Hesitation. The Energy Report 02/28/2025

West Texas Intermediate oil prices made a run for the 10-day moving average but failed to complete the breakout, keeping us locked in a trading range. Oil prices were hesitant to move higher and break out because of mixed signals like OPEC Plus hesitation as well as a reminder from President Trump that he will not hesitate to enforce tariffs that will out on schedule unless some dramatic changes are made.

Also, President Trump’s peace push is reducing geo-political price risk as he makes a historic agreement with Ukrainian President Zelensky that will make the US a partner in developing Ukraine’s minerals, rare earths, oil and gas and says that he thinks the Russian Ukraine war will end very soon, or it will not end at all.

Yet some are complaining that Ukraine may not have much in the way or rare earth minerals. They do have the potential to increase production of oil and gas in addition to any rare earth minerals that the US can find. President Trump does say that the relationship with Vladimir Zelensky got a little bit testy. Apparently Vladimir doesn’t like being called a dictator, makes him testy. I get it. President Trump also stated that he did not think Putin would invade Ukraine again if they reached a peace agreement with Ukraine. He suggested that Russia and Ukraine could have a strong economic relationship if both nations cooperated. That’s assuming of course Putin gets over his obsession with getting the Old Soviet Union back together and Nato respects its treaties with Russia.

Yesterday oil prices made a run at the 10-day moving average but failed as traders started to wonder if we could see the start of “Oil Trading War III”. Algorithmic traders responded quickly to a headline indicating that OPEC is hesitant about proceeding with an April output increase due to uncertainties surrounding sanctions and tariffs, causing oil prices to rise by almost $0.50. Yet reversed it very quickly afterwards because the next headline read that Russia and the United Arab Emirates still wanted to go ahead with the production increase.

That brought t back memories of past production wars. We all remember the disagreement between Russia and Saudi Arabia about oil production in the beginning days of COVID that led to a production war that helped prices crash to below ZERO! In recent months the UAE have been chomping at the bid to show their oil production prowess. OPEC has restrained them even as they have given the United Arab Emirates the ability to make up for quotas that other OPEC members just weren’t using. If OPEC delays their production increase, it will be very bullish for oil and oil product prices.

Currently, oil prices are fluctuating within a trading range, but a delay will give prices an upside breakout. Generally, the seasonality of oil, gasoline, and diesel becomes bullish around Easter anyway.

In fact our friends at Moore Research points out to look at the price of August crude oil between March 29th and April 14th. It’s kind of 14 out of the last 15 years. If you look at diesel, for example March 29th to April 14th it’s gone up 13 out of the last 15 years. And those summer blends make me feel fine as we get the April run up in gasoline! Between March 30th and April 15th gasoline futures have gone up 14 out of the last 15 years.

President Trump realizes that the United states is going to need rare earth minerals whether they’re produced here or in other parts of the world. Right now, China of course has a monopoly almost on many better earth minerals. Trump has warned China to quit dumping their products here in the United States and we’ll take action to stop. At at the same time China pledges to stabilize grain prices and may intervene in the market to counter potential tariff threats.

Natural gas is hanging after a bullish report. Cold weather caused a bullish report. Working gas in storage was 1,840 Bcf as of Friday, February 21, 2025, according to EIA estimates. This represents a net decrease of 261 Bcf from the previous week. Stocks were 561 Bcf less than last year at this time and 238 Bcf below the five-year average of 2,078 Bcf. At 1,840 Bcf, total working gas is within the five-year historical range.

Weather fluctuations have been unbelievable causing movement in the futures markets. That is why it is imperative that you download the Fox weather app. Tune in to the Fox Business Network because they are the only network in America that is truly invested in you.

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To take advantage of commodity movements, open your futures account. Call Phil Flynn at 888-264-5665 or email pflynn@pricegroup.com.