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April 4, 2025
Morning everyone,
Well, what is there to say about markets yesterday aside from… nat gas was higher! That’s right, and that jobless claims data came in better than expected too.
Hey, it’s true.
Sure the dollar got smoked and crude was down almost 7%. But focus on the positive right?
What's in this issue:
Energy Market Recap
OPEC Speeds Rollback of Production Cuts
LNG Export Growth
Headlines
| Crude Oil (May) | $66.95 | -4.76 | -6.64% |
| Natural Gas (May) | $4.138 | +0.083 | +2.05% |
| Copper (May) | $4.8285 | -0.2120 | -4.21% |
| S&P 500 | 5,396.52 | -274.45 | -4.84% |
| Dollar Index (DX) | 101.80 | -1.69 | -1.66% |
Energy Markets
🛢️WTI got hammered by 6.64% in the wake of the tariff announcement. The implication is that there is no way the new regime won’t slow down global trade, and the global economy.
Technically, we’re getting right back to support levels from March that the market had a hard time selling through. Perhaps nows the time?
As if that wasn’t enough, OPEC+ went ahead and sped up their schedule for peeling back production cuts.
👀 OPEC+ wasn’t seeing quite enough headline attention and apparently thought crude prices weren’t quite low enough…
… so they just decided to triple the pace of planned production increases for May.
So that’s fun.
— Rory Johnston (@Rory_Johnston)
11:32 AM • Apr 3, 2025
This is outweighing supportive forces of sanctions on Iran, Venezuela and Russia for now.
WTI Spreads
May/June: +0.48
Jun/Dec: +2.76
Dec5/Dec6: +1.37
🔥 Natural gas actually rose by 2% yesterday, a rare green dot in a sea of red.
The EIA reported a build of 29 bcf, slightly larger than consensus expectations of a 25 bcf build. This brings inventories to 80 bcf shy of the 5-year average.
In the near term, weather demand is outweighing any potential demand destruction from a slowing economy. That may change as industrial demand for gas is an important driver:
“While natural gas is partially insulated in the immediate term, the larger consideration within the next 12 months is if macroeconomic disturbance … will weigh on near-term industrial and power sector demand to the extent that it derails a bullish structural setup for natural gas into winter 2025-26,”
Of course, whether tariffs last 12 months, or 12 days, is anyone’s guess.
Source: EIA
LNG Export Growth
Great analysis by the EIA released in today’s In-Depth Analysis section on the factors influencing their forecasts of US LNG export capacity. Definitely worth a look…
“U.S. exports of liquefied natural gas (LNG) represent the largest source of natural gas demand growth in our March 2025 Short-Term Energy Outlook (STEO), with LNG gross exports expected to increase by 19% to 14.2 billion cubic feet per day (Bcf/d) in 2025 and by 15% to 16.4 Bcf/d in 2026. The start-up timing of two new LNG export facilities—Plaquemines LNG Phase 2 (consisting of 18 midscale trains) and Golden Pass LNG—could significantly affect our forecast because these facilities represent 19% of incremental U.S. LNG export capacity in 2025–26.”
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Headlines
“The campaign, dubbed “From America, For America,” starts Thursday and runs through June 2 on a range of 2024 and 2025 models, including those imported into the country. For its EVs, Ford is throwing in a home charger and free installation. Employee discounts can shave several thousand dollars off the price of a new car or truck.”
+Ford Offers Its Employee Discount to All New Car Buyers - WSJ
“For Booz, which makes 98% of its roughly $11 billion in annual revenue from government-related work, the assignment was existential. Rozanski and his team pulled in more than 100 employees to develop a response, which included more than $1 billion in potential cost savings.”
+How the Company Making Nearly All Its Money From the Government Is Navigating Trump’s Cuts - WSJ
“Alongside pushing Phillips 66 to sell its midstream business, its European retail operations and its chemicals joint venture with Chevron, Elliott also wants to remove the company’s staggered board, meaning all 14 directors would be up for a vote each year.”
+Elliott Management steps up proxy campaign against refiner Phillips 66 - FT
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