Can’t Make Up Its Mind. The Energy Report 03/07/2025

President Trump is having success bringing down oil prices after they hit the lowest price since 2023. This came in with an oil market selloff that saw tariff news going on and off, that no matter what happened traders took as bearish. I guess oil traders are confused whether tariffs are bearish for oil.

What I mean is that oil prices took a hit after President Trump announced tariffs on Canada and Mexico. It still took another hit after it was reported that Trump could eliminate the 10% tariff on Canadian energy imports, such as crude oil and gasoline, that comply with existing trade agreements. Yet it’s interesting because the predictions were that tariffs would cause oil to go up. Yet then there are fears that tariffs might slow the economy. Those fears were played out as stock prices took a hit. Yet later when it was announced a one-month exemption to 25% tariffs on Mexico and Canada are going to cover all USMCA-covered goods, oil still fell.

The selloff isn’t just about tariffs; it’s driven by the belief that President Trump’s foreign policy will lead to a ceasefire in the Russia-Ukraine war and return of Russian oil and gas to the global market. Headlines about the Trump Administration possibly seizing ships carrying Iranian oil didn’t worry the market. Additionally, OPEC’s modest production increase and Trump’s potential elimination of the 10% tariff on Canadian energy imports contribute to the confidence that prices will stay low.

The sell-off is typical for the shoulder season when refinery shutdowns generally create a price floor for spring and summer. However, President Trump’s foreign policy may limit oil’s upside. Streamlining approvals and reducing regulatory burdens have typically lowered prices for US consumers. In contrast, Biden’s numerous executive orders on oil and gas increased regulatory costs and contributed to inflation. Additionally, his extensive spending policies negatively impacted the economy.

Some also blame Fed Chairman Jerome Powell for inflation by continuing to suggest that it was transitory and not admitting that Biden’s fiscal policies were largely responsible for the worst inflation in a generation. Now today it’s being reported by Reuters that Jerome Powell will speak in New York today, addressing the economic risks posed by Trump’s tariffs, rising inflation expectations, and slowing growth. And what that means is that we’re going to get a sense from Jerome Powell whether the policies by President Trump will lead to rate cuts and in fact we are starting to see evidence that the central banks around the globe are going to start cutting rates some are fearful that that will create inflation. From the US point of view, Europe spending more on their own defense is going to free up more money for Americans.

It’s interesting that the tariffs on Mexico come at a time when they’re continuing to struggle with their oil output US refiners were very upset because of salt in some of the oil. Oil Price reported that, “Problems with the salt content in Pemex oil have been solved!! Mexico’s President Claudia Sheinbaum said, after multiple reports about trouble with salt and water content in Pemex crude. “The problem of salt in crude has been solved,” Sheinbaum said during a regular press conference, as quoted by Reuters.

As we look at the price of crude oil and the product we think that we’re getting pretty close to the seasonal low. Keep in mind that the more Research Institute says that August crude has gone up 14 out of the last 15 years between March of 29th and April the 14th. Heating oil also joins the oil upswing at March 29 up 13 of the last 15 years. And of course, gasoline is 14 out of 15 years. Past performance is not indicative of future results.

Natural gas prices dip holds back a little bit after an exceptional run the United States has just rocking as they continue to hit records with liquefied natural gas exports. On the global market Europe must buy a lot of natural gas to get their storage filled back up and that could come as President Trump works to get sanctions off Russia.

The EIA reported that, “Working gas in storage was 1,760 Bcf as of Friday, February 28, 2025, according to EIA estimates. This represents a net decrease of 80 Bcf from the previous week. Stocks were 585 Bcf less than last year at this time and 224 Bcf below the five-year average of 1,984 Bcf. At 1,760 Bcf, total working gas is within the five-year historical range.

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