You may not want it but you’re going to need it. A frank bit of talk from BP’s (BP) chief executive Bernard Looney who stated the obvious about the realities of the green energy transition and some of the misconceptions about the peak in global oil demand. As reported by Bloomberg the CEO at the IP Energy Conference said when talking about the rush to move away from fossil fuels “You can't defy gravity; you can't go against the will of society... I want to be the one in the room working out how to give people the renewables they want." But when it comes to oil, he said, “People don't always want our product, but they need it... Oil and gas will be here for decades to come and is central to our business - fueling our transition into a lower carbon company.”

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The rush to the energy transition is one of the reasons that we are seeing oil prices continue to surge. Yes, there are short-term factors like the Texas energy crisis that reduced production by over 5 million barrels a day but the real thrust supporting prices is the massive cutbacks in oil and gasoline cap x spending. Also, we are seeing many investors pull back from energy investment.

The surge in oil and gas prices so far has not seemingly caught the attention of the Biden Administration and their silence surrounding the oil and gasoline price surge is deafening.

OPEC is also not in a rush to stop the surge. Dow Jones reported that Saudi Arabia as expected will move to give back its additional 1 million barrel a day production cut but not all at once. Amena Bakr of Energy Intelligence reported that in the previous OPEC plus meetings it was agreed that the easing of the cuts will be “gradual” and a maximum volume of 500 thousand barrels of oil a day would be eased. BUT during the last meeting the group didn’t ease the cuts, so don’t be surprised if more than 500k hit the market this time at the next meeting.

Oil closed above its long-term resistance of $63 a barrel. If we close above that again and even better $64 it should confirm technically the supercycle breakout type of trade talk. We were of course warning that the oil super-cycle was coming and now some of the major banks and the commodity charts agree. The Upside risks are still high so hedgers should be hedged.

 We should also get a big draw on Natural gas! Dan Molinski of Dow Jones writes that U.S. government natural-gas data due Thursday is expected to show inventories decreased last week by a massive, near-record amount as a winter storm in the middle of the country curbed production and kept heating demand high.

The Energy Information Administration is expected to report gas-storage levels fell by 334 billion cubic feet during the week ended Feb. 19, according to the average forecast of 14 analysts, brokers, and traders surveyed by The Wall Street Journal. The EIA is scheduled to release its natural-gas storage data for the week at 10:30 a.m. EST Thursday. Estimates range from decreases of 322 bcf to 347 bcf. The average forecast compares with a 145-bcf decrease in storage in the same week last year and a five-year average decline of 120 bcf for that week.

S&P Global Platts Analytics said the expected plunge in inventories could rival the largest weekly storage decline on record, which stands at 359 bcf and was set for the week ended Jan. 5, 2018. "During that week, a 'bomb cyclone' blasted its way across the U.S., prompting freeze-offs and pipeline-related outages in nearly all U.S. basins, dropping supply by 3 bcf per day," said S&P.A 334-bcf decrease last week would mean gas stocks totaled 1.947 trillion cubic feet, 13% below last year's total at this time and 8% below the five-year average for this time of year.

December and January saw a mix of warm and cold spurts that kept in check a long-running storage surplus compared to the five-year average. But a much-colder-than-normal February has caused the surplus to narrow significantly and quickly move toward a sizable deficit.