⚡ Oil drops 2% tariff delay brings pause to rally.

Energy Markets

🛢️Oil prices fell 2% as the market continues to digest news out of the White House. A tug-of-war will continue as the sanctions and tariffs headlines are weighed against any fundamental data.

Energy Emergency?

There's a lot of talk about an energy emergency, however the only problem the industry had in 2024 was low prices due to an oversupply of oil and gas.

In January, we got a glimpse of what can happen when Washington interferes with markets as oil climbed from $60-80. With tariffs on Canada and sanctions on Iran and Venezuela all on the table, the market will remain twitchy.

Funds are Long

Analyst John Kemp points out that speculators have ​entered the market​ in a big way.

"Investors have built the most bullish position in petroleum for nearly nine months, anticipating U.S. sanctions will reduce exports from Russia and Iran and cause inventories to deplete even faster."

WTI Spreads

Feb/Mar: +.82
Mar/Dec: +6.61 (last +3.82)
Dec25/Dec26: +3.52

🔥Natural gas prices continued to fall as weather forecasts predict a warming pattern into early February. Prices were down almost 5% yesterday.

The IEA released its Gas Market Report for Q1 2025. It's worth a look.

​Unsurprisingly, gas demand in the US growth was driven by power consumption.

"Gas burn in the power sector continued its expansion and rose by around 4% (or 17 bcm) in 2024. This growth was primarily supported by higher electricity consumption, which grew by a near 3% y-o-y. Sizzling heatwaves pushed up gas-fired power generation to an alltime high in July. In addition, the continued decline in natural gas prices supported additional coal-to-gas switching, with coal-fired generation declining by near 4% in 2024."prices

LNG Green Light

As promised, one of Trump's first actions was to resume the processing of LNG export permit applications.​

According to Reuters, the following LNG export projects are currently awaiting approval:

"Plants in Louisiana awaiting approvals include Commonwealth LNG, Venture Global's CP2, Cheniere Energy's expansion to its Sabine Pass facility and Energy Transfer's Lake Charles terminal. In Texas, a second phase of Sempra's project Port Arthur LNG, awaits approval."​

+Oil majors brace for falls in LNG revenues as prices stabilise - FT

Nafta to Nada

First there was NAFTA, brought to us by Dubyah in 1993 and in place until Trump trashed it in 2017. The follow up, USMCA, negotiated by Trump himself, looks like it will be out sooner than later.

The agreement was already up for review in 2026, but it is on the chopping block on day one. However, the deal is important and the impact on trade with our largest and most important partners can't be overestimated.

​​According to the WSJ:

"The USMCA governs roughly $2 trillion of trade between the U.S. and its continental neighbors. It was approved by Congress with the broadest support of any trade deal in U.S. history."

Any tariffs on our neighbors who supply everything from oil to cars will be felt immediately by the American consumer, but the hope is that the threat alone is enough to move the needle on fentanyl and immigration.

Headlines

"Our core capabilities are focused on delivering reliable fuel supply to our travel centers and customers across North America,"

+Warren Buffett's Pilot Co shuts oil trading business - Reuters​

"The Latin American nation exported $9.68 billion worth of fuel and energy out of the country in 2024 while pumping in $4.01 billion, marking a surplus of $5.67 billion."

+Argentina logs largest energy trade surplus in 18 years in win for Milei - Reuters​

"Tightening global corn supplies have had investors’ attention for months, though it has recently become apparent that soybean stocks later this year may not be as

ample as previously thought."

+Bulls take control of CBOT soybeans while funds' corn long nears three-year high - Reuters