Joe Biden takes no responsibility for higher oil and gas prices and instead his White House says that it is the refusal of OPEC nations to pump more oil that is responsible for the current oil and gas prices. Yet the lack of taking responsibility for anything is the moniker of this administration and is one of the reasons we saw a red wave in the Virginia governor race and a dead heat in New Jersey. Now the Biden plan is to threaten OPEC with a coordinated release from global energy reserves that will backfire economically and geopolitically. Release from the global oil reserves will be another sign of Biden’s failed energy policies.

Biden told America that he was a master of diplomacy yet he failed to bring China and Russia to the table at the COP 26 climate conferences and instead took steps to further restrict US energy production. A new methane emission reduction pledge on new and existing oil and gas wells in the US will cost producers upwards of a billion dollars and will further restrict US production growth. This will add to the cost of gasoline and natural gas and food prices and fertilizer.

The crude oil market is taking a sell-off today as it’s worried about the Fed tapering from today’s Fed meeting and fears about the White House threat of an oil release. Rumors are circulating inside that Biden will not nominate or reappoint Jerome Powell for another term as Chairman of Federal Reserve.

There are also new concerns about an uptick in covid as cases in China hit the highest levels since 2020. Bloomberg reports that the highly-infectious delta variant is hurtling across the country despite the increasingly aggressive measures that officials have enacted in a bid to thwart it. More than 600 locally-transmitted infections have been found in 19 of 31 provinces in the latest outbreak in the world’s second-largest economy.

Oil also sold off on a bearishly construed American Petroleum Institute (API) report. The API reported that crude rose 3.594 million barrels. Cushing, OK saw another 882,000. Gasoline supply fell by 552,000 and distillates increased by 573,000.

This is a profit-taking correction due to concerns about a release from the reserve and concerns about the Fed and the concerns about OPEC. If indeed we release oil from the reserve, it will probably happen after the OPEC meeting where more than likely they will not budge on raising production. The threats by Biden to cajole OPEC into producing more oil will fail. He did not know how to use diplomacy and has irritated both Russia and Saudi Arabia with his foreign policy. If Biden thinks he can control the global oil market by releasing oil for a short-term sell-off he is going to be mistaken, just like he’s been mistaken about everything when it’s come to his energy policy.

Bloomberg News reports that Mexico is in the process of locking in its income from next year’s oil production, people familiar with the matter said, in what’s one of the most closely watched deals among the world’s energy traders. The country has been purchasing put options, which grant the right to sell at a predetermined price, at a price range of about $60 to $65 a barrel, the people said, asking not to be identified because the trade is private. The oil hedge is a multibillion-dollar deal that typically covers 200 million to 300 million barrels and is so large it often roils the market. Mexico’s Finance Ministry declined to comment. Mexico has taken unprecedented steps over the last two years to keep details of the hedge secret as the government fears that any information surrounding the deal could allow traders to front-run it, increasing the cost.

EBW Analytics reported that the December natural gas contract showed strength on Tuesday, recapturing the entirety of Monday’s losses as the mid-November weather forecast trended cooler. However, operational concerns at Freeport LNG, a production increase, and a lack of substantial cold forecast for the back half of November suggest the front-month may face difficulty sustaining elevated NYMEX futures pricing. Over the next 30-45 days, rising LNG feed gas and possible December Arctic outbreaks may rebuild the storage deficit and re-inflate January natural gas contract risk premiums, potentially lifting January back above $6.00/MMBtu. The end-of-March natural gas storage trajectory has increased 200 Bcf since mid-September to reach 1,378 Bcf. Monte Carlo simulations point to decreasing the odds of a true storage scarcity event this winter. The market may find it increasingly difficult to justify elevated risk premiums for the March 2022 contract, posing significant downside price risks by mid-to-late winter.