About The Author

Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

It’s all about the oil heavy oil that is. While President Trump seems determined to put tariffs on Canada in Mexico tomorrow morning, he may be having second thoughts about putting tariffs on Canadian oil.

President Trump yesterday said that he’s going to decide on oil last night and the global oil market is going to await his decision.

Considering a pause on the tariff on Canadian oil is probably a recognition that the world is in short supply of heavy oil, the heavy oil that our US refiners need.

President Trump doesn’t want to risk a spike in diesel prices because that could impact businesses across the board.

At the same time though he doesn’t want to send a message to our trading partners that he is going to be determined to clean the borders and stop the drug trade from impacting the lives of ordinary Americans.

Chevron’s earnings missed today but they made some interesting comments regarding their business with heavy oil producer Venezuela.

Chevron said that they are already engaged with the Trump administration on Venezuela.

The FT Reports that Chevron is lobbying the White House to keep Venezuelan oil licensee. They are warning that the US could be vulnerable to Chinese, Russian influence if it is forced to abandon operations there.

It’s very clear that President Trump wants to put more pressure on the Maduro regime in Venezuela.

President Trump doesn’t really view Maduro as a legitimate leader of the country he sees Maduro as a dictator.

He would love to put maximum pressure on the country.  Of course, Venezuela’s heavy oil is in demand and if we tariff Canadian oil prices will higher.

So, President Trump when it comes to oil may have to pick his battles maybe put the pressure on Venezuela but go easier on Canada.

Russia is another country that produces a lot of heavy oil President Trump obviously wants to end the war between Russia and Ukraine and I think he would like to see Russian oil back on the global market.

Yet the fighting between Russia and  Ukraine continues And as you know energy especially oil is a major chess piece in this war.  Russia has the oil and gas Ukraine has the pipelines and Russia has the heavy oil.

Today reports say that Ukrainian drones attacked an oil refinery owned by Lukoil, one of Russia’s largest oil producers, in Volgograd Oblast overnight on Jan. 31, the General Staff of Ukraine’s Armed Forces reported.

“This refinery is one of the 10 largest oil refineries in Russia in terms of design capacity and is involved in supplying the Russian occupation army,” the General Staff said in a statement.

The Lukoil-Volgogradneftepererabotka refinery was targeted in a joint operation of the Unmanned Systems Forces and Ukraine’s military intelligence agency (HUR). It lies around 500 kilometers (300 miles) from the front line in Ukraine. This was reported by Kiev Independent.

Because of more sanctions on Russia reports were saying that their oil exports had gone down but their oil product exports have gone up so Ukraine is trying to hurt Russia by attacking the refineries because that should reduce the income that they’re getting more easily.

Reuters did report that “  – Traders have resumed offers of Russian crude cargoes to Indian refiners at narrower discounts after a delay triggered by recently imposed U.S. sanctions that have pushed up trading costs, Indian refining sources said on Friday. Washington earlier this month imposed sweeping sanctions targeting Russian producers and tankers, disrupting supply from the world’s No. 2 producer and tightening ship availability.

Regardless, the diesel market seems to be the strongest in the sector the last couple of days.

Not only are we dealing with a spat of record-breaking demand because of the cold, but we are also seeing the concerns about the tariffs on heavy oil.

That is why it’s likely that oil will be spared from the trump tariffs but if not look to ride the oil and products.

We saw an increase in gasoline crack spreads .

The seasonality is for oil are very attractive as there are for many petroleum spreads.

And while there’s been a lot of focus on oil as far as tariff goes, we should also be focusing on natural gas.

Natural Gas Intelligence reminds us that President Trump’s threat to impose 25% tariffs on all imports from Canada and Mexico on Feb. 1 looms large and could have an immediate impact on the supply and cost of various goods traversing North America, including natural gas.

Yet the market isn’t so focused on the tariffs as much as they are in the weather.

Despite a very bullish withdrawal from inventory yesterday the market is feeling a little bit more comfortable that they’re going to be able to get through the winter without sharply higher prices.

Sill if you look at Europe the prices to refill storage going into next year are very high and it could happen here in the US if the weather starts to turn cold. To keep an eye on that download of the Fox Weather app.  The EIA said that working gas in storage was 2,571 Bcf as of Friday, January 24, 2025, according to EIA estimates.

This represents a net decrease of 321 Bcf from the previous week. Stocks were 144 Bcf less than last year at this time and 111 Bcf below the five-year average of 2,682 Bcf. At 2,571 Bcf, total working gas is within the five-year historical range.

Download the Fox Weather ap. Make sure you stay tuned to the Fox Business Network, the only network that in America is truly invested in you! Call to open your account today by calling 888-264-5665 or e-mail me at pflynn@pricegroup.com.

 

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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