Hot Off the Presses. The Energy Report 04/24/2025

There was an old saying in the markets that if you traded headlines eventually you would be out selling newspapers. Few people sell newspapers anymore as headlines now dominate the market, with rapid trading shifts that can’t be ignored.

Current OPEC headlines are raising concerns about a potential production war on efforts to take market share from US shale producers where the North Dakota state regulator said that oil prices are near break even levels. 

Oil seemed to be disconnecting from the stock and bond market turmoil because of strong demand and tight supplies and the fact that if prices go lower, we may see a drop in US production. So just as it looked like oil prices were going to recover, OPEC headline shenanigans are back. Suspiciously timed headlines appeared when the oil market was breaking out, followed by another headline just as oil seemed ready to recover from its pullback.

Yesterday, oil prices were nearly $65 a barrel when Reuters reported that Kazakhstan’s new Energy Minister, Erlan Akkenzhenov, will prioritize national interests over OPEC+ when determining oil production levels.

The thought was that the new energy minister wanted to take advantage of the potential increase in production from its new oil fields in conjunction with Chevron. Chevron’s has significant interests in Kazakhstan’s Tengiz and Karachaganak projects making it the country’s largest private oil producer with higher output capability. Oil prices dropped quickly but the market absorbed the move and it started to come back.  Later in the day Kazakhstan walked back those comments somewhat saying that they would cooperate with OPEC.

And while that report wasn’t enough to keep oil prices down the next headline did the trick. A Reuters report from three unnamed OPEC sources suggested that some OPEC+ members will suggest the group accelerates oil output hikes in June for a second consecutive month during the May 4th meeting. There is speculation that OPEC aims to regain market share from struggling U.S. shale producers and trying to win favor with President Trump that want lower oil prices.

The drama surrounding OPEC overshadowed a bullish report from the Energy Information Administration, which indicated a surge in oil demand ahead of Easter and little economic impact from ongoing trade tensions. The Energy Information Administration (EIA) reported that total product demand increased to 20.875 million barrels per day, driven by a surge in gasoline inventory demand to 9.414 million barrels per day ahead of the Easter holiday weekend. Diesel demand also rose significantly to 3.903 million barrels per day. U.S. oil production fell slightly while U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, were noted.

U.S. crude oil inventories rose by 0.2 million barrels to 443.1 million barrels, about 5% below the five-year average for this time of year. Motor gasoline inventories fell by 4.5 million barrels, roughly 3% below the five-year average. Finished gasoline inventories increased while blending components decreased. Distillate fuel inventories dropped by 2.4 million barrels, around 13% below the five-year average. Propane/propylene inventories rose by 2.3 million barrels, 7% below the five-year average.

Argus Media reported that, “US President Donald Trump’s administration today called on the IMF and the World Bank to focus resources away from climate action and energy transition and to make lending available to fossil fuels programs. The IMF “devotes disproportionate time and resources to work on climate change, gender, and social issues,” US treasury secretary Scott Bessent said in remarks today timed to coincide with the two international lending institutions’ annual meeting in Washington. “Like the IMF, the World Bank must be made fit for purpose again,” he said, during an event hosted by trade group Institute of International Finance.

The IMF and the World Bank in recent years have followed the preferences of their largest shareholders — the US and European countries — in incorporating the effects of climate change in their analysis and to facilitate energy transition in the emerging economies. The World Bank, together with other multilateral development banks globally, announced at the UN Cop-29 climate conference last year that they could increase climate financing to $170bn/yr by 2030, up from $125bn in 2023. “I know ‘sustainability’ is a popular term around here,” Bessent said. “But I’m not talking about climate change or carbon footprints. I’m talking about economic and financial sustainability.”

Bessent urged the World Bank to “be tech neutral and prioritize affordability and energy investment,” adding that “in most cases, this means investing in gas and other fossil fuel based energy production.”

 “In other cases, this may mean investing in renewable energy coupled with systems to help manage the intermittency of wind and solar,” Bessent said. The US is the largest shareholder at both the IMF and the World Bank, with a 16pc stake in both institutions. The Trump administration, which has slashed climate programs at US government institutions and withdrew the US from climate-focused international efforts, has so far refrained from interfering in the operations of the IMF and the World Bank.

Natural gas prices are still struggling as we get into shoulder season we are looking at the long term outlook to be pretty friendly though so we would be looking at bullish strategies on these dips .

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