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The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com


Snow Go. The Energy Report 12/20/2024

Oh, the weather outside is frightful, but the nat gas moves delightfully. And since we’ve no place to go,

Let it snow, let it snow, let it snow. It doesn’t show signs of stopping, as the temperatures are still dropping. The lights are turned way down low to save some dough, let it snow, let it snow, let it snow.

The natural gas market leads the energy report because let’s face it, oil is kind of boring. Oil is still stuck in a new higher trading range, but now is acting like its wants to hibernate until after the Holidays. Yet natural gas will not have that luxury as winter weather and below normal temperatures are sending prices higher.

Fox Weather is reporting that the coldest air in nearly 2 years is coming to Northeast. The Fox Forecast Center eyes the potential for snow across the northeast on Friday and the Arctic plunge that follows. Temperatures begin to fall on Saturday but will be majorly felt Sunday morning through Monday with some of the coldest air the Northeast has seen in nearly two years.

Not only is Fox Weather predicting that, but some weather forecasters are also predicting that January in the US may be the coldest we have seen 2019. You remember Jan 2019 nat gas traders, don’t you? That was when a polar vortex brought arctic air to the Midwestern United States and Eastern Canada and record low temperatures to many areas, and some all-time record lows. In Wisconsin, the polar vortex caused record low temperatures in Madison and Milwaukee, and wind chills as low as -55°F in Waukesha.

In fact, that was just the type of weather that Neil Cavuto loved to send me out in to do live shots in, mainly because I think he was jealous of my fury winter coat! As many of you have heard, Neil is leaving Fox News. I just want everyone to know that Neil is genuinely one of the nicest and classiest professionals in all of television and I think the world of him. It’s not just me but everyone that had the pleasure of meeting him or working with him say the same. I wish him all the best and he will be missed.

Reuters is reporting that President-elect Donald Trump said on Friday that the European Union may face tariffs if the bloc does not cut its growing deficit with the United States by making large oil and gas trades with the world’s largest economy. The EU is already buying the lion’s share of U.S. oil and gas exports, according to U.S. government data, and no additional volumes are currently available unless the United States increases output, or volumes are re-routed from Asia – another big consumer of U.S. energy.

Now back to the oil prices. I think the reason why oil prices are under pressure is the stock market even though the fundamentals for oil are looking bullish based on supply and demand.

Concerns on the Federal Reserve’s dot plot and concerns about a potential government shutdown is weighing on market sentiment. Concerns about Chinese oil demand has been a familiar story this year as well. But Zerohedge is reporting the last time China 1Y bond traded below 1%, Lehman had just filed for bankruptcy. Bond market convinced Beijing to unleash mother of all monetary stimulus and/or QE. Commodities are so far unaware.

Also, Iranian sanctions may be starting to hurt Iran Bloomberg is reporting that, “The volume of Iranian oil stored on tankers at sea has swelled to the highest level since late July, as broadening US sanctions disrupt flows of the OPEC producer’s crude to China. The amount of oil held in floating storage was 16.82 million barrels as of Dec. 15, according to data from Kpler. Nearly two-thirds is stashed on tankers off the eastern coast of Malaysia, a key area of the supply chain where Iranian crude is often transferred to other ships for transit to Chinese ports. The question is why it took so long?

We think oil will find support in this area. The lows should be in for the quarter.

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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

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