Direct Talks. The Energy Report 04/08/2025

Calmness and reality are returning to the market as traders recognize that President Donald Trump’s trade war may lead to peace and prosperity. Many countries are eager to make deals with the United States, acknowledging their dependence on its economy. Additionally, there is historic movement between the United States and Iran, as President Trump has encouraged direct talks regarding a final nuclear settlement.

Trump’s actions have made it clear to Iran that their support of terror will not be tolerated. President Trump secured direct talks with Iran, a first since the Iranian revolution. Reports that the direct talks between the US and Iran should reduce the risk premium in oil was propped up by chatter that the US and Israel was on the verge of attacking Iran.

Energy groups want the Trump Administration to buy oil for the Strategic Petroleum Reserve. Energy Secretary Chris Wright indicated plans to proceed. The urgency is due to oil prices approaching break-even for many shale producers, causing concern over reduced CapEx for US producers.

Trade war reports caused high volatility yesterday but now the markets are able to put some of these trade war fears in perspective. Fox News reported that CNBC was forced to issue an on-air correction after it amplified a viral falsehood that President Donald Trump was considering a “pause” on his widespread tariffs.

Reuters reported that Trump said he would impose an additional 50% duty on U.S. imports from China on Wednesday if it did not withdraw the 34% tariffs it had imposed on U.S. products last week. Those Chinese tariffs had come in response to 34% “reciprocal” duties announced by Trump. Beijing responded with defiance. Trump’s threat was a “typical move of unilateralism, protectionism and economic bullying,” Chinese embassy spokesperson Liu Pengyu said. “We have stressed more than once that pressuring or threatening China is not a right way to engage with us,” he added. “China will firmly safeguard its legitimate rights and interests.”

The European Commission, meanwhile, proposed counter-tariffs of 25% on a range of U.S. goods, including soybeans, nuts and sausages, though other potential items like bourbon whiskey were left off the list, according to a document seen by Reuters. Officials said they stood ready to negotiate a “zero for zero” deal with Trump’s administration. “Sooner or later, we will sit at the negotiation table with the U.S. and find a mutually acceptable compromise,” EU Trade Commissioner Maros Sefcovic said at a news conference.

Many countries are willing to compromise, acknowledging the United States’ low tariffs. However, abuses from other trading partners have led to significant trade deficits in the US. Actions have been taken to address these issues, aiming to eliminate waste and fraud in government spending. The Department of Government Efficiency plays a role in continuing to reduce waste and fraud while improving government operations.

Government efficiency should go beyond addressing waste and fraud. The Department of Government Efficiency, with its smart and tech-savvy personnel, must review all government reporting agencies. Accurate reports from agencies like the Bureau of Labor Statistics, the Energy Information Administration, and the US Department of Agriculture are crucial for the economy. Providing these agencies with the necessary tools to produce precise data will benefit businesses and the global economy. Additionally, it’s vital to remove political biases from these reports, ensuring they serve their true purpose of providing reliable information.

While the stock market recovers, oil prices are declining. The crack spreads indicate no recession is imminent, supported by the bond yield curve. Don’t be swayed by recession fears; look for opportunities.

We anticipate oil prices will recover slightly, not dramatically. Tonight’s American Petroleum Institute report on oil inventories should show seasonal market strength. Meanwhile, the drop in gasoline prices benefits American consumers, offsetting the seasonal blend spike.

Are You Kidding Me! Today is April 8th, and the morning temperature was 18°. There is a forecast for snow next week. This late cold spell may impact efforts to reach normal levels of natural gas storage. Additionally, more countries are planning to buy natural gas from the United States as a response to President Trump’s trade policies. Taiwan and Japan have both offered to increase their purchases of liquefied natural gas. It is important to monitor the weather conditions.

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