⚡Oil Drops on Tariffs, Inventories

March 6, 2025

Morning everyone,

Equities recovered somewhat, but oil and the dollar took another hit as tariffs and general uncertainty hit global growth estimates.

The ADP employment number came in weak, the smallest number since July.

Car makers got a bit of a break as the White House gave the sector a one month reprieve from tariffs and:

“would apply to autos imported through the U.S.-Mexico-Canada Agreement, or USMCA, the successor trade deal to 1994’s North American Free Trade Agreement.”

Good luck planning around that I guess…

~Doug​

What's in this issue:

• Energy Market Recap

• EIA Inventories Build

• Copper Spikes

• Headlines

Energy Markets

🛢️WTI slid 2.9% as tariffs are expected to crimp global growth and the EIA reported a larger than expected build in inventories.

The EIA reported a build in crude oil inventories of 3.6 million barrels. Cushing inventories grew by 1.1 million barrels. Consensus expectations were for a build of around 300,000 barrels.

WTI Spreads

Apr/May: +0.40
Jun/Dec: +1.94
Dec5/Dec6: +1.28

🔥Natural gas ended higher by another 2.3% as tight inventories and continued moderate demand support the upward trend.

The EIA will report inventories later today. Expectations are for a draw of 98 bcf.

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Tariffs Distort Copper

Copper prices spiked by over 5% in New York as Trump announces the possibility of tariffs up to 25%.

Other benchmarks didn’t move as much on the news, opening up a huge arbitrage. As Bloomberg notes:

“The huge differential has already touched off a worldwide hunt for copper that can be shipped to the US before any tariffs are imposed, and traders are likely to redouble those efforts following Wednesday’s jump.”

Headlines

"The good thing is that there's appetite for Mexican crude in Europe, in India, in Asia," they said. "There's demand for heavy crude and Pemex crude."
+After Trump's tariffs, Mexico seeks Asian and European crude oil buyers - Reuters

“The County of Los Angeles, the Los Angeles County Flood Control District, the Consolidated Fire Protection District of Los Angeles County, the City of Pasadena and the City of Sierra Madre filed lawsuits seeking compensation for damages to public resources and infrastructure caused by fire”
+Los Angeles County, Pasadena, sue Southern California Edison over wildfires - Reuters

“By taking the drastic step of exiting vast swaths of the ports business that has been a central part of its identity since the 1990s, the group has removed itself from Trump’s crosshairs and struck a deal that boosted its struggling share price by more than 20 per cent on Wednesday.”
+The billionaire elite who answered Donald Trump’s call on Panama Canal - 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