Market Commentaries, Phil Flynn Energy Report, The Energy Report, Trading-Futures

Fifty Would Be Nifty. Report The Energy Report 12/18/2020

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Fifty would be nifty for WTI oil that has defied negativity about global oil demand and economic recovery. Oh sure, the Brent oil is already there and WTI has a way to go but the oil price recovery is solid and something we said would happen it is not so much as where we are on oil, but where we have come from that makes the move so amazing. From negative oil prices to a half a century mark is a rebound that has come as a historic drop in oil output was met with massive economic stimulus and the faster than many expected rebound in global oil demand. As we look forward, we expect the bull trend to continue into 2021 as we will have more demand post vaccine as well more regulation on energy in 2021.

RBOB futures have been rallying as refiners have cut back and global demand is rising. In 2021 China will become the worlds biggest oil refiner taking the title from the US.

Gas is making a nice move as global demand is rising. Reuters reports that, “surging spot prices for liquefied natural gas (LNG) are exacerbating a gas supply crunch in key fast-growing emerging markets in Asia just as a cold spell in other parts of the region boosts demand for the fuel. Companies from Pakistan to China have cancelled a flurry of LNG tenders this week, several trade sources said, as lofty prices risk pushing up the input costs of industries, which could make energy more expensive for consumers. Benchmark Asia spot LNG prices LNG-AS have soared sevenfold since May to six-year highs, driven by production losses in Australia, Malaysia, Norway, and Qatar combined with accelerating use in China, India and elsewhere. “Buyers with no alternatives are now paying top-dollar for prompt cargoes in January,” said Chong HI Xin, a director at consultancy IHS Markit.

The state buyer for Pakistan – one of the fastest growing LNG markets – did not award an emergency tender seeking three cargoes for delivery in January after it received high prices, according to sources. Power plants may opt to burn dirtier but cheaper fuel oil instead, the sources said, but are also facing rising prices in that market. In India, Gujarat State Petroleum Corp (GSPC) and Indian Oil Corp did not award tenders seeking cargoes for January to February delivery, trade sources.
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Phil Flynn

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