Greatly Exaggerated. The Energy Report 02/05/2025

There’s a lot of exaggerations going on. I pointed out that it’s an exaggeration to believe that tariffs cause inflation. It was a great exaggeration to believe that we are going to get into a protracted trade war with our partners from Mexico and Canada. Now it appears that the global trade war is over and if you slept late, you might have missed it!

Not only has Canada and Mexico agreed to President Trump’s terms, but the stock market is also getting excited about the possibility that the United States can cut the ridiculous amounts of public spending, fraud and abuse that has been uncovered by the Department of Government of Efficiency DOGE.

Oil prices bounced off key support levels yesterday after President Trump announced that he was going to put “maximum pressure” back on the Iranian regime. With that he vowed that he was going to get their oil exports back to zero. That maximum pressure campaign is a warning shot to China as well. Let’s face it, China  has been feasting on cheap Iranian barrels of oil. Now that they put a tariff on U.S. they won’t be able to replace it with cheap barrels of Iranian oil bought at a discount.

They may have trouble meeting their demand. Or they may just have to buy US barrels and pay themselves their own tariff. Because we know the Chinese government has a stake in almost all Chinese oil refineries and production. Independent tea-pot refineries are not as independent as one might think.

Yet it’s a great exaggeration that President Trump wants to blow Iran off the face of the earth. You know why I know that? It is because Truth Social said so. President Trump on Truth Social put out a statement that, “I want Iran to be a great and successful country but one that cannot have a nuclear weapon. Reports that the United States working in conjunction with Israel is going to blow Iran smithereens are greatly exaggerated.” I think that should help Ayatollah Khamenei sleep a little bit better. Even before the assurances by President Trump that he didn’t want to blow them to smithereens, the Iranian regime was reaching out to the Trump Administration and sending signals that they didn’t want to be eliminated.

Iran suggested that they could actually make a deal with the Trump Administration on their nuclear program as long as they could reign in Israel just a little bit.

Regardless, Trump’s truth social pulse gave oil a sell off this morning. Not just because he isn’t going to blow Iran to smithereens, but even offering the Iranians an olive branch, just as he’s going to enforce the maximum pressure campaign.

President Trump said that regarding Iran, “would much prefer a verified nuclear peace agreement which would let Iran peacefully grow and prosper. We should start working on it immediately and have a big Middle East celebration when it is signed in completed. God bless the Middle East!” I don’t know about it, but I am ready for a big celebration! Whether you love Donald Trump or hate Donald Trump you must admit he’s a bold leader with a clear vision!

If President Trump’s maximum pressure campaign could get Iran to forgo its nuclear weapons program and stop supporting Hezbollah, Hamas and Houthi rebels and make a commitment to stop working to undermine and attack and destroy Israel, then perhaps we could have some lasting peace. It’s going to take a lot of prayers but at least there’s a vision and some rays of hope! And if it doesn’t work there’s always the option of going back to considering blowing Iran to smithereens.

For commodity traders President Trump’s drama over the last couple of days have presented a lot of big swings and a lot of fun. I pointed out a few days ago that despite the extreme market moves intraday we really haven’t broken out of the trading range we were in before President Trump started to take control of the global economy and the US government.

The record cold temperatures took a huge bite out of diesel suppliers as they fell a whopping 6.979 million barrels last week. It appears that there is a drop-in refinery activity due to the cold and caused a surge in crude oil supplies to the tune of 5.025 million barrels of oil.

Gasoline inventories also rose an impressive 5.426 million barrels as many Americans probably couldn’t find their car in the snow or couldn’t get them started or just said the heck with it I’m staying home and not going to work. Kind of sounds like federal employees every day. Just kidding. I know there’s some very good federal employees out there.

Natural gas had a pop on the cold weather but pulled back as the tariffs on Canadian natural gas exports were delayed. Now the next key driver for natural gas will be weather. The FOX Forecast Center is monitoring the development of a powerful winter storm that has tens of millions of people across at least 22 states from the Midwest to the Northeast on alert for a widespread threat of freezing rain that has already led to numerous reports of icy roads and crashes. Download the Fox weather app to keep up with the latest.

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Call today to open your futures and options on futures account. Call Phil Flynn at 888-264-5665/ e-mail pflynn@pricegroup.com.