Oil did a flip flop and rocked after the International Energy Agency (IEA) actually raised their oil demand forecast for 2021 but at the same time said that in the near term, the oil demand outlook was fragile. It is unusual that the IEA has the most bullish demand outlook. They agreed with OPEC and the Energy Information Administration that demand would be weaker in the third and fourth quarters but is now saying demand will bounce back next year. 

The Paris-based IEA cut its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd in its second downgrade in a row. Yet the IEA projected global oil demand would grow by around 5.5 million bpd next year, climbing to an average of 97.1 million barrels a day.

The Gulf Coast has to get ready for Hurricane Sally a powerful, slow-moving storm that might prove to be a nightmare for the U.S. energy Infrastructure. The Wall Street Journal reports that "Hurricane Sally took aim at the central Gulf Coast on Monday, as thousands of people prepared for heavy rain and potentially deadly flooding from New Orleans and Biloxi, Miss., to the Alabama-Florida state line. Sally, with maximum sustained winds of 100 miles an hour, strengthened to a Category 2 storm and was expected to make landfall around the Mississippi-Alabama state line early Wednesday, according to the National Hurricane Center. Forecasters said the storm could drop up to 24 inches of rain over the course of days along the central Gulf Coast. Forecasters also expect Sally could trigger a storm surge from the Mississippi River Delta in Louisiana to the Florida Panhandle, triggering life-threatening flooding. Sally was about 130 miles southeast of Biloxi Monday night and was moving slowly over warm Gulf waters, which were expected to fuel the storm's strengthening. The possibility of damaging flash floods will put pipelines and refineries in jeopardy and, of course, will also stop imports and exports in the Gulf Of Mexico.

In the meantime, vaccine hopes and near record-breaking refinery demand in China once again is giving the market hopes that oil demand is not as bad as we had feared, and the demand outlook could be even brighter.

S&P Global Platts reports that "China's domestic refineries processed 14.06 million b/d or 59.47 million mt of crude oil in August, edging down 0.2% month on month, extending a slight downtrend since hitting a record high in June, National Bureau of Statistics data released September 15 showed.”

On the road again. Reuters is reporting that road traffic in New York, London, and Paris was on a slow but steady recovery, data provided to Reuters by location technology company TomTom showed. In Moscow and Beijing, traffic was as high as pre-lockdowns levels.

There are also signs that the U.S. economy is starting to grow quickly. Zero Hedge reports that rail traffic is up year over year for the first time since early 2020. They are also reporting of shippers not being able to secure rail cars. Zero Hedge said that "U.S. railroads just posted their first annual traffic gain in a very long time: according to Railway Age, for the week ending September 5, 2020, a surge of nearly 25% y/y in intermodal loadings more than offset a 7% decline in carload traffic, creating an overall annual gain of almost 9%, the Association of American Railroads (AAR) reported September 9. Canadian and Mexican intermodal volumes also rose, driving a North American gain of nearly 21%. Total U.S. rail traffic for the week ending September 5 was 509,637 carloads and intermodal units, up 8.6% compared with the same week last year.

Technically it looks like oil may have hit a short-term bottom. This is unusual, especially with a hurricane like Sally coming in. It looks like the funds got too short and are now running for cover.