Over the last 24 hours, the news flow has favored the bulls in the energy complex. The biggest risks to the oil market, such as the delta variant of the coronavirus , saw the news that would ease extreme doom and gloom concerns of massive oil demand destruction. Not only did we see reports of falling covid cases in England, which was a hotspot of the delta variant, but we are also seeing reports of rising vaccinations rates in US covid hotspots. It appears that the message from the government to go get vaccinated is getting some unvaccinated people to move. In England, the daily number of new infections recorded fell for seven days in a row to 23,511 cases, half what it was one week ago.
We also heard from Jerome Powell of the Federal Reserve that he didn’t believe that the corona variant would be a major risk to the economy. The Fed also juiced up the market by suggesting that there are no plans to raise interest rates anytime in the foreseeable future and even the debate about rolling back purchases of mortgage-backed securities and bonds hasn’t been decided on. The Fed also acknowledged that there are upside risks to inflation and obviously if there is an upside risk to inflation that means there are upside risks to the price of oil and natural gas.
China also stepped in to try to calm the markets after concerns of a crackdown assuring companies in China that they could IPO in the United States. China is learning quite quickly if they pull back from capitalistic principles their economy is going to pay for it.
Then you have Saudi Arabia overnight raising prices for oil which is also a sign of very strong demand. Saudis lifted its Arab Light crude pricing to Asia by 50c a barrel month over month for Sept. to the highest since Feb. 2020. the Saudis are not that worried about Covid demand destruction.
We have the Energy Information Administration (EIA) data that was very bullish across the board showing big draws in distillate inventories crude oil and gasoline they show that US energy production fell they showed that gasoline demand and diesel demand went up and it showed another draw in pushing Oklahoma which is raising concerns that that important benchmark could soon run out of oil. Supplies in Cushing OK fell 1.3 million barrels 2A low of 35.4 at that storage point.