⚡Lower on Bullish News

February 27, 2025

PRESENTED BY: POWERING THE FUTURE

Morning everyone,

Copper spikes on tariff threats and equities were unchanged as the market awaited earnings out of Nvidia. They crushed it yet again, but after a little move higher the stock is actually lower after hours (at time of this writing).

Will this be the trend? Sentiment is souring. As the WSJ’s Greg Ip puts it:

“It’s way too early to assume that Trump, like his predecessor, President Joe Biden, will be tormented by a public mood at odds with objective reality. That said, the anxiety that has long permeated the public isn’t going away just because the White House changed hands.”

~Doug​

What's in this issue:

• Energy Market Recap

• EIA Inventories Draw, Build Was Expected

• EU Gas Get’s Talked Down

• Powering Down

• Headlines

Energy Markets

🛢️WTI ended lower by $.45 despite bullish news. Inventories came in much lower than expected showing a draw of 2.3 million barrels. Expectations were for a build of 2.6.

HFI Research has an interesting take on why the inventory draw didn’t push prices higher:

“As you can see, the draws are not happening in the critical regions of the oil market, which is why you are not seeing it being reflected in the price. While from a fundamental balance (NGLs are part of the total liquid balance), the total liquids draw appears to be bullish, oil bulls have to acknowledge the draws are coming from other segments of the market.”

Additionally, Trump revoked Chevron's license to produce oil in Venezuela.

Chevron is producing about 200,000 bpd in the country. And it’s the nice heavy oil American refiners like.

“While Venezuela's oil accounted for only 3.5% of total U.S. crude imports in November, it was about 13% of crude oil imported by U.S. Gulf Coast refineries, according to the EIA.”

WTI Spreads

Apr/May: +0.32
Jun/Dec: +2.34
Dec5/Dec6: +1.85

🔥Natural gas fell 4% (April contract) as the March contract went off the board today down 6% and settled at $3.906.

A spell of warmer weather has cooled demand, but longer term forecasts show we’re not totally out of winter just yet.

EIA inventory data due out today. Expectations for another large draw due to the cold blast.

EU Gas Get’s Talked Down

Gas prices in Europe were spiraling higher on the combined effects of a cold winter and inventory draws. Knowledge that supplies would need to be replenished at a faster rate had pushed up summer prices.

Easing temps are helping. But the EU has also discussed easing the mandatory storage injections.

The current regulation mandates member states to fill storage to 90% capacity by November 1, with intermediate targets throughout the year. This policy was introduced during the 2022 energy crisis to ensure winter supply security but has faced criticism for its rigidity and economic impact.

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Powering Down

There’s plenty of talk about new power coming on line and backlog of generation waiting to be connected to the grid.

It’s good to keep in mind that there is also some natural attrition in the power sector as old facilities are shut down - particularly coal. Unlike the second life old nuclear facilities are experiencing, these likely won’t be coming back.

According to the EIA:

“Electricity generators plan to retire 12.3 gigawatts (GW) of capacity in 2025, a 65% increase in retirements compared with 2024. Last year, 7.5 GW was retired from the U.S. power grid, the least generation retired since 2011.”

Headline

“The company will postpone until August 2029 construction of anti-terrorism equipment at its Kashiwazaki Kariwa power plant that’s required to restart the Unit 7 reactor. Tepco had previously planned to finish the project by next month.”
+Tepco Falls on Risk of Delay to Restart World’s Top Atomic Plant - Bloomberg

“According to Petrobras, the financial transactions did not impact its cash flow, and excluding them, the firm would have posted a net profit of 17.7 billion reais in the quarter, still a 53% drop year-on-year.”
+Petrobras to issue dividends despite fourth quarter net loss of $2.8 billion - Reuters

“While Ukrainian negotiators were able to narrow down the scope of the deal and push back on some of the more onerous terms demanded by the Trump administration, several crucial details have yet to be decided.”
+What are the terms of the US-Ukraine minerals deal? - FT

Economic Calendar

Monday -
Tuesday - Case-Schiller, Consumer Confidence
Wednesday - New Home Sales, Crude Oil Storage Report
Thursday - Natural Gas Storage Report, Jobless Claims, GDP
Friday -