⚡Oil Drops on Tariffs

March 4, 2025

PRESENTED BY: POWERING THE FUTURE

Morning everyone,

Well, here we go. Equity and oil markets tanked as Trump rolled out another round of tariffs. The WSJ has now doubled down on calling them the “dumbest in history.”

One month isn’t a ton of time to make sweeping changes especially when the targets are moving or unclear:

“They left unsure what Trump wants, said Canada’s immigration minister.” 

The SPGlobal TPM shipping conference is happening in Long Beach. Rolf Habben Jansen, CEO of shipping giant Hapag-Lloyd put it succinctly:

"Having higher tariffs and additional fees is not good for the global economy,"

~Doug​

What's in this issue:

• Energy Market Recap

• OPEC+ Hikes Production

• Headlines

Energy Markets

🛢️WTI ended lower by 2% on the double-whammy of new tariffs and OPEC+ hiking production (more below).

Increased tariffs on both Canada, Mexico, and China are feared to cut into global economic activity.

At the same time, while OPEC+ didn’t talk up a huge production number, the signal that they are done holding back production was enough to send prices lower.

WTI Spreads

Apr/May: +0.31
Jun/Dec: +2.36
Dec5/Dec6: +1.86

🔥Natural gas spiked by 7.5% as forecasts shifted a bit colder.

Natgasweather.com was quoted in the WSJ as saying:

“Tight storage likely contributed to the gains, and it also helps that LNG exports remain very strong at just under all-time highs,”

Reuters also reported that, for now, Germany is not considering restarting Russian gas imports through Nord Stream 2.

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OPEC+ Hikes

The question has been rolling around since last year. When will OPEC+ begin to roll back its production cuts?

Well, it seems the answer is now, to the tune of about 138,000 bpd - less than Chevron’s now-cancelled Venezuela production.

Even if the number is symbolic, this marks the first increase since 2022. Prices haven’t changed much since then, and, if anything, the global economy now looks shakier. And sentiment is already turning.

As analyst John Kemp recently posted:

“Funds held a net long position of just 39 million barrels (the third-lowest in weekly records dating back to 2011) in NYMEX and ICE WTI on February 21 down from 236 million five weeks earlier.”

However, lower oil prices has always been one of Trump’s themes, so this will put them in his good graces (potentially, for now, who knows…).

Headlines

“Slower-than-expected project ramp-ups, unplanned plant outages or stronger Asian LNG demand would all tighten the market and require Europe to pay more to secure supplies.”
+Europe's LNG summer buying binge puts market on razor edge - Reuters

“LNG exports in the U.S. rose in 2024, reaching near-record levels in December. But lower LNG export prices combined with higher costs squeezed margins for companies such as New Fortress.”
+New Fortress Energy posts quarterly loss amid lower LNG export prices - Reuters

“Having been burned on tariff trades already this year, investors are less reactive to unsupported tweets”
+Currency investors grow wary of bets on Trump tariffs - FT

“As one guy used to say to me, if you make something China needs, you’re going to be wealthy. If you make something China makes, you’re fucked.”
+China ‘annihilated’ US aluminium — can Donald Trump’s tariffs revive it? - FT

Economic Calendar

Monday - ISM
Tuesday -
Wednesday - ADP Employment, PMI, Crude Oil Storage Report
Thursday - Natural Gas Storage Report, Jobless Claims,
Friday - US Jobs Report, Employment Rate