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April 1, 2025
Morning everyone,
I thought about doing some sort of April Fools headline, but these days how would you even know the difference.
While all eyes will be on announcements coming out of the White House tomorrow, economic data has its fair share of attention as markets look for data that may influence the Fed.
Later this morning is the PMI (expec 49.8) and ISM (expec 49.5).
What's in this issue:
Energy Market Recap
Q1 in the Books
Headlines
| Crude Oil (May) | $71.48 | +2.12 | +3.06% |
| Natural Gas (May) | $4.119 | +0.054 | +1.33% |
| Copper (May) | $5.0340 | -0.0960 | -1.87% |
| S&P 500 | 5,611.85 | +30.91 | +0.55% |
| Dollar Index (DX) | 103.71 88 | +0.17 | +0.16% |
Energy Markets
🛢️WTI popped 3.06% as the slow rise from $65, prompted by sanctions (or threats of sanctions) on Iran, Venezuela, and Russia, have squeezed shorts out of the market.
WTI Spreads
We paid a lot of attention the last few front spread cycles to the fact that they were collapsing towards contango. Worth noting the opposite as well. May/June has consistently widened, placing a greater premium on prompt month, as sanctions threaten to remove barrels from the market.
May/June: +0.53
Jun/Dec: +3.53
Dec5/Dec6: +2.51
🔥 Natural gas rallied 1.33% as some cold weather lingers, potentially limiting the scope of injections in the near term.
Natgasweather.com pegs this week’s demand level at moderate.
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Q1 in the Books
The first quarter of 2025 is in the books, and what a doozy!
Most eyes are on the SP500, which is now down 5% on the year. The Nasdaq 100 was worse off, down 8.3%. This was the worst quarter for stocks since 2022. Conversely, gold has rallied by almost 20%.
Worth noting that yesterday markets posted a serious reversal from early lows.
On the energy front, WTI is lower by .5% despite the recent rally back to $71. Of course, prices were riding high on Biden’s sanctions just as the new year began.
Natural gas is up by almost 14% as a cold winter drew heavily on inventories and LNG exports continue to grow. Thankfully, European gas is lower by almost 20% as it looked like things might get out of control there.
Worth noting that gasoline is higher by almost 14% as refinery margins continue to be poor. Heating oil is just lower of unchanged.
Copper is one of the market’s biggest winners, up 26% on the year. The threat of sanctions have distorted the market there. A wide open arb between the US and Europe prompting traders to send cargos to the US like never before.
Headlines
"As the only branded baby diaper made in Canada, our weekly shipments have quadrupled,"
+As ‘Buy Canadian’ grows, more US companies say retailers shunning their products - Reuters
“Colonial's pipeline system stretches over 5,500 miles from Houston in Texas to New York's harbor. It moves more than 100 million gallons of fuel daily, including gasoline, jet fuel, diesel and heating oil, according to its website.”
+Brookfield nears $9 billion-plus deal for Colonial Pipeline, sources say - Reuters
“The renewed licenses will allow Oconee to operate through 2053 and 2054. The license was set to expire in 2034. Oconee also became Duke Energy's first nuclear facility to reach the milestone of receiving approval to operate for 80 years.”
+Duke Energy receives approval to extend operations at Oconee nuclear plant - Reuters
Economic Calendar
Monday -
Tuesday - PMI, ISM
Wednesday - ADP Employment, Factory Orders, Crude Oil Storage Report,
Thursday - Initial Jobless Claims, Natural Gas Storage Report
Friday - US Employment