Looking for fear in the oil market? Look no further than the Brent versus West Texas Intermediate oil spread that blew out to the highest level all-year and the highest since 2015, with Brent holding a $7.30 premium currently above WTI. European and Asian buyers of Brent are pricing in the risks and realities of the fallout from sanctions on Iran to increased tensions in the Gaza strip as well as the inability of traditional Brent oil producers to fill that void.

Libya and Nigeria have failed to prove to be reliable producers and now it is being reported by Reuters that ConocoPhillips is looking to sell its North Sea assets to focus on shale in the U.S., leaving some to speculate that the North Sea production will see accelerated declines after a few years of stability. It shows that Oil companies are focused still on lower costs projects with much quicker returns and are failing to make the big investments it will take to try to reverse or stabilize fields in the North Sea.

So now more than ever Europe is looking to the U.S. shale patch to fill the void. The spread between the two contracts is basically Europe and Asia screaming for more oil from the Untitled States to fill the potential void and feed their ravenous oil demand. For WTI, while it is underperforming at this point, it is not by any means bearish for the U.S. benchmark. The strong global demand for WTI will keep us supported, and even if some of the global risks get reduced WTI will benefit from the unwinding of the Brent versus WTI spread that is reflecting most of the geopolitical risks.

We also have weather risk on crude. Already we have a tropical disturbance in the Gulf of Mexico. The National Weather Service says that a deep-layer non-tropical area of low pressure located over the eastern Gulf of Mexico continues to produce widespread cloudiness, showers, and thunderstorms across much of Florida and southeastern Georgia. Although this system could still acquire some subtropical or tropical characteristics while it moves slowly northward across the eastern Gulf of Mexico during the next few days, the low-pressure system has not shown signs of an increased organization during the past 24 hours. Regardless of subtropical or tropical cyclone formation, this system will produce locally heavy rainfall and possible flash flooding across portions of Florida and the southeastern United States during the next few days. Formation chance through 48 hours...low...20 percent. Formation chance through 5 days...low...30 percent.

The up move and crude export picture is also going to keep ultra-low distillates in a strong uptrend as well as RBOB gasoline. The risks to supply and demand means more upside. The strong economy is driving some interesting moves in other commodity markets. Lumber got squeezed to another explosive record high. Hopefully, home builders were hedged as this will raise the cost of new home construction. Also, milk is making a moo-ve! It closed above 16.00dollars per hundredweight (cwt.) for the first time since September of 2017 in much-needed relief for struggling dairy farmers. The breakout might be sustained as the milk glut is getting sopped up by rising demand. I assume cookie demand is rising as well.