RUSSIA RUSSIA RUSSIA. The Energy Report 07/14/2025

Oil prices are surging overnight as president trump said he’s going to make a major announcement in Russia, Russia, Russia. President trump says he’s going to make a major announcement in NATO as he takes a tougher stance against Vladimir Putin in his war in the Ukraine apparently the US is going to send more Patriot missiles to Ukraine but the US is not going to pay for it the cost of the operation is going to be paid for by NATO.
Yet the concerns have President Trump is going to announce stricter sanctions on Russian oil has the market scrambling right now as we already have a tight supply of distillate inventories around the globe.
There’s also more talk about the US cracking down on Iraq laundering Iranian oil which is also going to tighten the supplies of that Russian heavy oil that is critical to making diesel supply in Europe.
China’s latest import data exceeded expectations, contradicting recent pessimistic views about its economy. Chinese customs reported crude oil imports of 12.19 million barrels per day in June, compared to 11.02 mbpd in May, 11.35 mbpd in June 2024, 12.72 mbpd in June 2023, 8.75 mbpd in June 2022, 9.81 mbpd in June 2021, and 12.99 mbpd in June 2020.
Some people speculate that China is just filling up their strategic reserves in the event of a major conflict .
Yet we saw that China’s trade surplus rose to $114.77 billion in June, beating expectations and May’s $103.22 billion, as exports increased 5.8% year-on-year. The growth followed a trade agreement with the U.S. that reduced tariffs, leading to more export licenses—especially for rare earths—as Washington eased some chip restrictions.
But more importantly what we’re seeing is a shift of the market psychology to one of oversupply to one of under supply. In fact, we’re getting stark warnings from the OPEC cartel that if we don’t start investing in the oil soon, we’re going to be running out.
OPEC projects that fossil fuel spending will need to rise to $18.2 trillion by 2050, up from $17.4 trillion in 2024, to accommodate increasing oil demand. Meanwhile, U.S. oil rigs have reached their lowest level in 46 months, reflecting an adjustment within the U.S. energy sector.
The pullback in oil rigs is partly due to the market routine out of whack with reality due to  Joe Biden’s massive release from the Strategic Petroleum Reserve and because of that distortion in the market the US oil companies must pull back at a time when they really should be increasing investment to get prepared for what may be coming next
Reuters reports U.S. oil and natural gas rigs fell for the 11th week straight, hitting 537—the lowest since October 2021 and down 8% year-on-year, per Baker Hughes. Oil rigs dropped to 424, gas rigs held at 108, and Texas’ count hit a low of 255. Haynesville shale rigs rose by one to 38, the highest since March 2024.
Geopolitical risks and market undersupply are supporting oil prices. Last week, OPEC denied making any decisions regarding an October pause on production increases, following restricted press access at their meeting. OPEC attributes recent price manipulation to reporting, though the true source remains unclear.
We remain bullish, particularly regarding the diesel crack spread, which we’ve monitored for some time. The gasoline crack spread has been more volatile but could present buying opportunities on dips. However, current weakness may depend on upcoming gasoline demand figures from this week’s EIA supply report, as weekly demand has fluctuated significantly; the four-week average will give a clearer picture of overall strength or weakness. WE will be watching my trade levels.
Natural gas prices are starting to look very solid. Partly due to increased demand expectations but also weather heat and the lack of wind and the potential for tropical activity in the Gulf of Mexico.
National electricity demand increased last week, reflecting a partial rebound following the holiday period and slight rises in national cooling degree days. Reduced wind generation in ERCOT also contributed to a 1.4 Bcf/d week-over-week increase in power sector gas-fired generation according to EBW Analytics.  Fox Weather reports that a weak non-tropical low will move from the Southeast coast across northern Florida into the Gulf next week, where it may develop tropical characteristics and bring heavy rain to Florida. Traders will be paying c lose attention to these storms as it could impact supply and will be watching the Fox Weather ap.  You can also stay tuned to the Fox Business Network. I am invested in you. Sign up for the wildly popular Phil Flynn Trade levels and get signed up for your trading account by calling 888-264-5665 or email me at pflynn@pricegroup.com.