Energy Report: Oil Policy Madness

The American Petroleum Institute did not yet show the full impact of the Texas disaster. The API reported a surprise 1.026 million barrel increase in crude supply. Part of that increase was a sharp rebound of 2.783 million barrels in the Cushing, Oklahoma hub. The APOI did show a very large 4.489 million barrel drop in distillate and a modest 66,000 barrel increase in gasoline supply. The market initially sold off at the number but now is rebounding because the trade knows that in the coming weeks we will start to see the impact of the production and refining shutdowns. 

Oil is testing its major long-term resistance near $63 a barrel. A breach of that number should open up a long-term oil market break out. I have been warning that when oil prices were cheap we were setting the stage for this burgeoning oil supercycle. People who thought that oil supercycles would be impossible in the future because of shale are getting a lesson in the importance of oil investment as well as government policy! The Biden administration plans to make oil and gasoline expensive and rare is ahead of schedule. The problem is that it is coming on the backs of the American worker. It is coming at the expense of US opportunity and jobs and a policy that is going to give China back an economic edge. U.S. manufacturing will be strained in the coming months but China will expand using good, old fashion fossil fuels. 

Hopefully, you have headed my warnings, and you're hedged. At least there will be some amazing opportunities in the commodity space. The risk is for another upside spike is still high. We are still in a buy the breaks mode.

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Bill Johnson 2 months ago Member's comment

I bought USO at $18 and looking forward to higher Oil prices! I guess I’ll have to start riding the motorcycle to save on my fuel expenses!