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Dude! Where’s My Car? The Energy Report 1/25/16


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Dude! Where’s My Car? The Energy Report 1/25/16

Monday, January 25, 2016

by Phil Flynn of The PRICE Futures Group

Oil prices are pulling back after the biggest 2-day rally since 2008 due to concerns that the monster snowstorm out east will zap demand. While most New Yorkers are trying to find their car, it is clear that demand will be impacted negatively. All across the East Coast demand has been hit by this historic snowstorm. It is a white out wipe out.

Andrew Weissman reported in his Energy Outlook, “As of Sunday afternoon, automobile and truck traffic had been shut down almost entirely for 48 hours in an area that accounts for more than 20% of the U.S. population, with the likelihood that many areas will remain shut down for at least another 24 to 48 hours. Traffic on the I-95 corridor—the most heavily traveled inter-state highway system in the country—has been reduced to near zero.”

Mr. Weissman says that the massive disruption most likely will result in an aggregate reduction in consumption of gasoline, diesel fuel, and jet fuel of at least 6-8 million barrels (2-3 million barrels/day for a three-to-four-day period), far offsetting the impact of the storm on fuel oil consumption, which was minimal (as temperatures during the storm were only a few degrees colder than they had been before the storm hit). Since the storm did not begin until Friday afternoon, this impact will not show up in EIA’s Weekly Petroleum Status Report until ten days from now. It follows on the heels, however, of a 23.6-million-barrel build in gasoline stocks over the past three weeks—the largest three week build ever.

Oil prices also saw that Japan’s oil imports last year fell to the lowest level since 1988. Japan imported 195.5 million kiloliters of oil, or about 3.37 million barrels a day in 2015, a 2.3 percent drop from the previous year. That’s the lowest since 1988 when the nation imported 192.2 million kiloliters, according to Bloomberg.

The oil market is also worried about the wheeling and dealing going on with Iran. Reuters reported that Greece’s biggest oil refiner Hellenic Petroleum agreed on Friday to buy crude oil from the National Iranian Oil Company (NIOC), the first European refiner to restart trade relations with Iran after the lifting of international sanctions. Hellenic Petroleum was a major buyer of Iranian crude, which accounted for about 20 percent of the southeast European country’s annual crude oil imports before sanctions were imposed on Tehran in 2011.

Iran cut a deal with Russian oil company LUKOIL. The Russian company and Norway’s Statoil had won a deal to launch exploration operations in Anaran block in western Iran in 2003. Lukoil held a stake of 25 percent in the consortium and the remaining stakes belonged to Statoil.

Of course today it comes down to confidence. From a technical basis oil should retest lower before going higher. With a lot of economic data and a Fed meeting, oil is poised for a bottom. At some point oil will look beyond the current glut to a situation where it will be supported by more stimulus from China, Europe and Japan.

Hedge funds sensed a rally as they cut their long positions by 8.4% before the massive rally. Oil has been driven by fear and that fear was seen in gold as hedge funds doubled its long position. Bloomberg said funds more than doubled their net-long position in bullion last week, just three weeks after they were the most-bearish ever. Investor holdings of gold through exchange-traded products are expanding at the fastest pace in a year, and the value of the ETPs has jumped by $3 billion in 2016.

Are gasoline prices near a bottom? Trilby Lundberg, the best gasoline watcher in the country, is saying they may have. As reported by Reuters, the average price of a gallon of gasoline in the United States fell 14 cents in the past two weeks to its lowest level in seven years, according to a Lundberg survey released on Sunday. Regular grade gas fell to $1.91 per gallon in the Jan. 22 survey from $2.05 on Jan. 8, when the previous survey was taken. The price was the lowest since Jan. 23, 2009, when it was roughly $1.86, survey publisher Trilby Lundberg said. The latest price was 16 cents lower than a year ago as the continued plunge in crude oil prices drove gas prices lower, Lundberg said. She said, however, that the latest average gas price could mark a bottom if a rebound in crude prices that occurred on Friday continued.

The mood is changing. Call for the latest!

See me on the Fox Business Network! If you are ready to trade call me at 888-264-5665, or open an account online by clicking here.

Phil Flynn

Questions? Ask Phil Flynn today at 312-264-4364

http://insidefutures.com/article/1650478/Dude! Where’s My Car? The Energy Report 1/25/16.html


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I'm afraid to change the oil in my garden tractor because it may affect global oil prices...help!!