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February 14, 2025
PRESENTED BY: BLUE LACY ADVISORS
Morning, and Happy Valentine’s Day you lovebirds!
Quick heads up that US markets are closed Monday for President’s day, so there will not be a newsletter that morning. Will pick things up on Tuesday.
Have a great long weekend for those of you that get it.
Things got interesting yesterday as the world continues to digest Trump’s moves to bring the war in Ukraine to an end.
Let’s take a look…
What's in this issue:
Energy Market Recap
EIA Reports NG Draw
End of War?
Headlines
| Crude Oil (Mar) | $71.29 | -0.08 | -0.11% |
| Natural Gas (Mar) | $3.628 | +0.062 | +1.77% |
| Copper (Mar) | $4.7780 | +0.0735 | +1.56% |
| S&P 500 | 6,115.07 | +63.10 | +1.04% |
| Dollar Index (DX) | 107.22 | -0.60 | -0.56% |
Energy Markets
🛢️Oil prices ended just lower of unchanged, although prices had moved steadily off lows set at the open throughout the session.
Could we settle into a wider and more volatile $70-75 range now that we’ve digested sanctions and are now faced with the possibility of peace in Europe?
After all, as Bloomberg’s Energy Daily put it this morning:
“Something odd is happening in global oil markets: The biggest triggers that might spark a price surge or slump are fading at exactly the same time.”
WTI Spreads
Mar/Apr: +0.15
Mar/Dec: +3.10
Dec5/Dec6: +2.51
🔥Natural gas prices gained yet again as the EIA reported an inventory draw of 100 bcf. While this was at the high end of expectations, it was smaller than the 5-year average withdrawal for the week (-144).
However, while prices ended on a positive note they were $0.150 off their highs. The intraday move showed a spike after the number was released and subsequent decline from the highs for the rest of the day.
While cold weather is still in the cards for the next week, it seems the market was in ‘sell the news’ mode.
Source: EIA
PRESENTED BY BLUE LACY ADVISORS
Hedging and Risk Management Advisory Services
Blue Lacy is an energy-focused risk advisory founded by market expert Steve Sinos. I’ve known Steve for years and can highly recommend his services.
His typical client is “an energy company that doesn’t want to be.” These are companies that are wildly exposed to energy prices like airlines and transportation authorities. If you have risk you don’t fully understand, you should reach out.
Steve prides himself in really getting in the weeds of the energy market, and in this podcast you’ll get a feel for this expertise and detailed analysis.
Give this a listen, I promise you’ll come away with a better understanding of all of the different moving parts in this complex industry - from oil to LNG.
End of the War?
No one knows how Trumps push to end the war in Ukraine will play out, but it has people at least considering the scenario where the end of the war is brought about sooner rather than later.
The idea that uncertainty is bad for markets is already playing out as European equities rally. The Euro could catch a bid as well. In general, the war ending is a positive for the business environment and GDP growth.
Not surprising…
Gas Will Flow
The FT has a good article highlighting research from Goldman Sachs that highlights, among other things:
“The most important channel would likely be via natural gas markets. Following our commodity strategists, we consider a limited gas flow scenario (with a 15% decline in gas prices) and an upside flow scenario (with a 50% drop in prices).”
Will the Oil Flow?
It’s been hard to figure out the effect sanctions have really had. After all, evidence is that money is still flowing into Russia quite nicely.
The IEA puts it this way:
“Fresh US sanctions on Russia and Iran roiled markets at the start of the year but they have yet to materially impact global oil supply. Iranian crude oil exports are only marginally lower while Russian flows, so far, continue largely unaffected.”
Headlines
“Trump’s move on reciprocal trade could mean that his campaign pledge for across-the-board tariffs is less likely. Trump last week said he was leaning more toward reciprocal action than a “flat fee” tariff—a line backed up by those close to him.”
+Trump Orders Federal Agencies to Study Reciprocal Tariffs - WSJ
Quintenz most recently worked as the head of policy at a16z crypto, Andreessen Horowitz’s cryptocurrency arm. Quintenz also serves as a board member at event contracts trading exchange Kalshi and previously was an advisory council member at crypto exchange Crypto .com”
+Trump Picks Brian Quintenz to Be CFTC Chairman - WSJ
“Empire Offshore Wind 1 is an 816-megawatt wind project that will produce enough renewable power for more than 388,000 homes.”
+New York approves power line for Equinor offshore wind farm - Reuters
“S&P said the current triple-A ratings of the World Bank and other top development banks assume the U.S. remaining in place. Therefore, if Washington were to "limit" its support, any rating change that came as a result of that was likely to be "negative".”
+S&P Global warns of "unprecedented" U.S. World Bank withdrawal risk - Reuters
ECONOMIC CALENDAR
Monday -
Tuesday -
Wednesday - CPI, Crude Oil Storage Report
Thursday - Natural Gas Storage Report, Jobless Claims, PPI
Friday - Retail Sales