⚡Tariff "Clarity"

April 2, 2025

Morning everyone,

Equities rallied and energy took a pause as markets await today’s expected clarity on tariffs.

Clearly, it has been a roller coaster to date as Trump imposes then backs off announcements. So the final (for now?) details could be seen as bringing some sort of relative relief to the uncertainty.

+Want to Play a Game? Global Trade War Is the New Washington Pastime. - NYTimes

As Jim Caron, CIO at Morgan Stanley Investment Management put it:

“Now the game is something that we on Wall Street are very, very well equipped to understand. You know: what’s the cash flows under these tariff scenarios? What’s the range of outcomes?”

Warm up those spreadsheets and put the coffee on. The associates won’t be getting any sleep tonight.

~Doug​

What's in this issue:

• Energy Market Recap

• Banks Lower Crude Price Forecasts

• OPEC+ Meets Thursday

• Headlines

Energy Markets

🛢️WTI ended lower by .39%, pausing after Monday’s big move and we await tariff details.

The bullish factors - sanctions - haven’t been seen as working to take much oil off the market. Although that may not be the case with Venezuela whose exports are down 11.5%.

Despite the move higher, Wall Street banks have lowered their forecasts for crude prices for the rest of the year.

“In the Journal survey, Brent and WTI are forecast at $72.30 and $68.32 a barrel in the second quarter, respectively. The benchmarks are then expected to fall to $71.81 and $67.72 a barrel in the third quarter and to $70.55 and $66.80 a barrel in the fourth.”

EIA Expectations

Our friends at CRG expect the EIA to show a build of 900,000 barrels in this week’s inventory report. Additionally, gasoline is expected to draw 1.3 million barrels, distillates down 1.4.

WTI Spreads

May/June: +0.46
Jun/Dec: +3.25
Dec5/Dec6: +2.40

🔥 Natural gas prices declined by 4% as energy trends reversed before tariff announcements.

Additionally, analysts are expecting another build in inventories as we track back towards the 5 year average.

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OPEC+ Meets

As if there wasn’t enough going on this week, OPEC+ ministers are meeting on Thursday.

The group is expected to move forward with a planned production increase of 135,000 barrels per day in May.

With barrels from Iran, Venezuela, and Russia with the lack of a ceasefire in Ukraine potentially dropping off the market, the group certainly has the cover to push product.

"I don't think many market participants are expecting another formal pause at this stage," RBC Capital Markets analyst Helima Croft is quoted in Reuters.

Headlines

“With this transaction, TG Natural Resources will add more than 250 gross locations to its existing Haynesville inventory, assuming four wells per section.”
+Chevron to Sell Majority Stake in East Texas Gas Assets for $525 Million - WSJ

“We do not necessarily want to retaliate, but we have a strong plan to retaliate if necessary.”
+EU Has Plan to Retaliate on U.S. Tariffs, Von der Leyen Says - WSJ

“The first cause for concern must be antimony — used to harden lead bullets and make flame-retardant materials. Once traded comfortably below the $15,000-a-tonne mark in Europe, antimony has jumped in price by about 375 per cent since the start of 2024 because of a global feedstock shortage and Chinese export controls that came into effect in September 2024.”
+The niche minerals now surging in price as defence spending booms - FT

Economic Calendar

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