What will have more impact on oil trading today? Will it be news out of OPEC or the testimony in Congress by Janet Yellen?

We know that comments from the Russian oil minister Alexander Novak saved oil from selling off more after he said that he remains optimistic that OPEC can get a deal done by the time of the official meeting on November 30th. Of course, as he meets with his Saudi counterpart Khalid Al-Falih, the flies in the OPEC ointment is nowhere to be seen, namely Iran and Iraq. And while there’s warnings that yesterday’s seasonal crude oil build was raising warnings about the market slipping back into oversupply, the truth is the market has performed well because the dollar had surged to a 17-month high.  

The dollar is where Janet Yellen comes into play. Oil will perform well if the dollar breaks even with the supply increase as we should see that moderate as refiners start to come out of maintenance. The Fed fund futures are overwhelmingly pricing in a rate increase in interest rates in December but what the market will wait to hear is where do we go after that. We know the Fed has said that they would raise interest rates slowly, not worrying about inflation but that is when you had a president that had heavy regulation and weak economic growth policies. 

How will Ms. Yellen deal with a Donald Trump presidency, assuming she is around long enough to have to worry about it. While Donald Trump can’t fire her like on "The Apprentice”, he can ask for her resignation. Of course, she may just play out her full term which ends in February of 2018. Even though a strong dollar may hurt some commodity prices, the expectations of Federal stimulus and infrastructure spending should be inflationary and it should be bullish for oil and other commodity demand expectations.

If you are still worried about peak oil or have worries that we are going to enter a “Mad Max” world someday, well you can rest easier. Despite all the dire warnings about “peak oil” and fears that we would be running out of oil, high prices and ingenuity has solved that problem for at least another couple hundred years. What am I talking about?

The biggest oil find in Texas that we have ever seen! The United States Geological Survey reported that the Wolf camp shale in the Midland Basin portion of Texas' Permian Basin province contains an estimated mean of 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids, per an assessment by the U.S. Geological Survey.

This estimate is for continuous (unconventional) oil and consists of undiscovered, technically recoverable resources. This discovery makes the Permian basin one of the most prolific area of oil supply in the world! Already almost a third oil rigs are in the Permian and the area that has been a bounty since the 1930’s continues to bless this land with oil riches. The peak oil guys who I used to call peak freaks can rest easy at least for a couple of hundred or more years.

Natural gas is trying to rebound on more seasonal weather coming in. Warm temperatures are giving the market a sense of security that may be masking longer-term worries of rising demand and falling investment and production. Not to mention pipeline delays and possible pipeline constraints. The Energy Information Administration is expecting to announce 31 billion cubic feet of natural gas into storage last week, which would be an all-time high in real terms but not if you compare it to forward days of demand cover. We may see that injection come in lower as we are looking at 25 bcf injection.