The world is reaching decisive moments as the presumptive democratic presidential nominee pushes price controls and a potential ‘decisive moment’ for peace in the Middle East. We have a big show with peace talks in Israel and the start of the Democratic Convention in Chicago where Kamala Harris has to back off of her previous statements on just about everything.

U.S. Secretary of State Antony Blinken said that we have arrived at a ‘decisive moment’ for Gaza ceasefire talks and that we have, “probably the best, maybe the last opportunity” and urged all parties to get the agreement over the finish line.

Oil futures continue to squeeze out war risk premium but may not be able to ignore the commodity resurgence much longer. Iran seems to have backed off its attack on Israel because at the end of the day they knew they may be signing the regimes own death warrant. Yet with the markets pricing in interest rate cuts causing gold to hit a record high and now even the beaten down industrial metals are bouncing, can oil be too far behind?

The US oil rig count should also be supportive as there are more predictions that US oil production will come in lower than previously projected. The Baker Hughes oil rig count fell by 2 to 483 rigs. The EIA lowered their forecast for domestic oil production growth in 2024 by 120,000 barrels per day to 170,000 barrels per day, as oil production fell in January because of shut-ins related to cold weather, particularly in oil producing North Dakota.

Economists on both side of the apolitical spectrum are horrified at the economic dribble coming out from Kamala Harris. Price controls, that always lead to shortages, show a total lack of economic literacy as well as a 5.5-billion-dollar plan to increase housing and will in fact only serve to make housing less affordable by raising housing prices.

After Kamala Harris has had to walk back her statements about banning fracking for oil which would be a disaster for the US economy and the US jobs market, she’s had to back off her comments about stealing patents from public companies such as drug companies which would only reduce the availability of drugs and increase the cost. It could also slow research and developments and new wonder drugs and put off cures for diseases and push the medical field back into a new dark age. Maybe Harris can replace wonder drugs with leeches.

Yet as unlikely as it is that Kamala Harris will get her way. If she is elected, you had better prepare for the worst. It is now clear that inflation has soared under Biden Harris. It is not debatable that they tried to downplay it by saying it was transitory. Then when people blamed their policies, they blamed companies that produced its goods. The administration put on unprecedented drilling moratoriums, cancelled the Keystone XL pipelines, and reversed Trumps energy policies that cause energy prices to rise then blamed the oil industry calling them price gougers and war profiteers.

Democrats always promise you a free lunch but there is no such thing as we all pay for it with inflation and less opportunity. They also have got Planned Parenthood to give free abortions making a side show attraction of the destruction of human life. Again, there is no such thing as free anything, there is always a cost.

There are oil product demand concerns as both the gasoline crack spread and the diesel crack-spreads plummeted. The drop in the cracks is out of whack with the inventories which continue to tighten.

This week we expect to see crude oil inventories fall by two million barrels and we expect both diesel supplies, and distillate supplies to fall by two million barrels we also expect refinery runs to stay steady as there’s no crack spread price incentive to raise output.

While global oil demand expectations have been lowered the truth is that global oil demand is still exceeding global oil production. That should lead to further tightening of supplies in the future and once the market gets confirmation that the Fed is going to cut rates that should provide us with a floor even though the mood right now is negative as they take out geopolitical risk premium.

Natural gas dropped on Friday but it’s coming back because today the heat wave is about to descend upon the country.  The natural gas rig count rose by one to 98, while miscellaneous rigs dropped by one to five. A year earlier, the US had 520 oils, 117 gas and five miscellaneous rigs in operation according to Baker Hughes.

The Biden Harris Administration foolishly is hurting the US natural gas industry and hurting the environment as LNG is the cleanest Burning Fossil fuel. The FT is reporting that, “The US liquefied natural gas industry faces mounting challenges as legal clashes with activists and contractors combine with a federal permitting freeze to slow the expansion of the world’s biggest exporter. That is the good old USA, thanks to the US frackers and the US oil and gas industry. Cheap US natural gas has been a boom for the US economy and the US manufaruring base that has feasted on cheap natural gas that has helped create millions of jobs. Yet Kamala Harris wanted to ban fracking putting US Manufacturing into retreat causing the cost of goods to raise adding more inflation.

The FT says that, “Two multibillion-dollar terminals under construction on the Texas Gulf Coast backed by super majors ExxonMobil and TotalEnergies suffered fresh setbacks this month, which are expected to lead to delays. This has added to uncertainty over future supply growth created by the Joe Biden administration pause on new export permits and underlined the complexity of getting LNG mega projects off the ground.” The FT says that, “Delays in bringing US projects online threaten to further squeeze an already tight market and push up prices. The Golden Pass delay will remove 2.3mn tonnes of supply from the market next year and 5.2mn in 2026, according to Wood Mackenzie.” Less supply means more inflation and dirtier air, just like Kamla Harris, they do not think these things through.

The FT says that, “Though the Biden moratorium was blocked by a federal judge last month, no new permits have been issued since and industry players do not expect any change before the November presidential election. “Developers and LNG buyers are waiting from clarification from courts and the US election to remove uncertainty,” said Mark Bononi, an analyst at Wood Mackenzie.”

More By This Author: