Oil Not Left Out. The Energy Report 05/06/2025

Then there’s gold and silver and other commodities that surged through the stratosphere as oil has been left in the dust. This is not matching up with the fact that demand for products is exceptional based on market activity.

The crack spread for gasoline is reaching new highs, indicating strong demand. Although the diesel crack has slightly decreased, it remains at a healthy level due to continued demand from farmers and manufacturers, despite trade war concerns. In summary, oil prices are being driven by fear rather than reality. The gasoline crack spread hit 28 11 for a high overnight in the diesel crack.

As other commodities like gold and silver surge, oil is unlikely to lag much longer. The fear of trade may be ending, and I think we’ll see some short covering as we get closer to the Fed meeting. The Fed starts their meeting today and the policy decision is going to be released at May 7th 2:00 PM Eastern Time 1:00 PM central time. Of course, the main show will be the 2:30 PM Eastern Time 1:30 central time press conference with Fed Chair Jerome Powell who obviously is under a lot of pressure from President Trump to lower interest rates.

Today, the market is seeking the Energy Information Administration’s (EIA) “Short Term Energy Outlook”. It will be interesting to see how the EIA reacts to the recent concerns about tariffs. One of the things we do know is that more than likely the EIA is once again going to have to raise their demand estimates and lower their production estimates.

Make no mistake about it, we’ve seen production falter in recent weeks partly because of lower prices and also because of the invisible hand of lower regulations. The market is becoming convinced that the Trump Administration energy policies will allow energy producers to bring on production much more quickly without red tape. So, US energy producers can respond more quickly to any perceived increases in demand. That should lead to more efficiency in the market and an added benefit will be lower prices for consumers. Overall, the markets appear to have reached their lows. Unless there are adverse developments regarding tariffs, it may be an appropriate time to consider taking a more proactive approach on the long side and to execute call options moving forward.

Could it be we are actually seeing the beginning of the first signs of summer! Natural gas prices are rising due to anticipated warmer weather in the South. Prices are tighter than usual for this time of year. Warmer conditions are expected in the northern Rockies, Plains, Southeast, and Ohio Valley. Southern California may experience slightly below-average temperatures but still warm weather. The northern Plains and Upper Midwest will see temperatures in the 70s and 80s, while the Mid-Atlantic will range from the 60s to 70s. The hurricane season is also approaching with higher activity expected according to Fox Weather. Hurricane season starts in less than 25 days and with hurricane season almost upon us, it’s important to stay prepared for the weather impact. I would say that it’s going to impact energy as well so make sure you download the fox weather app to keep up with the latest breaking news. I think it’s going to be critical that you stay tuned to the Fox Business Network Today.

Call me at 888-264-5665 or by emailing Pflynn@pricegroup.com to start trading.