Copper soars on the prospects of better demand created by the excitement of a Donald Trump presidency but crude oil is being left out. Concerns that President Elect Trump would cause a surge in domestic oil production will be another factor that will make it harder for OPEC to cut production.

US oil production rose last week slowing the decline in US oil output. The market is seeing this as critical especially after the International Energy Agency (IEA) said that if no OPEC agreement is reached to cut production, then oil prices have little chance of moving significantly higher as we will see a relentless growth in supply. The US has added rigs but that has only started to stop the production decline. With Donald Trump at the helm and better regulations, US production costs could go lower. Of course they also added that if OPEC did manage to cut output, then the global oil market would move from surplus to deficit very quickly in 2017. 

If the oil market starts to focus on demand instead of supply it might not worry about new supply because a Trump presidency should bring record demand. OPEC must show that they can show some restraint after posting a record production number of 33.83 million barrels a day or it might be harder to find a bottom with a stronger dollar even with the prospect of record demand. If Donald Trump is bullish for copper and other industrial metals, he should also be bullish for oil but OPEC will need to act or they will face some more short term pain.

Natural gas supplies hit a record per the Energy Information Admintation (EIA). Natural gas inventories increased by 54 billion cubic feet (Bcf) to an all-time high storage 4.017 trillion cubic feet. This comes as warm weather masks the fact that until this week injections were below normal as natural gas production falters. Obviously it will be hard for gas to rally when temperatures are so far above normal but the long term structural problems in the gas market remain. US production of gas is staying above and below 70bcf a day. Demand for gas will far exceed that if the weather gets cold. With low prices discouraging less production we should see a price spike as record storage will not be enough to offset record demand, record exports and falling production. Use market weakness to put on long term bullish strategies.