From Alberta with Love. The Energy Report 06/04/2025

Currently Canada has shut down approximately 344,000 barrels per day of oil sands production which is about 7% of Canada’s total crude output. Operators South of Fort McMurray evacuated flights and halted production tightening heavy crude supplies globally.

Heavy crude supplies of course are much in demand by US refiners as the Trump Administration puts the screws to Venezuela and has lifted their export license. The diesel market seems to be getting a little bit of support because of these developments. Diesel gets maxed out on heavy crude and when heavy crude is less available it pushes up diesel even as gasoline should be the feature in the summer driving season.

The reports that we’re seeing right now show that Cenovus Energy Inc has halted 238,000 barrels a day at its Christina Lake oils sands facility and that is one of the largest single site shutdowns reported. That represents about 30% of Cenovus’s 2024 production capacity. There is no timeline as to when they will resume production.

Canadian Natural Resources LTD shut down 36,500 barrels a day of production at its Jackfish oil sands project.

MEG Energy faces production delays due to a power loss from wildfires. The expected barrels per day reductions are not available currently. Other smaller producers in the regions have also cut back a little bit but specific company names and volumes are not available. Obviously, these companies are going to want to bring on production as quickly as possible, but they must make sure that it’s safe to do so.

According to another report from Wood Mackenzie, the Rotterdam oil refineries owned by British Petroleum have been shut down, which could affect supply.

The oil market is awaiting developments between Iran and the United States regarding a nuclear deal. Reports indicate that the Ayatollah of Iran will not agree to reduce uranium enrichment, and President Trump has stated on Truth Social that this is unacceptable. Iran’s foreign minister stated that Iran is too deeply invested financially and politically in its nuclear program to consider abandoning it now.

This comes with the Trump administration continues to put tougher sanctions enforcement on Russia and it looks like that is having an impact. According to Bloomberg, Russia’s oil revenue in May plunged to 430.4 billion rubles which is the lowest since June of 2023.

The Wall Street Journal is going to be looking at trade deals. President Trump took a fresh swipe at China early Wednesday, saying his Chinese counterpart, Xi Jinping, was “extremely hard” to strike a deal with.”I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!” Trump posted on Truth Social.

His comments follow days of renewed U.S.-China friction, with both sides complaining the other hasn’t upheld the terms of their trade truce. White House press secretary Karoline Leavitt said Tuesday the U.S. was monitoring China’s compliance with the agreement. “There will be a leader-to-leader talk very soon,” she told reporters. Beijing hasn’t commented on repeated statements from the Trump Administration that the two leaders are set to speak.

Leavitt also said that the deadline was approaching for countries around the world to present their best offer on trade negotiations. “The president expects good deals and we are on track for that,” she added.

Bullish as they can be. The time spreads are suggesting a very tight oil market and if we can get away from focusing on some of these sideshows of removing oil, we could start getting a significant rally.

Natural gas prices are pulling back a little bit after a big surge but in the big picture, weather is going to be the key. The forecast for warmer temperatures is boosting cooling demand and with the start of hurricane season we must keep an eye on a developing storm. Fox Weather is reporting that low-pressure system is expected to bring heavy rain and possible flash flooding to the Southeast coast, including Georgia, South Carolina and North Carolina, as the National Hurricane Center (NHC) monitors the system for potential tropical development. The area of low pressure will begin to move up the Southeast coastline starting Wednesday afternoon after dumping more than 6 inches of rain in South Florida, including Miami, between Monday and Tuesday.

The NHC gives the low-pressure system a low chance of development into a tropical depression or tropical storm over the next two days. “You have a drying front sitting off the Southeast coastline, a classic way of getting a tropical system in June,” FOX Weather Meteorologist Britta Merwin said.

Still the natural gas market will be watching this storm because of the possibility it could cause power outages. That is why you need to download the Fox Weather Ap to keep up with the latest. Also stay tuned to the Fox Business Network invested in you.

You can also open your futures trading account by calling Phil Flynn at 888-264-5665 or email me at pflynn@pricegroup.com.