President Donald Trump says that no one knows what he will do about the insane and ridiculous Iranian nuclear accord, but he said to French President Emanuel Macron, “you have a pretty good idea.” Oil is up as the French President shared that idea and said his bet was that President Donald Trump would drop out of the deal because of what he suggested were domestic reasons. Oil traders then bet that there would be an enhanced political risk factor in oil against a backdrop of tightening global supply. We are also seeing a concern about Venezuela as two Chevron employees detained in Venezuela last week could be charged with treason for refusing to sign a parts contract for a joint venture with state and Chevron pulled out other executives. Miltary rule of the oil industry is not going so well. Venezuela’s crude production has fallen from almost 2.5 million barrels per day (bpd) in early 2016 to around 1.5 million bpd.

It’s clear that the bearish talking points on oil are being proven to be wrong and the trade and major agencies are coming to grips with a secular bull oil market. Even the World Bank raised their forecast for oil to a lofty $65 a barrel, up sharply from their previous forecast of $53 for 2017. The World Bank sites strong consumer demand as well as OPEC/Non-OPEC compliance to cuts and now expects the prices of crude oil, natural gas, and coal to increase by 20 percent in 2018, up an incredible 16 percent from last year’s upward revision from the bank’s previous commodity market outlook from October last year.

This comes as the U.S. becomes the world’s best hope for production increases as well as filling their new role as oil refiners to the world. In fact, U.S. oil exports broke a record as we sent roughly 8.3 million barrels of oil products to an energy-hungry world. To put that in perspective that is up 450% from just 10 years ago. U.S. refiners are doing an amazing job, improving efficiencies and maxing out production.

Still, refiners must take a break some time. Oil saw a surprise 2.2-million-barrel build as we saw a drop in U.S. refinery runs due to maintenance and other issues. Record exports for oil were offset by a strong week of oil imports as U.S. refiners seek heavier crude to mix with the too light shale oil.

The EIA reported that U.S. crude oil refinery inputs averaged over 16.6 million barrels per day during the week, 328,000 barrels per day less than the previous week’s average. Refineries operated at 90.8% of their operable capacity last week. Gasoline production decreased last week, averaging 9.9 million barrels per day. Distillate fuel production decreased last week, averaging 5.0 million barrels per day. The EIA for products reported that gasoline inventories increased by 0.8 million barrels last week and are in the upper half of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 2.6 million barrels last week and are in the lower half of the average range for this time of year. Oil Is well below average for this time of year.

So is the bullish case for oil all bad? Should we be doom and gloom about the economy. The answer is no. As I have said before, rising energy prices are a good thing if they are rising for the right reason. That is if it is being driven by economic growth as it is now and not some other disaster factor.

These points were raised brilliantly from my old friend Caroline Baum at MarketWatch who wrote: “Rising oil prices release a gusher of crude nonsense”. She asks, “Strong demand is pushing prices up, so why are economists warning about demand weakening?”  She goes on “There is nothing, and I mean nothing, that causes economists to lose their moorings the way oil prices do. When crude prices are rising, economists forget the foundations of microeconomics — the law of supply and demand — and assert that higher prices are a tax on the consumer, a driver of inflation, a brake on economic growth, or all the above. I think that an industrial commodity, albeit a vital one, is endowed with such power!

With U.S. crude oil closing in on $70 a barrel, a price last seen in late 2014, the Wall Street Journal published an article on Monday filled with inherent contradictions, displaying all the accumulated nonsense about oil prices. “If crude continues to move higher, it could begin to stifle economic growth,” according to the Journal. “Higher consumer prices for gasoline and other energy products act like a tax, while pushing inflation higher.” One economist quoted in the story warned of higher oil prices “sucking cash flow out of the economy.” Another said that an increase of “$10 to $15 a barrel” from the current “Goldilocks zone” would be a drag on growth. At the same time, the article cited Goldman Sachs’ assessment that the first quarter of 2018 witnessed the strongest year-over-year increase in global oil demand in seven years. “Demand has remained strong even as oil and fuel prices have been rising,” according to the Journal. Imagine that! Maybe strong demand is driving the rise in prices, in which case expectations of stifled growth are totally misplaced” A must read for those that always think that rising oil prices are a bad thing.

Natural Gas prices are rising and that is a bad thing if you like spring. We have seen prices rise as winter keeps hanging on and we might jump right to summer. I do not know about you, but I want my spring back. Well, maybe we will see a sign of spring as the EIA will finally show an injection into supply in today’s report. Farmers are getting into the fields. Diesel demand will stay strong. We see a demand surge coming. Total Commercial inventories are well below where we have been in years. Make sure you have your risk hedged.