As OPEC heads into its March 17-18th OPEC+ coalition “Joint Technical Committee and Joint Ministerial Monitoring Committee” meeting in Baku, Azerbaijan, they are making it clear that they are considering an extension of OPEC production cuts but also warning the U.S. not to think about instituting a NOPEC bill that would allow the government to sue the cartel. According to a Bloomberg report, they would start a production war, call on every member to raise production to maximum capacity, causing a crash in oil prices, and continue to work to bring the shale oil producers to their knees.

Yet without a bill, they plan on draining supply and driving the price of Brent oil basis back to $80 a barrel, tweet or no tweet. OPEC is still fuming about President Trump’s last-minute reversal on Iranian oil sanctions when he granted waivers, especially after OPEC and their partner in crime Russia, tried to appease the president by raising production. Now the gloves have come off and the cartel wants revenge and they are going to stay tighter and show that they will not be swayed by the U.S. President.

OPEC is covering their tracks and they are making a case for even further cuts by lowering their demand estimate for crude oil. In their latest report, they lowered their 2019 demand forecast to 30.46 million barrels per day, 130,000 bpd less than last month’s forecast. OPEC is also calling on others to cut output and they will not be swayed from their production cut goals, despite evidence that their determinization will lead to a supply deficit in the near future.

In fact, that is exactly what the International Energy Agency (IEA) is predicting. The world is being led by U.S. oil demand growth as we are the strongest economy on the globe. The IEA, according to Reuters, is saying that “The Paris-based IEA said the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 0.5 million bpd.”

“At the same time, (OPEC) production cuts have increased the spare capacity cushion. This is especially important now as economic sentiment is becoming more pessimistic and the global economy could be entering a vulnerable period,” the IEA added. The agency said it was particularly concerned about a possible further decline in production in Venezuela, where output has stabilized at 1.2 million bpd in recent months.”

What this means for traders is that the path of least resistance is still to the upside. We have talked about the lack of heavy oil, as well as other refining issues, which will make this turnaround season very challenging. We have not even touched on the fact that Iranian production is falling, yet Libyan production is rising. We have an unstable situation in Nigeria as well, so there is enough geopolitical risk to keep the market nervous. While there is no real risk to oil supply at this point, the market must also pay attention to Israel and Gaza. The AP reported that Israeli warplanes on Friday struck some 100 Hamas targets in the Gaza Strip in response to a rare rocket attack on the Israeli metropolis of Tel Aviv. Rocket fire persisted into the morning, setting the stage for additional possible reprisals.

Nat gas may have had its last blast of winter, I hope. The EIA yesterday reported a massive drop in supply. Market Watch reported that the U.S. Energy Information Administration released Thursday that domestic supplies of natural gas fell by 204 billion cubic feet for the week ended March 8. That was within range of the 208 billion-cubic-feet decline expected by analysts polled by S&P Global Platts. Total stocks now stand at 1.186 trillion cubic feet, down 359 billion cubic feet from a year ago and 569 billion below the five-year average.