Phil Flynn's take - Feb 14
Posted: Mon Feb 14, 2022 1:13 pm
Phil Flynn and I are on the same page when it comes to the IEA. We both agree that the IEA reports and supply/demand forecasts are biased toward what the Climate Change Wackos want to hear. For over a decade IEA has under-estimated oil demand. The IEA is based in Paris and everyone that works there must support the Paris Climate Accord or else they won't be getting a paycheck much longer. My comments are in blue below.
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The Energy Report: Insecurity Ahead
By Phil Flynn (Feb 14, 2022 09:48AM ET)
As Europe braces for war, it is clear that decisions made by European governments in regards to energy are going to have far-reaching consequences.
The International Energy Agency (IEA) became a mouthpiece for the green energy lobby putting out flawed data that has left Europe in a pickle. For years they underestimated demand and inflated energy supply and gave Europe the impression that some of their pie in the sky ideas about a quick energy transition could be easily accomplished. Yet now, the misreporting from this agency can no longer be hidden as the reality of energy shortages, and now the threat to Europe’s security cannot be ignored anymore.
The IEA admitted that their estimate of global oil supply was off by 200 million barrels, and they admitted that global oil inventories plunged by 600 million barrels instead of 400 million barrels.
The IEA blames OPEC plus Russia because they ‘chronically’ fail to meet output targets. Now they warn that global oil inventories are 255 million barrels below the five-year average and at their lowest level in seven years. On top of that, the agency had to go back and revise upward 15 years of oil demand estimates that they previously underreported and set the stage for the energy crisis that Europe is in now. < Yes, IEA actually goes back and increases their oil demand forecasts after the fact.
At this point, war has not broken out, and Ukraine insists that the U.S. and the Biden administration is hyping the risk. The Wall Street Journal reported that U.S. officials are warning that Russia could be about to attack Ukraine. For many citizens in this embattled country, the assault has already begun.
Ukrainian officials said that Russia, which has positioned more than 100,000 troops around three sides of Ukraine, is stepping up a destabilization campaign involving cyberattacks, economic disruption, and a new tactic: hundreds of fake bomb threats. Zerohedge reported that during their Sunday phone call, Ukraine’s President Zelensky asked Biden to visit Kyiv in person amid continuing White House claims that a Russian invasion is set to happen “any day” now.
Saying that major Ukrainian cities are “under safe protection,” Zelensky suggested that a visit of the U.S. president in person would stop the spread of panic and prevent escalation. Zelensky told the U.S. president:
“I am convinced that your visit to Kyiv in the coming days… would be a powerful signal and help stabilize the situation. We will stop any escalation. The Ukrainian capital, Kyiv, other cities in our country – Kharkov and Lvov, Dnepr and Odessa – are under safe protection.”
In the U.S., despite war fears, we know that oil supplies will most likely fall again. There are signs that U.S. producers are trying to respond to higher prices even with the risks posed by the Biden administration’s threats of more taxes and regulations.
World Oil reported that Baker Hughes rig count released Friday shows the United States has added 22 rigs since last week, bringing its total count to 635. This shows an increase of 238 rigs from last year and brings North America’s total rig count to 854. Compared to a record low U.S. count of 244 in August 2020, the rig count is up 160%.
According to Baker Hughes, rig counts are also increasing internationally, with Canada adding one to total 219 since last week and other countries adding seven to total 841 since last month. Canada’s number of rigs has increased by 43 in the past year, and other international rigs have increased by 164 in the past year.
The Energy Information Administration data showed oil output will average 12.6 million barrels a day in 2023, an increase from its previous estimate of 12.41 million. The current annual all-time high of 12.3 million barrels a day was set in 2019. < On a monthly basis, US oil production peaked in Nov 2019 at 12,860,000 BOPD. A few weekly EIA estimates in Q4 2019 showed US production over 13 million BOPD, but that never happened in the real world. Always remember that EIA's weekly production estimates are just WAG's.
If you are looking for oil from Iran to cool off prices, well, not so fast. The indirect talks in Austria between Iran and the United States resumed last week after a 10-day break. Delegates have said the talks had made limited progress since they resumed in November after a five-month hiatus prompted by the election of hardline Iranian President Ebrahim Raisi. < IMO the media often mentions a deal with Iran is "close" just because it is good "click bait".
Despite a report from a Russian official that talks were going well, Reuters reports that a senior Iranian security official said on Monday that progress in talks to salvage Iran’s 2015 nuclear deal was becoming “more difficult” as Western powers only “pretended” to come up with initiatives.
Natural gas Is also popping. EBW reports that a moderately bullish weather shift recovering almost a third of last week’s losses over the weekend, a three-week high in LNG feedgas demand, and a flattening production trajectory may allow the front-month to retest resistance north of $4.08/MMBtu early this week. Another leg lower remains the most-likely price scenario as a mild late February and early March compound an end-of-March storage trajectory north of 1,425 Bcf. Further declines, however, are likely to feature choppy trading as near-term NYMEX contracts grind lower. < At the time of this post, the MAR22 HH NYMEX futures contract was up $0.22 to $4.16/MMBtu.
Brimming geopolitical tensions with Russia and Ukraine sent oil soaring on Friday to an eighth straight weekly gain. While underlying fundamentals remain robust and near-term technical points higher, a retracement lower after the extended rally may occur at any time.
