- Energized
- Posts
- ⚡Swimming In It
April 16, 2025
Morning everyone,
Volumes and open interest are declining across markets as volatility from headline driven events has led to uncertainty, margin calls, and thinning liquidity.
James Grant’s Almost Daily newsletter was all about the lack of liquidity in bond markets.
“If a steep breeze blew through the Treasury market today, rates would move a quarter point,” quipped Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott.”
United Airlines has decided to offer two different earnings outlooks.
“The macroeconomic environment “is impossible to predict this year with any degree of confidence,” United said in an investor update as it reported first-quarter financial results.”
What's in this issue:
Energy Market Recap
EIA expectations
Swimming in it
Headlines
| Crude Oil (May) | $61.33 | -0.20 | -0.33% |
| Natural Gas (May) | $3.329 | +0.004 | +0.12% |
| Copper (May) | $4.6260 | +0.0005 | +0.01% |
| S&P 500 | 5,396.63 | -9.34 | -0.17% |
| Dollar Index (DX) | 99.40 96 | +0.56 | +0.56% |
Energy Markets
🛢️WTI was once again unchanged as the market digests a $10 move lower on the back of so much uncertainty. The next headline is awaited.
In the meantime, EIA will report inventories later today. Consensus estimates are for a build of 500,000 barrels. Both distillates and gasoline are expected to post inventory draws of 1.2 million and 1.6 million barrels respectively.
WTI Spreads
May/June: +0.58
Jun/Dec: +1.95
Dec5/Dec6: -0.52
🔥 Natural gas also had a quiet day and prices were essentially unchanged.
The quiet trading reflects shoulder season demand, uncertainty, etc, etc.
PRESENTED BY ENERGY 101
From oil and gas to power and renewables, we have you covered. Groups of ten or more? We can create a custom course from over 50 available course modules to suit your needs.
Swimming In It
This year, and the next, we’ll likely be swimming in oil.
The IEA just slashed its global oil demand growth forecast by about a third on the heels of Trump’s trade war.
The leading cause of the decline is an assumption of a 0.5% hit to global GDP in both 2025 and 2026. They are now assuming global GDP growth of just 2.5% and 2.6% in those two years.
This assumption, in turn, led to a forecast of oil demand growth for 202 to be just 730,000 bpd, a 300,000 bpd reduction from previous forecasts.
The group notes that 2025 demand was cruising on the back of a strong economy before the self destruction began.
“The downgrade comes on the heels of robust oil consumption in 1Q25, up by 1.2 mb/d y-o-y – its strongest rate since 2023.”
Supply Glut, Despite US Production Decline
BREAKING: @IEA cuts its oil demand growth forecast for 2025 by 1/3 to ~730,000 b/d (from ~1m b/d) on the back of the US vs the rest of the world trade war. “Oil markets are in for a bumpy ride ,” it says on its monthly oil market report | 1/2 #OOTT
— Javier Blas (@JavierBlas)
8:03 AM • Apr 15, 2025
Low oil prices combined with higher prices for steel and equipment will lead to a decline in production growth.
The report trims its US production growth forecast by 150 kbpd.
Tariffs Have Already Collapsed the Propane Market
Back in March (aka, the before times), I highlighted an EIA report that showed the ties between petroleum exporters and Chinese importers in a niche of the energy market - propane.
Propane is a key feedstock in plastics production, and US exports of it have been steadily growing since 2007. These energy exports, of course, are a key to balancing our trade deficits which will now be worse to the tune of about a billion a month.
“The two countries should be snug bedfellows in the LPG market. US production has soared thanks to the shale revolution, and China has capitalized by ramping up its plastics making capacity. Until last week, those plants were feeding an export machine which was heavily dependent on American consumers.”
Headlines
“Venture Global, a developer of a liquefied natural gas export facility in the US, sold $2.5 billion dollar-denominated senior secured notes in two tranches to refinance existing debt, according to a person with knowledge of the matter.”
+US Junk Bond Market Defrosts After Long Period Without Deals - Bloomberg
“Take crude oil for example. Imports were 135.25 million metric tons in the first quarter, equivalent to 10.97 million barrels per day (bpd) and down 1.5% from the same period a year earlier, according to customs data released on Monday.”
+China's Q1 key commodity imports were soft, outlook mixed - Reuters
“If the UK government is worried about over-reliance on foreign steel, then it should certainly be concerned about reliance on foreign oil and gas.”
+British Steel seizure makes North Sea extension a no-brainer - Reuters
Economic Calendar
Monday -
Tuesday - Empire State Manufacturing
Wednesday - Retail Sales, Cap U, Crude Oil Storage Report, Fed Minutes
Thursday - Initial Jobless Claims, Housing Starts, Natural Gas Storage Report
Friday -