Oil Prices broke yesterday after a Tass article that suggested that Russia and OPEC, at the upcoming meeting in Algiers, may discuss the possibility of increasing oil production by more than 1 million barrels per day, quoting Russian Minister of Energy Alexander Novak. Yet, trade war fears and the fears of the impending refinery maintenance season brought prices back down. Yet, reports overnight that Saudi Arabia is comfortable with higher prices and increased geopolitical risk after Israel shot down a Russian plane in Syria is bringing oil right back up.

Is Russia meddling in the oil market? Yes they are! Yet, why the market broke on a report that OPEC and Russia would raise output by a million barrels broke the market is a puzzlement because it should be clear that 1 million barrels of oil will not be enough to offset losses from Iran, not to mention Venezuela. In fact, Bloomberg news reports that Iranian crude exports have dropped more than 40% since April, and that is a bigger-than-expected plunge in sales is tightening global oil markets.

It is not even clear whether Saudi Arabia will go along with a million barrels a day increase. In fact, afterwards Reuters reported Saudi Arabia indicated it was comfortable with a higher price range oil prices rallied.

Yet, reports that Israel shot down a Russian plane, killing 15 people, could be adding to the geopolitical risk buying as well. Bloomberg reported that “Russia warned angrily it may respond to “hostile” actions by Israel after one of its military reconnaissance planes was downed mistakenly by Syrian forces fighting off an attack by Israeli warplanes. The spike in tensions came a day after Russia called off a campaign against the last major opposition-held area in Syria, preventing for now an escalation in the seven-year war, after President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan reached a deal on Monday. Still, unlike a 2015 incident in which Turkey shot down a Russian warplane, sparking a yearlong breach in ties, the Kremlin gave no sign the latest episode would lead to broader consequences." Dow Jones said that Russian Defense Minister says Moscow reserves the right to respond to Israeli actions.

Years ago, when oil went to $26 a barrel, we wrote that oil had put in a generational low that would mark a new era in oil. Forbes pointed out today just how far oil has come from those dark days. “At the beginning of the year 2016, you could purchase a barrel of oil for about $26. Today that same barrel of oil would cost you $69. If your first thought is "that's more than a double," your first thought is on the right track.  But to be completely accurate and on the money, that's an increase in the price of  -- could this be correct? -- 165%.” Yes, it is! Even though the trade down to $26 came on a wild expiration. While we have seen oil make some ups and downs, the cycle and new super cycle that we predicted is now becoming more obvious.

While oil sold off a bit on trade war concerns today, at least early on they are ignoring them. The Wall Street Journal is reporting that President Trump said Monday he will impose new tariffs on about $200 billion in Chinese goods and threatened to add hundreds of billions more as part of his campaign to pressure Beijing to change its commercial practices, escalating trade tensions between the world’s two largest economies.

The 10% tax on Chinese imports will take effect on Sept. 24 and will rise to 25% at the end of the year, according to administration officials. The tariffs will affect thousands of goods ranging from luggage to seafood, extending the impact of Mr. Trump’s aggressive tariff policy for the first time to a broad population of American consumers.  Chinese trade practices “plainly constitute a grave threat to the long-term health and prosperity of the United States economy,” Mr. Trump said in a statement.

Natural gas put in a strong day as above average temperatures overcame the demand destruction from Hurricane Florence. Jeff Mower, the Editor at S&P Platts wrote that Tropical Depression Florence is now making its way northeast through Appalachia. Utilities in the Carolinas made progress restoring the grid Monday, leading to increased power demand.