Vlad says to start with the man in the mirror, he’s asking him to change his ways and no message could have been any clearer. If you want to put oil in a much better place, take a look at yourself, and then make a change. Russian President Vladimir Putin, while acknowledging that oil prices are getting too high placed the blame on President Donald Trump. Putin said that  “Donald, if you want to find the culprit for the rise in prices, you need to look in the mirror.”

Of course, Putin is right. Most of the blame for rising oil prices do fall on Donald Trump’s head. While many think I am talking just about the hardline on Iran and upcoming sanctions, but the blame goes much deeper than that. It is really a story about historically high oil demand growth driven mainly by President Trump’s economic policies.

Just consider, for example, yesterday’s Institute for Supply Management Non-manufacturing services number that represents the largest part of our U.S. economy. It hit a 21-year high of 61.6 last month, the second strongest reading in the history of the index. As the U.S. economy soars to provide those services, it takes a lot of energy and it creates a lot of jobs. Enter the ADP jobs report that blew away expectations as private-sector employers added 230,000 jobs. I could go on and on about the economic data that shows quite clearly that President Trump’s poor “Trumponomics” is working better than any of his critics would admit. His easing of over-regulation on business, revamping the corporate tax code and renegotiating NAFTA  has laid the groundwork for the best economic conditions for average Americans in decades. It also lays the groundwork for more oil demand and with that demand comes higher prices.

Of course, there is Iran. Iran, with or without sanctions has been a bad actor on the world stage for some time. While oil prices initially fell on a much larger than expected increase in crude supply, in yesterday’s Energy Information Administration (EIA) report, overall strong product demand in gasoline and distillate offset the concerns of the supply increase that was mainly caused by a sharp drop in U.S. oil exports. The market realizes that when we see a sharp drop in U.S. oil exports in one week, it usually rebounds hard the next week. With almost a $10 premium of Brent over WTI, a drop like that in exports must be an anomaly. Look for U.S. exports to surge next week.

We got another surge, on the report that the United States terminated a 1955 treaty with Iran after an international court issued a ruling based on the treaty this week, Secretary of State Mike Pompeo announced Wednesday. “I’m announcing that the United States is terminating the 1955 Treaty of Amity with Iran,” Pompeo said at a press briefing. “This is a decision frankly that is 39 years overdue.”

And U.S. demand remains strong and is exceptional for this slow time of year. The EIA says that demand for total oil products is at 20.5 million barrels per day, up by 1.1% from the same period last year. Over the past four weeks, motor gasoline demand averaged 9.3 million barrels per day, down by 1.5% from the same period last year but was up week over week. Distillate fuel product supplied averaged 3.9 million barrels per day over the past four weeks, down by 2.9% from the same period last year, yet jet fuel product supplied was up 6.6% compared with the same four -week period last year.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.0 million barrels from the previous week. At 404.0 million barrels, U.S. crude oil inventories are at the five year average for this time of year.

Total motor gasoline inventories decreased by 0.5 million barrels last week and are about 7% above the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 1.8 million barrels last week and are about 3% below the five year average for this time of year. Propane/propylene inventories increased by 2.4 million barrels last week and are about 8% below the five year average for this time of year. Total commercial petroleum inventories increased last week by 8.0 million barrels last week.

Our year-end target is still $84 as it was in the beginning and continue to be so. Many of the long-term bullish option strategies that we have recommended over the past few years should really be starting to pay off.  Oil products will be driven by crude.