Congratulations. The Energy Report 06/24/2025

And just like that, the doomsday scenario that oil traders have been speculating about for many years disappeared in an instant.

As Iran chose not to attempt to follow through on their empty threat of trying to close the Strait of Hormuz or attacking its neighbors oil infrastructure. They showed they now understand that they have lost and decided it might not be a great time to commit economic and political suicide. And while it’s going to be very difficult to trust the Iranian regime, what’s left of it anyway, the decision not to damage Iran’s oil production capabilities or export capabilities can allow Iran and their people to have a normal and prosperous life if the regime can stop its support of terror and rejoin the world community.

While the Middle East is still going to be a volatile place, one can hope and pray that these actions carried out that led to a historic ceasefire between Israel and Iran could set the stage for decades of cooperation and more free flowing global oil marketplace.

The oil markets are already getting a peace dividend that’s going to be a boost to the global economy. We are observing a significant increase in copper prices, a substantial rise in the stock market, and a notable decline in gold prices.

Additionally, there has been a reversal in the heating oil crack spread, which was previously rising due to concerns about the potential loss of Iranian oil. The decrease in the heating oil crack spread indicates that the market is now factoring in the return of Iranian barrels and the diminished risk of any potential shutdown of the Strait of Hormuz.

The gasoline crack spread on the other hand is going back up as the reduction in the price of crude oil would suggest lower gasoline prices and more demand from consumers. So in other words, car drivers are going to get a peace dividend as they fill up their gasoline tanks as they head into the 4th of July holiday.

Jerome Powell will speak today at his semiannual testimony to Congress before the House Financial Services Committee and the Senate Banking Committee on Wednesday. He is expected to face questions regarding why he did not signal interest rate cuts sooner, despite moderating inflation. Mr. Powell indicated uncertainty about the Israeli Iranian conflict, but as the situation has calmed, he now needs to clarify whether his decisions are politically influenced or just overly cautious. Or as President Trump would say, it is because he is incompetent or a numbskull or just maybe Mr. Too Late.

Hopefully this peace through strength can spread to Hamas. Qatar’s Prime Minister is saying that in the next two days there will be indirect talks between Hamas and Israel to reach a ceasefire. Perhaps now with Iran on its back heels the possibility of a ceasefire between Hamas is better than it has been in the past. Sadly there are still 20 to 27 hostages believed to be alive that are being held by Hamas. Hamas has to release all the hostages and commit to a full and unconditional surrender. And because President Trump and Israel has basically caused Hamas’s biggest supporter Iran to surrender, it should be only a matter of time before Hamas gives in.

After unwinding bullish positions in oil, we might focus on supply and demand fundamentals again. Today, the American Petroleum Institute report is expected, and last week’s data showed, drawdowns in supplies. We anticipate a slight bounce back. Overall, the supply and demand outlook remain supportive of prices. Once premiums unwind further and stability returns, a recovery in prices is likely due to increased demand. There will be good opportunities on swing trades, and you can get those off my Daily Trade Levels.

We might also get a bounce on the ceasefire break but one would not expect a major disruption in supplies. We don’t think there’s a scenario where Israel will lash out on their own and attack Iran’s oil exports or production facilities.

Natural gas prices pulled back as well in sympathy with the drop of oil and also because maybe, just maybe, some of those record high temperatures aren’t going to be quite as hot. Still the Fox Weather channel is reporting that, “A massive heat dome fueling the first major heat wave of the summer brought record-breaking temperatures to cities across the Northeast on Monday, and the life-threatening conditions will continue on Tuesday as millions of people from the Midwest to New England fight to stay cool. As temperatures skyrocketed across the region, many cities experienced heat that hadn’t been seen in a century, breaking long-standing records. Worcester, Massachusetts, reached 92 degrees on Monday, breaking its old record of 89 degrees set in 1894.  The temperature reached 97 degrees in Glens Falls, New York, on Monday, breaking its record of 95 degrees set in 1894. Newark International Airport reached the triple digits Monday afternoon, officially hitting 101 degrees. Meanwhile, Philadelphia marked its hottest day since July 2022, with a high of 99 degrees according to Fox Weather.

To stay updated with weather news, download the Fox Weather app and tune into the Fox Business Network.

To set up your trading account, call Phil Flynn at 888-264-5665 or email me at pflynn@pricegroup.com.