⚡Pause

February 4, 2025

PRESENTED BY: EKT INTERACTIVE ENERGY TRAINING

Yesterday was one of those days where the net of where prices ended was less significant than where they were off of their highs (in the case of oil) or lows (in the case of equities.

Tariffs announced over the weekend were met with a flurry of diplomatic talks. These talks ended in a pause for both Mexico and Canada based on commitments to increased border security.

Of course, the real emergency is that Waffle House has implemented a temporary $.50 per egg surcharge.

~Doug​

What's in this issue:

• Energy Market Recap

• Need the Info

• Gold Bugs

• Headlines

ENERGY MARKETS

🛢️Oil prices ended higher by .9% to close at $73.16 after hitting a high of 75.18. WTI began its pullback after the announcement that Mexico had agreed to beef up border security, thus winning a one-month pause in sanctions. Canada would follow suit later in the day.

There’s plenty of commentary about this, and some note that these security promises are not much different than earlier proposals.

So was it that, or that it is unlikely that either domestic oil producers or OPEC+ will be coming to the rescue if oil prices shoot higher?

+U.S. Frackers and Saudi Officials Tell Trump They Won’t Drill More - WSJ

WTI Spreads

Mar/Apr: +0.77
Mar/Dec: +5.41
Dec5/Dec6: +2.64

🔥Natural gas spiked as weather forecasts for February turned colder for the middle of the month. Prices ended higher by over 10% on the day.

Last week’s EIA data showed that inventories are now below where they were at this time last year (a warm winter) but also below the 5-year average.

The most recent In-brief analysis from the EIA continues to digest last years gas data, showing how spot prices fell from 2023 to 2024 across the nation’s key delivery hubs.

NEED THE INFO

OPEC has booted the EIA, along with Rystad Energy, as sources of independent data on member country production. Kpler, OilX, and ESAI have been chosen as replacements joining five other companies that provide this information.

“Opec probably now sees the EIA as a [direct] US government agency,” said one former Opec staffer to the FT.

No specific reasons were given. The last time a change like this was made was 2022 when OPEC removed the EIA as a data source.

GOLD BUGS

A flight to quality is playing out in the oldest safe-haven asset, gold. The yellow metal has broken all-time highs set back just before the US election. As we touch on regularly here, it’s not just price but location.

The premium of the US-based Comex gold future is now so large that it is cost effective to transport gold to the US and deliver it against the contract.

Reuters reports that inventories are up 80% since November as banks and dealers rush to take advantage of the wide-open arbitrage. That’s $38 billion worth of gold at today’s prices.

HEADLINES

“The flashpoint here is Norwegian voters are paying higher electricity prices so German ones don’t face even higher costs.”
+Why Norway’s Political Crisis Is a European Energy Problem - Bloomberg

"This trend we have seen of [refining] margins softening through 2024 is something you can expect to continue to see, to extend into 2025," Chevron CEO Mike Wirth said in an interview.
+Big Oil bleak on refining profits going into 2025 - Reuters

“He's willing to start with his closest ally… If he's willing to do this to Canada, what's he willing to do to everybody else?"
+Canadians cancel trips, ban American booze after Trump's tariffs - Reuters

ECONOMIC CALENDAR

Monday - PMI, ISM
Tuesday - Job Openings, Factory Orders, Fed Atlanta & San Fran speak,
Wednesday - ADP Employment, Crude Oil Storage Report
Thursday - Natural Gas Storage Report, Jobless Claims, Fed speakers
Friday - Employment