With all of the drama going on in the world, whether it be Afghanistan or the devastating hurricane in Louisiana, it should be noted, before it gets lost in all of the noise, that U.S. total product demand hit an all-time high this week. This will be very important to remember because we know that in the coming week’s, data out of the U.S. as far as supply and demand are going, will be skewered because of the devastating damage that we have seen in Louisiana caused by hurricane Ida.

According to the Energy Information Administration (EIA), total domestic implied petroleum demand set a new all-time high of 22.8 million barrels a day. While weekly numbers sometimes can be overstated, I still believe it's a pretty incredible number. It shows that demand has come back dramatically since the covid-19 situation to pre covid 19 levels. Yet if the weekly numbers don’t get you excited, then the monthly average in the U.S. is consuming over 20 million barrels a day of petroleum products. No matter how you slice it, those are impressive numbers and shows the incredible resilience of the U.S. energy demand.

That incredible demand is one of the reasons why global oil inventories are falling and it is also a reason why OPEC felt very comfortable in raising production by 400,000 barrels a day. Yesterday the OPEC number crunchers could see quite clearly that even with raising production by 400,000 barrels a day the global oil market would still be in tight supply deficit.

Before the meeting, the Russian deputy chairman of the government of the Russian Federation and oil minister Alexander Novak gave the market a scare when he stated the obvious that Russia could produce more oil than their OPEC quota. Now he never said that he would produce more than his OPEC quota but that didn't matter. The comment caused a sell-off in the price of oil. My take on the Russian energy minister's comment was that he was sending a message to smaller OPEC countries that were potentially going to follow the same route that the United Arab Emirates followed last month and ask for a new baseline so that they could produce more oil. I think it was a thinly veiled threat and it appeared to work because what happened then was one of the shortest OPEC meetings in recent memory. Dissent what squashed as the group rubber-stamped the 400,000 barrel a day production increase.

Now you may or may not be happy with OPEC’s decision but we know somebody was very happy with the decision, Joe Biden. The White House seemed to congratulate OPEC on raising oil output this morning and made a statement that said, “we're glad OPEC is continuing to increase oil production.”

What I wish I was hearing out of the White House is the Biden administration congratulating U.S. energy companies that are taking heroic efforts to bring back oil and gas production in the Gulf of Mexico. The Biden administration doesn't seem to appreciate the value of the U.S. energy industry in oil and gas and what they bring to our nation. While the Biden administration recently did reopen auctions for oil and gas, their policies have done more damage to the U.S. oil and gas industry and that is why the Biden administration is looking to OPEC to fill the United States demand needs. It should be pointed out that once again Russia was the biggest provider of oil imports to the United States.

Bringing back production in the Gulf of Mexico is proving to be more challenging than in past hurricanes. Port Fourchon, in Louisiana, took major hits, and of course, that was a launching point for helicopters and services for offshore oil production damage. Bloomberg reported that damage to the port, which services about 90% of the output from U.S. Gulf deepwater oil and natural gas wells, is extensive and widespread. Louisiana highway 1 will need to be cleared of debris for heavy equipment to travel south to the port, while navigable waters around the port will have to be surveyed for safe travel.

The lack of electricity is making it more difficult to bring production back online. The Bureau of Safety and Environmental Enforcement the BSEE reported yesterday that 79.96% of Gulf oil production is still shut in and natural gas production is still shut to the tune of 83.21%.

U.S. demand isn't the only place that is seeing records being broken. Reuters reports that India's gasoline demand is set to hit a record. They point to data from credit rating Moody's which expects India's gasoline consumption to rise by a whopping 14%. That puts Indian gasoline consumption at 739,000 barrels per day in the fiscal year to March 22. Not only that, they’re also predicting the gasoline demand will rise in India by 20,000 barrels a day to 760,000 barrels per day for October to December and that's up from a previous estimate of 740,000 barrels a day. That brings their annual forecast to March 22 to 725,000 barrels a day. That's 11% higher than a year ago. Passenger vehicle sales in India rose by 45% to 264,442 units in July, driven by pent-up demand, according to data from the Society of Indian Automobile Manufacturers.

Natural gas prices are on fire again as concerns about demand outstripping supply are overwhelming. Concerns about electricity outages and European gas prices hit another record high today. Reports that Russia is going to refill its gas storage leaving less exports from Russia is also supportive. Russia is supposed to be a reliable supplier to Europe, but it appears they are looking out for their own needs at a time when supplies are tight.

The impact from the storm is going to start raising gasoline prices and diesel prices in the coming weeks. While the impact right now has been relatively mild we will start seeing this market creep up in the coming days and weeks. With record-breaking demand and supplies being limited, we should see prices go up at a time of year where they normally go down. Right now I think prices will creep but I think eventually they will leap so if you need coverage or protection against rising prices I would start to do that now.

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Phil Flynn

The PRICE Futures Group

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network