Hello Sunshine, goodbye war premium! The Energy Report 05/16/2025

I believe that president trump’s foreign policy and economic policies have reduced the price expectations for oil by as much as 10 to $20 a barrel. Oil prices continue to fall as President Trump adjusts the United States relationship with the Middle East. There is speculation that President Trump might negotiate an agreement with Iran aimed at halting Iran’s nuclear weapon ambitions and lifting sanctions on the country.

The agreement may also include a commitment from Iran to stop funding groups like Hamas and the Houthi rebels.

Iran’s funding of certain groups is likely to cease, potentially allowing safer ship passage globally. The United States’ decision to lift sanctions on Syria indicates a willingness to align with the desires of the people there and work toward peace and prosperity under Trump’s vision. The current President of Syria is Ahmed al-Sharaa and is serving in a transitional capacity since January of 2025 he led the rebel coalition which ousted Bashar al-Assad. He was appointed president during the Syrian revolution victory conference and even though he has ties to al Qaeda, the Trump Administration is going to give him the benefit of the doubt because in that part of the world you must work with people that may have a checkered past. President Trump is willing to forgive and forget if they focus on rebuilding their country and avoid aggression.

Despite a recent drop in prices, oil fundamentals remain tight. We expect prices to rise back into the 70s in the coming weeks due to supply and demand. Consumers may not feel the impact as much because production costs have significantly decreased for producers.

Yesterday, soybean oil prices experienced a significant decline with a limit down move at one point primarily due to concerns that the Trump Administration may not increase biomass diesel blending volumes as much as initially anticipated. Administrator Lee Zeldin Warned that a legislative decision on biofuel tax credits and blending mandates may take months. ADMIS reported that this year, a coalition from biofuels and big oil industries suggested the EPA increase biomass diesel blending volumes to 5.25 billion gallons annually, up from the current 3.35 billion. Unconfirmed rumors that the recommendation might only rise to 4.65 billion gallons in 2026 caused futures to tumble.

The Energy Information Administration (EIA) is forecasting that the consumption of crude oil and other liquids will decrease over the next two years. They predict this due to a projected slowdown in economic growth in Asia.

I believe the Energy Information Administration is not considering the potential explosive growth expected in the United States. Despite Asia’s possible slowdown, we still anticipate exceptional growth. However, the EIA predicts the global economy will grow by 2.8% in 2025 and 2026. Economic activity demands energy, and with population growth, individual mobility, and increased shipping, oil consumption will rise. The IEA notes annual oil consumption has been lowest since 2000 when global economic growth was under 3%. Currently, world oil consumption is at 103 million barrels per day, higher than previous predictions.

Regardless, the EIA is still predicting that oil consumption will grow by 1,000,000 barrels a day in 2025-2026. EIA says that that will be 3 consecutive years below 1,000,000 barrels a day.

Needless to say, I think they are wrong. I think that demand will exceed their expectations. We will just have to wait for their upward revision in the coming reports. Of course we have become accustomed to upward revisions from the EIA, have we not.

The other key thing for natural gas heating demand during the final stages of the heating season has been the lowest in nine years and that has contributed to a rapid accumulation of gas inventories which has put downward pressure on prices according to John Kemp at John Kemp Energy. He points out that there have been a total of 940 population weighted heating degree days since February 23rd the fewest numbers since 2016 and before that 2012.

Yet analyst hit the natural gas injection on the number after the EIA reported a 110 billion cubic feet injection into underground storage. The weather and we did see some warmer than normal temperatures at least where I’m at in Wisconsin and in Chicago I think we hit a record high for this date touching 92° at O’Hare airport. The record set in 1962 of 91° making it the warmest day of 2025 so far. Fox Weather reported on the Fox Weather Ap that tornado warnings wailed across Minneapolis and nearby communities on Thursday and tornadoes were spotted spinning through Minnesota and Wisconsin, as dangerous storms charged through the Midwest. Damaging winds, including a gust close to 80 mph in Chicago, tore through the Upper Midwest. More than 121,000 customers were without power Friday morning across Minnesota, Wisconsin, Illinois, Indiana and Michigan, according to findenergy.com. The cities of Juneau and Mayville, Wisconsin, around 60 miles northeast of Milwaukee, received some of the worst damage as tornado-warned storms moved through around 6:00 p.m. local time. The Dodge County Sheriff’s Office said multiple buildings were destroyed in both cities and one person was taken to the hospital for minor injuries.

That why it is important to downlead the Fox Weather Ap. Also stay tuned to the Fox Business Network! Invested in you!

Call Phil Flynn to open your account at 888-264-5665 or email me at pflynn@pricegroup.com.