Obviously, the upside risk for oil and products is still high. Yet we could get a break after the extended run. You should be able to buy the break.
-------------------------------
The Energy Report: Insecurity Ahead
By Phil Flynn (Feb 14, 2022 09:48AM ET)
As Europe braces for war, it is clear that decisions made by European governments in regards to energy are going to have far-reaching consequences.
The International Energy Agency (IEA) became a mouthpiece for the green energy lobby putting out flawed data that has left Europe in a pickle. For years they underestimated demand and inflated energy supply and gave Europe the impression that some of their pie in the sky ideas about a quick energy transition could be easily accomplished. Yet now, the misreporting from this agency can no longer be hidden as the reality of energy shortages, and now the threat to Europe’s security cannot be ignored anymore.
The IEA admitted that their estimate of global oil supply was off by 200 million barrels, and they admitted that global oil inventories plunged by 600 million barrels instead of 400 million barrels.
The IEA blames OPEC plus Russia because they ‘chronically’ fail to meet output targets. Now they warn that global oil inventories are 255 million barrels below the five-year average and at their lowest level in seven years. On top of that, the agency had to go back and revise upward 15 years of oil demand estimates that they previously underreported and set the stage for the energy crisis that Europe is in now. < Yes, IEA actually goes back and increases their oil demand forecasts after the fact.
At this point, war has not broken out, and Ukraine insists that the U.S. and the Biden administration is hyping the risk. The Wall Street Journal reported that U.S. officials are warning that Russia could be about to attack Ukraine. For many citizens in this embattled country, the assault has already begun.
Ukrainian officials said that Russia, which has positioned more than 100,000 troops around three sides of Ukraine, is stepping up a destabilization campaign involving cyberattacks, economic disruption, and a new tactic: hundreds of fake bomb threats. Zerohedge reported that during their Sunday phone call, Ukraine’s President Zelensky asked Biden to visit Kyiv in person amid continuing White House claims that a Russian invasion is set to happen “any day” now.
Saying that major Ukrainian cities are “under safe protection,” Zelensky suggested that a visit of the U.S. president in person would stop the spread of panic and prevent escalation. Zelensky told the U.S. president:
“I am convinced that your visit to Kyiv in the coming days… would be a powerful signal and help stabilize the situation. We will stop any escalation. The Ukrainian capital, Kyiv, other cities in our country – Kharkov and Lvov, Dnepr and Odessa – are under safe protection.”
In the U.S., despite war fears, we know that oil supplies will most likely fall again. There are signs that U.S. producers are trying to respond to higher prices even with the risks posed by the Biden administration’s threats of more taxes and regulations.
World Oil reported that Baker Hughes rig count released Friday shows the United States has added 22 rigs since last week, bringing its total count to 635. This shows an increase of 238 rigs from last year and brings North America’s total rig count to 854. Compared to a record low U.S. count of 244 in August 2020, the rig count is up 160%.
According to Baker Hughes, rig counts are also increasing internationally, with Canada adding one to total 219 since last week and other countries adding seven to total 841 since last month. Canada’s number of rigs has increased by 43 in the past year, and other international rigs have increased by 164 in the past year.
The Energy Information Administration data showed oil output will average 12.6 million barrels a day in 2023, an increase from its previous estimate of 12.41 million. The current annual all-time high of 12.3 million barrels a day was set in 2019. < On a monthly basis, US oil production peaked in Nov 2019 at 12,860,000 BOPD. A few weekly EIA estimates in Q4 2019 showed US production over 13 million BOPD, but that never happened in the real world. Always remember that EIA's weekly production estimates are just WAG's.
If you are looking for oil from Iran to cool off prices, well, not so fast. The indirect talks in Austria between Iran and the United States resumed last week after a 10-day break. Delegates have said the talks had made limited progress since they resumed in November after a five-month hiatus prompted by the election of hardline Iranian President Ebrahim Raisi. < IMO the media often mentions a deal with Iran is "close" just because it is good "click bait".
Despite a report from a Russian official that talks were going well, Reuters reports that a senior Iranian security official said on Monday that progress in talks to salvage Iran’s 2015 nuclear deal was becoming “more difficult” as Western powers only “pretended” to come up with initiatives.
Natural gas Is also popping. EBW reports that a moderately bullish weather shift recovering almost a third of last week’s losses over the weekend, a three-week high in LNG feedgas demand, and a flattening production trajectory may allow the front-month to retest resistance north of $4.08/MMBtu early this week. Another leg lower remains the most-likely price scenario as a mild late February and early March compound an end-of-March storage trajectory north of 1,425 Bcf. Further declines, however, are likely to feature choppy trading as near-term NYMEX contracts grind lower. < At the time of this post, the MAR22 HH NYMEX futures contract was up $0.22 to $4.16/MMBtu.
Brimming geopolitical tensions with Russia and Ukraine sent oil soaring on Friday to an eighth straight weekly gain. While underlying fundamentals remain robust and near-term technical points higher, a retracement lower after the extended rally may occur at any time.
Obviously, the upside risk for oil and products is still high. Yet we could get a break after the extended run. You should be able to buy the break.