Energy Report: Run Bull Run

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Oil prices are stalling, taking a rest after its best bull run in 2 years. It has been a story of OPEC cuts balancing the market and the sense of a new oil supercycle as an investment is being shut down due to a global green energy push. The Biden administration wants to lead the world in green energy which in turn will make oil scarce and more expensive. Now add in the inflationary policies by the Fed and oil looks to be in a secular bull run.

OPEC is seeing better demand in the second half of the year. Market Watch reported that they, "trimmed its forecast for a rebound in global oil demand in 2021. In its monthly report, OPEC said it expects oil demand to rise by 5.8 million barrels a day in 2021, down 100,000 barrels a day from its January forecast, to an average of 96.1 million barrels a day. OPEC said that demand fell by 9.7 million barrels a day in 2020 to an average of 90.3 million barrels a day, slightly lowering its estimate by 30,000 barrels a day. The cartel said its forecast for non-OPEC supply growth in 2021 was revised down by around 200,000 barrels a day to show a rise of 700,000 barrels a day, for an average of 63.3 million barrels a day.

Still, that might not thwart price increases. U.S. supplies continue to fall. The Energy Information Administration reported that U.S. commercial crude oil inventories fell by 6.6 million barrels from the previous week. At 469.0 million barrels, U.S. crude oil inventories are about 2% above the five-year average for this time of year. Total motor gasoline inventories increased by 4.3 million barrels last week and are about 0% below the five-year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories decreased by 1.7 million barrels last week and are about 7% above the five-year average for this time of year. Propane/propylene inventories decreased by 4.5 million barrels last week and are about 9% below the five-year average for this time of year.

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