Energy Report: Power Surge

There is so much news. Most of it is bullish for the oil and gas markets. It's hard to keep up but we will give our best efforts. Oil and natural gas prices are soaring and things are getting so dramatic that Goldman Sachs has joined our call for consumers of natural gas to buy protection with out-of-the-money calls. In other words, Goldman Sachs is seeing what we've been saying for months that we have a potential structural shortage of natural gas going into winter and unless energy and shale producers can dramatically increase production, this global deficit of natural gas could become a major issue this winter.

Pump Jack, Oilfield, Oil, Fuel, Industry, Petroleum

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Oil prices also are getting support from very supportive data from the American Petroleum Institute (API) that showed crude oil inventories fell by 5.437 million barrels and supplies in the Cushing, OK storage hub fell by 1.345 million barrels. We also as have a big 2.761 million barrel drop in gasoline supplies and a 2.88 million barrel drop in distillate supplies. These draws and inventories are just the beginning and we should see bigger draws of gasoline and distillate supplies in the coming weeks. We may even see in the Energy Information Administration petroleum status report, bigger than expected draws and even more so than we saw in the API report. If that is the case, we would expect that oil and products would continue adding to the rally that we have seen in overnight trading.

Recovery in the Gulf of Mexico from Hurricane Ida and now by hurricane Nicholas is still slow. The Bureau of Safety and Environmental Enforcement reports that 39.57% of Gulf oil production is still shut-in. That is the equivalent of 720,217 barrels per day and 48.20% of natural gas production is still shut as well, driving panic buying of natural gas.

Natural gas prices in Europe are surging again this morning and here in the United States, we all know that these record-breaking prices of natural gas in Europe is being caused by bad energy policy. The United States looks like they want to repeat the same mistakes Europe has that have brought them to sharply higher heating bills, utility bills, and not to mention, gasoline prices.

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William K. 1 week ago Member's comment

For way too long now the green energy grouphas been boosting the price of energy and thus damaging all of the unfortunate folks who can not pay the much higher costs for the "green" energy. So they do not have the electric power for lights at night and electric water pumps to provide clean water to drink. Is it malice towatds the unfortunate? Or is it just plain, unthinking, stupidity? OR, as some point out, it may be unthinking greed. My take is that it is all three.