About The Author

Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

Oil is still trying to find a bottom as macroeconomic fears are outweighing common sense. The sharp break in oil prices has caused a drop in the U.S. rig count and we should see another substantial drawdown in U.S. oil supply. Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil fell by 4 to 873 this week after a 10-rig decline. Yet with trade war fears and a weak stock market it is hard for oil traders to look at the tightening oil market situation with any sense of dread. Instead, It is trading on what may happen If the economy slows down. In the meantime, we will look to the outside markets for direction as the short-term bullish fundamentals for oil don’t seem to matter. Even after OPEC plus 1 agreed to reduce output by 1.2 million barrels per day (bpd) from January, and loss of supply from Libya and Alberta and a OPEC report that Venezuela’s production declined to a new low of 1.137 million barrels per day, the market is focused on the demand drop that has yet to come. Near record  demand in the U.S. and China and world production declining at some point should start to support oil prices.

The real break in oil prices started when President Trump granted waivers to buyers of Iranian crude oil. Yet even with those waivers, Iranian production and exports are falling. Iran’s production is below 3 million barrels a day for the first time since the sanctions were lifted, at 2.95 million barrels per day. The 180-day waiver for 8 countries, including China, India, and Korea is coming to an end and those buyers are looking for alternatives. So, the sanctions may still bite the market after all. You have heard about protests to stop oil pipelines from being built, but how about protests to get them built.  Newsweek reports that “pipeline projects across the U.S. and Canada have long seen widespread opposition from environmentalist and indigenous rights groups”, but on Sunday, hundreds of demonstrators gathered in Alberta, Canada, to support the resource industry and call for pipelines to be built. The Royal Canadian Mounted Police estimated that as many as 1,500 to 2,000 protesters were gathered in Grande Prairie’s Muskoseepi Park on Sunday to voice their support for the oil and gas sector, according to Canadian broadcaster Global News.

In video of the protest, many could be heard chanting “build that pipe,” while others reportedly asked whether Canadian Prime Minister Justin Trudeau can “hear us now.” The event was organized by pro-oil sands groups Oilfield Dads and Rally4Resources, with both groups accusing the Canadian government of stifling the country’s oil and gas industry, according to the Canadian Broadcasting Corporation (CBC).
Phil Flynn


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