Energy Prospectus

Go here and watch the 3 minute video on the right side of the screen: https://www.cmegroup.com/trading/energy ... crude.html
There is a lot of technical support for WTI now. Several closes over $57/bbl is a positive breakout from the wedge which I showed you in my podcast. A close over $58 opens the way for a test of $60. - Dan

Oil Prices Hit 6-Week Highs Buoyed by Optimism on Output Cut Extension with my comments in blue.
Forex: Sep 10, 2019 08:26AM ET

Investing.com -- Oil prices rose to their highest levels in six weeks on Tuesday, bolstered by hopes that OPEC and its allies may agree to extend an agreement to curb output in order to support prices.

International benchmark Brent was up 55 cents at $63.16 a barrel by 08:23 AM ET (12:23GMT), its highest level since Aug. 1. Crude oil WTI futures were up 56 cents, or 1.0%, at $58.42 a barrel, its highest since July 31.

Prices were on track for a fifth straight day of gains after Saudi Arabia's new energy minister on Sunday reiterated a commitment to production cuts by the OPEC+ alliance, made up of the Organization of the Petroleum Exporting Countries and non-OPEC producers, including Russia.

He said the kingdom's policy would not change and a global deal to cut oil production by 1.2 million barrels per day would be maintained. He added that the alliance would be in place for the long term. < My take is that Saudi Arabia wants $80 Brent leading up to the IPO of Saudi Aramco.

"Clearly, the Kingdom wants higher oil prices ... Prince Abdulaziz made clear that 'no radical' change in the Saudi oil policy is forthcoming", said Tamas Varga of oil brokerage PVM.

"It will be interesting to see if we get any hint from him whether the producer group in general and Saudi Arabia in particular sees the need for deeper production cuts".

The OPEC+ joint ministerial monitoring committee (JMMC), which reports on compliance with the cuts, is due to meet on Thursday in Abu Dhabi. < They will be putting pressure on all of the cartel members and Russia to get their production below the quota agreements.

There have been concerns about producers' adherence to the agreement as OPEC members Iraq and Nigeria, among others, exceeded their quota in August and Russia also did not fully comply.

"Markets will need to see concrete progress on the production front, even as the world's economy slows, to sustain gains," said Jeffrey Halley, senior market analyst at OANDA.

Should oil markets close higher on Tuesday it will be the longest run of gains since late July but headwinds remain due to U.S.-China trade tensions.

--Reuters contributed to this report

The Energy Report Updated By Phil Flynn (Sep 10, 2019 10:02AM ET)

On the Verge

The crude oil market is on the verge of an upside breakout as the oil traders is expecting that at the very least, OPEC plus Russia will continue with production cuts at its joint OPEC/non-OPEC Ministerial Monitoring Committee (JMMC) meeting on Thursday. Those hopes have been inspired by the new Saudi oil minister Prince Abdulaziz bin Salman said he intends to maintain production curbs as part of an agreement with the Organization of the Petroleum Exporting Countries.

The market also expects that he will do more than his predecessor Khalid al-Falih, to try to raise oil prices ahead of the Saudi IPO. Mr. al-Falih's major failing was to not get oil to the price Prince Bin-Salman and his father the king wanted. So if Prince Abdulaziz bin Salman, the first member of a royal family to hold that role, wants to avoid the same fate as Khalid al-Falih, he better start calling Russia with a plan to announce a bigger production cut on Thursday.

In the meantime there are reports that Iraq, the biggest over production cheater in the OPEC cartel, it is now ready to reduce its crude oil production next month. Iraq's oil minister, Thamer Ghadhban, said, “We are committed to the agreement to reduce production.”

Oil is also gearing up for another bullish American Petroleum Institute (API) report. While Hurricane Dorian no doubt will start messing with the data, we are still expecting a pretty sizable draw. Private forecasters are reporting at least 700,000 draw at the Cushing delivery hub in Oklahoma and U.S. oil imports into the Gulf should drop dramatically from last week’s pre-storm surge. We are looking for crude oil supply to fall by 3.0 million barrels and we’re looking for products to fall by 3.0 million barrels as well.

More talk of shale pullbacks and fiscal discipline should lower U.S. shale production expectations. Decline rates are rising and rig counts are falling and are not painting a pretty production outlook. Oil demand drops in the U.S. have not happened and talk of falling global demand looks to be more overstated than understated. Demand in China stays strong and may get stronger with more economic stimulus on the way.

OPEC Sec Gen Barkindo: "The Oil Market Is Not Being Driven By Fundamentals"

Natural gas should stay strong with all the heat down south.

Thanks,

Phil Flynn

https://oilprice.com/Energy/Oil-Prices/ ... olton.html

The man wants to get re-elected.

From Ms. Geiger's article on OilPrice.com:

"While oil prices have weakened on demand fears due to the trade war between China and the United States, the tensions over Iranian oil have limited those losses. Now, with today’s administration reshuffling signaling a warming up to Iran, those trade war fears will run unchecked.

Oil prices had been trading up earlier in the day as OPEC renewed its commitment to the production quotas, and suggesting that it might extend the cuts again. By 12:28pm, WTI started to fall, reaching $57.71 (0.24%), with expectations of gloomier prices to come."

We'll see whether "those trade war fears will run unchecked" and "gloomier prices ... come."

When actual demand declines, I'll believe it. But I won't be holding my breath.

How about, on the supply side, increasing shale decline rates and declining US well productivity, declining rig counts, declining DUCs, declining inventory levels, declining days of supply, and relatively flat production since Dec. 2018 vs. predictions of a rise in US production of 1.5 - 2.0 mm bopd per year? Is the market just going to ignore it if inventory levels continue falling at the rate they have since May?

More broadly, is President Trump going to back away from his policy of denying nukes to the Iranian government and lift sanctions? More specifically, was Mr. Bolton alone responsible for the use of sanctions as a means by which to pursue a no nukes policy? We'll see.