For oil and the markets, Russia is all the rage. There is the big OPEC/non-OPEC pow-wow in Russia and reports that Special Prosecutor Robert Mueller is opening an investigation into President Donald Trump's business transactions with Russia one day after the President said that that would be a red-line for him. Of course Robert Mueller had no choice. If there is someone who has the job to look for a loaded gun and you tell him not to look for it in the closet, that's going to be the first place he will look.

The report of the widening of the Russia probe did move markets. The dollar took it as a negative, falling to lows. That helped gold and silver break above resistance but for oil it was taken as a negative. More Russian drama does not help the pro-growth/pro-infrastructure spending. Is the Trump agenda leading to worries that a bogged down Trump presidency may hurt oil demand expectations.

This comes on the same day that the U.S. Treasury Department slapped a $2 million fine on Exxon Mobil Corp. for violating sanctions on Russia when Secretary of State Rex Tillerson was the CEO. Exxon was outraged and industry observers wonder if the fine was done for political reasons just to get back at Donald Trump. The Treasury said Exxon violated U.S. sanctions on Russia imposed by then President Obama when they signed eight documents relating to oil and gas back in 2014 with Igor Sechin, the president of Russian state-oil firm Rosneft who was a target of sanctions. Reports say that a spokesman for Exxon called the fine "outrageous" and said Treasury's findings are a complete 180-degree turn from previous guidance handed down by the Obama administration at the time the sanctions were enacted. "ExxonMobil followed the clear guidance from the White House and Treasury Department when its representatives signed documents involving ongoing oil and gas activities in Russia with Rosneft -- a non-blocked entity -- that were countersigned on behalf of Rosneft by CEO Igor Sechin in his official representative capacity." The timing of the fine seems to suggest that the so-called "swamp” is pulling out all the stops to fine or investigate anything Russian.

Maybe they can investigate Russian collusion. There is clear evidence that Russia is colluding with OPEC on reducing oil output. In fact, they are quite open about it and wantonly meeting in Moscow officially on Monday, but really over the weekend, to conspire to reduce global oil supply. This meeting is very important because the last meeting topped the oil market. OPEC said that nothing more was needed to balance the market but the market did nor believe them. It topped and fell back almost $10.00 dollars a barrel in the next weeks.

But give OPEC credit. They were right. Maybe the market price has failed to give them credit yet but it will.

Oil inventories in the US have fallen at a record pace since that meeting and because of the price drop, market skeptics drove down expectations for US oil output as well. Still, from a price standpoint, I hope OPEC has learned how to deliver its message. It must not disappoint this fickle market. They must follow through with a production quota on Libya and Nigeria. Saudi Arabia is going to have to reduce exports by a million barrels a day. Why? Well because that is what they signaled to the market. What they should also do is try to shock and awe the market with an additional cut, even if they don’t plan to do it. If they have a potential cut hanging over the market, that will be enough to keep the sellers away.

Really though we are seeing the market balance and shale oil producers continue to struggle. The UPI reported that the Energy Information Administration reported productivity in the Permian shale basin in the southern United States was on pace to decline for the 10th month in a row. The EIA said operators are drilling wells, but not completing them, a process used to prep it for production. "When operators drill a well but do not complete it, the inventory of drilled but uncompleted wells increases, which tends to lower output per drilling rig," EIA explained. "Oil flows only after a well is completed."

What is really surging is RBOB gasoline futures. Strong demand and a drop in supply despite record production is shattering the myth of gasoline demand destruction. Look for further gains at your local stations in the coming days.