Stable Instability. The Energy Report 02/18/2025

Oil prices under the Presidency of Donald J. Trump have entered a new world of stable instability. What I mean is that oil and global stock and bond markets are holding up magnificently well despite the fear mongering and outright unstable comments regarding Trump, Tariffs and DOGE ( Department of Government Efficiency).  

Oil prices remain stable as worries about tariffs impacting demand and raising prices are balanced by significant government spending cuts. The oil market is also realizing that tariffs are not inflationary. They may cause some prices to rise but fall in other places. Cutting government waste and money printing is the cure for inflation and the markets must love that, despite the wailing and gnashing of teeth by those on the receiving end of this government money. The growing sense of stable energy prices driven by sensible energy policy could usher in a new era of energy price stability that will benefit both consumers and producers.

Today oil prices are supported by reports that OPEC may delay its production increase due to a weak global market. OPEC continues to point to weak demand from China as the reason but a cut when global oil inventories continue to fall is a dangerous game and should get some blowback from President Donald Trump.

Bloomberg reported that, “OPEC+ is considering pushing back a series of monthly supply increases due to begin in April despite calls from US President Donald Trump to lower prices, delegates said.” Then Reuters reported that, “OPEC+ producers are not considering delaying a series of monthly oil supply increases that is scheduled to begin in April, Russian Deputy Prime Minister Alexander Novak said on Monday, Russia’s RIA state news agency reported.”

See what I mean? Stable Instability. I present for your consideration, “Oil up on Bloomberg report. Oil down on Reuters report, oil back up on growing demand.

Trump talking peace with Russia is causing a sell-off for natural gas in Europe as hopes are being raised that a peace deal would allow the resumption of natural gas exports from Russia lowering the record breaking prices the Europeans have been suffering with.

According to IFAX at the Russia US talks were “productive” according to the Kremlin sources. They report that there were serious discussions on all issues and there are conditions for their meetings to take place, but a Putin-Trump meeting is not likely next week.

This occurs as the US continues to increase its position in the global energy market. Last week, U.S. Secretary of Energy Chris Wright joined President Trump to announce a new export authorization for the Commonwealth LNG project proposed for Cameron Parish, Louisiana. “Today’s action is the first major U.S. liquefied natural gas (LNG) project to receive an export authorization for non-free trade agreement (FTA) countries since President Trump and the Department of Energy lifted the Biden-Harris administration’s damaging freeze on LNG export permit approvals, restoring American energy leadership.” US energy secretary Chris Wright also hinted that more LNG approvals will be coming shortly that can help provide much needed liquified natural gas to the rest of the world and to Europe.

The Peoples Rebublic of California is considering a plan like one adopted by Venezuela, where the government would take control of the refining sector. After years of imposing regulations that affected the operations of California refiners, there is concern that these policies may lead to significantly higher gasoline prices in California compared to the rest of the country. The comparison to Hugo Chavez’s approach in Venezuela raises questions about the potential outcomes of this move. 

Currently, petroleum prices have remained stable. This could be an opportunity to consider various swing trades for oil, gasoline, and diesel. Seasonal spreads are also appearing favorable. Additionally, there may be options available by collecting premiums and coverage with spreads.

President Trump also has directed Interior Secretary Doug Burgum to undo Biden’s ban on future offshore oil drilling on the East and West coasts. Biden’s last-minute action last month “viciously took out” more than 625 million acres offshore that could contribute to the nation’s “net worth,” Trump said.

The latest forecast from the Fox Weather Channel predicts a severe winter storm that could bring heavy snow from the Plains to North Carolina. Fox Weather also reported that the polar vortex has returned to the US and frostbite inducing temperatures are blasting millions of Americans.

Natural gas prices have increased based on these forecasts and are currently stabilizing. Meanwhile, US natural gas producers have managed to raise production in recent weeks, compensating for some of the anticipated lost production due to freeze-offs.

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