China has issued the 2nd batch of oil import quotas for private refiners (the so-called teapots), significantly lower than the 2nd batch of 2020 (a 35% y-on-y reduction). Beijing is cracking down on the teapot's excesses.

The trend for oil is still very strong to the upside and we still recommend buying breaks in this market. We continue to believe that there is an upside risk in this market we continue to warn people that have the exposure that they should have some hedges in place.

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