The Impact of Hurricane Helene on Energy Demand and Global Markets
In the world of commodities, oil is a brown loafer in a world of tuxedos, to steal a line from the late George Gobel. After China unleashed its massive stimulus, the Chinese stock market soared along with almost every commodity from copper and aluminum to zinc, grains, and steel rebars. However, oil languishes on the heels of a dubious story that Saudi Arabia is going to abandon a $100 a barrel price target that they never had in the first place.
Oil also bought into the possibility that Saudi Arabia would start a production war to regain market share, but this seems unlikely as OPEC producers are reigning in overproduction and making compensation cuts on previous overproduction. The net increase in production in December might only be about 300,000 to 500,000 barrels a day, keeping us in a supply deficit and not substantially building global oil inventories.
While the hedge funds have been heavily on the short side of the market, there are signs that the markets are getting ready to turn. For example, crack spreads, especially in diesel, have started to turn. The impact of Hurricane Helene on energy demand has been substantial, with over a million people in Florida left without power.
Producers have been warning about the possibility of a supply glut in the natural gas world, but this concern is easing a bit. U.S. energy company EQT plans to reverse some natural gas production curtailments as demand for the fuel and prices increase. US natural gas stocks are rising much more slowly than average for the time of year, which could challenge the notion of oversupply if we experience a cold winter.
In conclusion, global markets are experiencing fluctuations due to various factors such as stimulus measures, production cuts, and natural disasters. It is essential for investors to stay informed about these events to make informed decisions about their finances.