Photo by Zbynek Burival on Unsplash

Oil prices rise as US fighter jets attack so-called Iranian-linked sites in Syria hitting two weapons and ammunition depot as the US sends more troops to the Middle East. This comes as Iran’s Foreign Minister Hossein Amirabdollahian makes threats to the US by saying “If the genocide continues in Gaza, the US will not be spared.” The reports sent oil back up to resistance as the market is still balancing the current supply and demand situation versus the real and growing threat to supply. 

On the demand side, the market is seeing some pull mainly due to seasonal weakness but travel to the Middle East and Israel will dry up. On the flip side, the first blast of winter has natural gas on the move and helping diesel rebound. Still, pricewise all the petroleum markers are going to have to build on today’s gains to repair the technical damage to the charts. The likelihood of that may depend on headlines coming out today and may be very well driven by the market’s assessment of risk going over the weekend.
 

Beyond the noise underlying the whole petroleum story is that global inventories are historically tight at a time when the risk to supply is heightened.

 Analyst Jorge Arjona pointed out that US oil inventories including the SPR are at 772 million barrels, a level we have not seen since 1985. 
Reuters is reporting That OPEC is sending more oil to Asia as opposed to the United States. They report that “Total U.S. crude waterborne imports are set to average 2.47 million barrels per day in October, down from 2.92 million bpd in September according to figures from data intelligence firm Kpler, with shipments falling from OPEC+ producers including Nigeria, Algeria, and Saudi Arabia. Within that, Saudi crude exports to the U.S. are set to drop to 241,000 bpd in October, Kpler figures showed, down from 286,000 bpd in September and from 410,000 bpd in October 2022.

OPEC+, led by Saudi Arabia and Russia, cut production by 1.3 million per day (bpd) earlier this year and in September extended the reduced production level through the end of the year.
For oil technical oil needs to close above $8625 to repair technical damage and turn back higher. For Brent, it needs to close over $90 a barrel. 
Green energy update, Reuters reports that “As Europe turns to renewable sources to diversify energy supplies away from Russian oil and gas, a peaceful marine scene conceals a billion-dollar security headache. Rising above the Baltic Sea less than 10 km (6 miles) off the coast of Denmark, 161 wind turbines spin slowly. They supply around 4% of the country’s power, sent to shore through two cable connections. The turbines have no barriers or surveillance.”

Oil Price reports that “Toyota thinks it has solved two of the main hurdles with mass electric vehicle adoption: battery range and charging time. Toyota’s new electric vehicle battery will offer a 745-mile range and only take 10 minutes to charge in what could be a breakthrough in electric vehicle adoption. 

Toyota announced this week that it is close to manufacturing a new solid-state battery that could double the range of most electric vehicles-at 745 miles. The batteries could reach the market by 2027 or 2028, helping to catapult electric vehicles into mainstream use. Battery range and charging time have continued to be a barrier to mass EV adoption, with consumers balking at the idea of driving a limited number of miles before spending significant time recharging.

Now all we need is a new power grid.

Natural gas is rallying on a blast of winter. The Fox Weather Channel writes that ” A reinforcing shot of cold air will help a storm system produce the heaviest snow of the season for communities that stretch from Denver through southern Minnesota over the weekend.

Fox Weather says that “forecast models show the heaviest snowfall will occur in the mountains outside of Denver, but cities such Omaha, Nebraska, and Des Moines, Iowa, will not be immune from the chance of frozen precipitation. Denver is expected to see anywhere from 3-8inches across the metro – heaviest totals on the western side of town – which will likely cause some travel problems along major roadways and at the international airport.

If this weather shift is a sign of a long cold winter then natural gas is gonna look very bullish we still are recommending buying some long-term calls going into winter and if the cold weather holds up you probably have not missed the boat.

More By This Author: