All markets lead back to gold. Well, yesterday they did anyway. The biggest one-day selloff in gold since 2013 after this recent parabolic run up caused margin selling that impacted oil and even the stock market. The breath taking plunge in gold and silver cause a late date swoon in stocks after margin selling tripped computer stock sell signals. Oil pulled back from the highest tick since March or pre-OPEC production war. Stocks today are rebounding as gold and silver are stabilizing, and oil can focus on bullish data from the American Petroleum Institute (API).

The API reported that U.S. crude supply fell by 4.401 million barrels, which followed last weeks 10 million barrel plus draw. Yet what was more supportive this week were draws in both products with gasoline falling by 1.310 million barrels and distillate by a surprising 2.949 million barrels. This suggests that supplies are on a path to tightening and should keep the bullish trend in place. If confirmed by The Energy Information Administration (EIA) this should have us make new highs unless of course gold and silver tank again.

The EIA reported, “The Short Term Energy Outlook that they expect high inventory levels and surplus crude oil production capacity will limit upward price pressures in the coming months. Still, as inventories decline into 2021, those upward price pressures will increase. EIA estimates global liquid fuels inventories rose at a rate of 6.4 million barrels per day (b/d) in the first half of 2020 and expects they will decline at a rate of 4.2 million b/d in the second half of 2020 and then decline by 0.8 million b/d in 2021.

EIA estimates that demand for global petroleum and liquid fuels averaged 93.4 million b/d in July. Demand was down 9.1 million b/d from July 2019, but it was up from an average of 85.0 million b/d during the second quarter of 2020, which was down 15.8 million b/d from year-ago levels. EIA forecasts that consumption of petroleum and liquid fuels globally will average 93.1 million b/d for all of 2020, down 8.1 million b/d from 2019, before increasing by 7.0 million b/d in 2021.

Reduced economic activity related to the COVID-19 pandemic has caused changes in energy supply and demand patterns in 2020.
Thanks,
Phil Flynn

Late-Breaking! A reported fire at a Rosneft oil field in Siberia. Stay tuned.

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