Oil prices have been creeping higher 4 days in a row as OPEC plans an “emergency technical meeting” July 24. The move is tentative as the market is still buying into the invincibility of shale oil production and this myth that the global oil market is not balancing. The International Energy Agency tried to feed into that myth by suggesting that OPEC compliance is slipping, offsetting what is a surge in global oil demand. Yet the IEA seemed to speak out of both sides of its mouth and really looks silly when you see US oil supply drop by over 10 million barrels in a week if you subtract a 3 million barrel release from the Strategic Petroleum Reserve.

This comes as U.S. crude imports from Saudi Arabia averaged less than 900,000 barrels per day (bpd) in the four weeks ending on July 7, according to the U.S. Energy Information Administration and US exports increased to 918,000 barrels a day last week. The combination of record US oil exports and falling Saudi imports that are already at the lowest level for this time since 2015 means the historic crude oil supply drain will continue.

According to Reuters, imports from Saudi Arabia will fall even further to less than 800,000 bpd in August, according to a Saudi industry source familiar with the kingdom's oil policy as, "Saudi Arabia is keen to see an improvement in the oil market and accelerate the balancing process." Saudi Arabia is cutting exports to all destinations but reducing shipments to the United States is especially important because U.S. stocks are the most visible and have the biggest impact on prices.

That 800,000-barrel reduction of oil imports will more than offset the gains from U.S. shale producers as they are showing signs of struggle with oil prices in the 40’s. Rigs are being drilled but uncompleted and investment was up almost 50% for the year has dropped significantly in just the last month and you can see this in my Summer Solstice special report. Shale investors put on the breaks until they see if the market starts to stabilize. That is not good for the longer-term supply pictures where investment has fallen by 12 percent last year to $1.7 trillion and close to 50% over the last 4 years.

While Venezuelan shipments of crude managed to uptick, the country is still having problems maintaining oil output as the country collapses. In fact, one of Venezuela’s big customers, their socialist cousin Cuba, is struggling to find supply. Reports by Reuters show that Venezuelan exports to Cuba have fallen by 13% in the first six months of 2017, according to official PDVSA data. Cuba had already been rationing energy and it relies on that good old heavy Venezuelan crude. Cuba is looking to Russia to try to fill that Void. How is that socialist revolution thing working for you?

For natural gas, Marketwatch reports that domestic supplies of natural gas rose by 57 billion cubic feet for the week ended July 7. Analysts surveyed by S&P Global Platts forecast a build of 59 billion cubic feet. Total stocks now stand at 2.945 trillion cubic feet, down 289 billion cubic feet from a year ago, but 172 billion cubic feet above the five-year average, the government said. The natural gas market is poised to rally as soon as we see some warmer temperatures.