⚡Ceasefire Talks Continue as Energy Infrastructure is On Fire.

March 24, 2025

Morning everyone,

Writing from the road as the family takes in some beach time for Spring Break! Sitting in some much appreciated air conditioning, the writing is a good break from the heat.

I am generally willing travel to places with government travel warnings in place, but it seems the tables have turned as European countries are now issuing travel warnings on the US.

Maybe I just shouldn’t go home!

Table below shows that Friday was uneventful pretty much across the board. As we’ll show below, it was actually a pretty quiet week.

Let’s take a look…

~Doug​

What's in this issue:

• Energy Market Recap

• Copper Bulls

• Headlines

Energy Markets

🛢️WTI ended the week up .3% in a quiet, but nonetheless positive session. Prices were higher by 2% on the week, the second straight weekly gain.

Is this move just a flagging break from the overall trend lower or are prices putting in a bottom?

Geopolitical risk with Iran continues to tick higher, and a real deal (Holyfield?) with Russia looks further away. It was never going to be an easy one, as much as the administration hoped for a quick hit and pumps out optimistic rhetoric.

It seems the ‘energy infrastructure ceasefire’ has already fallen apart.

WTI Spreads

May/June: +0.39
Jun/Dec: +2.56
Dec5/Dec6: +1.73

🔥 Natural gas prices rallied on Fridays open, but drifted lower the rest of the session. They closed just barely north of unchanged.

Prices were down by 3% on the week, the second straight weekly decline.

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Copper Bulls Gain Steam

While tariffs, sanctions, and general economic disorder haven’t led to any prolonged spike in oil prices, copper is having a different experience and the bulls are calling for more.

“We think there is something exceptional happening in the copper market,” he said. “Is it unreasonable to expect a copper price of $12,000 or $13,000? I’m struggling to put a number on it because this has never happened before.”

The unprecedented event is a tariff-driven market distortion that has widened the spread of US Comex prices versus LME contracts. Copper is flowing to the US from all over the world, draining inventories elsewhere just as China is ramping up demand.

“This is the first time in recent history that another market is taking tons away from the Chinese market. That’s why it’s uncharted territory.”

Headlines

“The oil and gas rig count declined by about 5% in 2024 and 20% in 2023 as lower U.S. oil and gas prices over the past couple of years prompted energy firms to focus more on boosting shareholder returns and paying down debt rather than increasing output.”
+US oil and gas rigs rise for first time in three weeks, Baker Hughes says - Reuters

“Iraq's current oil output stands at about 4 million bpd, oil ministry officials say. It is the second-largest producer within the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and allies including Russia.”
+Iraq plans to raise oil production capacity above 6 million bpd by 2029 - Reuters

“Through the lens of SPX options, markets appear to be downplaying the impact on US equities of the US’s implementation of agricultural and reciprocal tariffs,”
+Options Market Focused on Jobs and Inflation Over Tariff Reveal - Bloomberg

“It’s not just the jawboning, they added, but the fact that Bessent can follow it up with concrete action like limiting the size of 10-year debt auctions”
+‘Don’t Fight Bessent’s Treasury’ Is New Mantra in US Bond Market - Bloomberg

Economic Calendar

Monday -
Tuesday - Home price index, New home sales, Consumer confidence
Wednesday - Crude Oil Storage Report, Durable goods
Thursday - Natural Gas Storage Report, Jobless Claims, GDP
Friday - Consumer sentiment