There is a lot on the plate for oil this week. Not only do we have the Fed meeting we have the possibility of new sanctions on Russia and the potential pullback from the Iranian nuclear deal. This came against a backdrop of surging global demand for oil and related products.

The Fed should raise rates a quarter and the market then will focus on how many more times the Fed will raise rates this year. While we seemed to be moving towards four rate hikes, but now with a pullback in growth forecast by the Atlanta Fed, the odds are the Fed will not change their outlook at all. So, three hikes are what we can expect.

President Trump meets with Saudi Arabia's Crown Prince Mohammed bin Salman, and the meeting, along with the firing of Rex Tillerson is raising the odds in the mind of the market of canceling of the nuclear deal. Leaders in Europe seem desperate to want to keep the deal in place and may try to talk to the Trump administration to get the U.S. to stay in the deal. Talk from folks close to the White House seems to be suggesting that the U.S. could find some room to negotiate the current deal. In the meantime, the fact is that MBS called Ayatollah, Khamenei, "the new Hitler" of the Middle East. An interview on CBS' 60 minutes went like this:

Norah O'Donnell: But I've seen that you called the Ayatollah, Khamenei, "the new Hitler" of the Middle East.
Mohammed bin Salman: Absolutely.
Norah O'Donnell: Why?
Mohammed bin Salman: Because he wants to expand. He wants to create his own project in the Middle East very much like Hitler who wanted to expand at the time. Many countries around the world and in Europe did not realize how dangerous Hitler was until what happened, happened. I don't want to see the same events happening in the Middle East.
Norah O'Donnell: Does Saudi Arabia need nuclear weapons to counter Iran?
Mohammed bin Salman: Saudi Arabia does not want to acquire any nuclear bomb, but without a doubt, if Iran developed a nuclear bomb, we will follow suit as soon as possible.

Then there is the possibility of Russian sanctions. Vladimir Putin won a rigged election and is coming under fire by the UK and the U.S. for using a nerve agent to poison a former spy. Putin said it was nonsense to think that Moscow would have poisoned the former Russian spy Sergei Scribal and his daughter, Yulia. Yet the facts lead back to Putin as the nerve agent used was an old Soviet recipe.

Reuters reported that Italian oil major Eni will discuss sanctions against Russia with authorities in the European Union and the United States to gain clarity on the economic rivalry forming between President Donald Trump and the Kremlin. OIL Price reported that Eni signed a cooperation agreement with Rosneft last year to explore fossil fuel deposits in the Barents Sea and the Black Sea last year. President Donald Trump has ramped up sanctions against Russia to retaliate against Moscow’s meddling in the 2016 presidential elections, as well as other cyber attacks.

“We are careful to maintain relations with Rosneft, but we have to respect U.S. and European norms,” CEO Claudio Descaling said on the sidelines of a business plan presentation. The executive clarified that the company ran two wells in all of Russia. The Trump administration issued a series of punitive sanctions against Russia for coordinating a cyberattack on the U.S. energy grid, aviation systems, and other infrastructure, according to a recent report by the Associated Press. Deputy Foreign Minister Sergei Rybakova said Moscow will prepare a response to the sanctions but did not provide additional details.

The drop-in product supplies in the U.S. means that we are close to the seasonal bottom for RBOB. Distillate supplies will be in strong demand as winter lingers in the U.S. and in Europe. U.S. summer drive demand should set records. Make sure you get hedged.

Natural gas still supported by cold but is failing to make any more territory on the upside. Look to get short or buy puts.