Outlook: The tariff games continue today with China next up on the docket. Yesterday both Canada and Mexico made concessions viable to the administration, resulting in a month-long delay to proposed tariffs. 2025 could very well be a year of monitoring tariff threats and OPEC decisions month by month in its entirety. 10% tariffs against China expected to start today have already resulted in retaliatory tariffs which include LNG, oil, and Ag machinery. President Trump is expected to meet with Chinese President Xi Jinping this week to discuss these developments. Energies have erased yesterday’s rally and some today and the delaying of tariffs may be resulting in a corrective move in tariff-related risk-premium. Several significant support levels are within reach, most notably WTI, which could test $70. The US dollar is weaker today as the busy macroeconomic slate continues with JOLTS Jobs due to report at 9:00 am CT. The closely tracked Nonfarm payroll report will be released on Friday this week.
Crude
- President Donald Trump agreed to hold off tariffs for both Canada and Mexico for a month following concessions from both to support border security. (Reuters)
- China launched retaliatory tariffs today which include 15% on LNG and a 10% tariff on oil and ag machinery. (BBG)
- President Trump plans to speak with Chinese President Xi Jinping this week while the 10% tariff on China is expected to go into effect today. (BBG)
- Three Federal Reserve officials warned yesterday that the Trump tariff plan poses an inflationary risk which could deter rate cuts. (Reuters)
- OPEC+ agreed to stick to their current production plan which will gradually increase production by 2.2 mbpd through 2026. The group will meet again in April. (Reuters)
- The API will report its inventory survey at 3:30 pm CT.
- Reuters estimates crude stocks rose 3.3 million barrels last week.
- As of 7:06 am CST: Brent crude oil up $1.30 to $76.97, US dollar index up $0.919 to 109.289 while the nearby e-mini S&P 500 futures contract down 88.25 to 5978.00.
Diesel
- A Ukrainian drone strike hit Russia’s 300,000 bpd Volgograd refinery. (BBG)
- Reuters estimates diesel stocks fell 2 million barrels last week.
- Refinery maintenance schedules for this spring may be impacted by tariff decisions. Those due to turnaround in the Midwest may look to align with tariffs if they come to fruition.
Gasoline
- Reuters estimates gasoline stocks fell 300,000 barrels last week.
- The prompt RBOB crack is down 3.5% to $15.23 this morning which is more supportive than the outright view.
Propane
- Prompt Conway futures are indicated at .8900 while Belvieu is trading at .9125.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8025.
- Conway propane is trading at 51% to WTI.
Natural Gas
- Overnight weather runs removed 3 HDDs from the two week forecast.
- US HDDs fell by 85 last week and were 24 HDDS below the long-term average. (BBG)
- Almost 9 of every 10 US LNG cargoes went to Europe in January with European exports falling just shy of a monthly record.
Continuous Daily HO: With a lower low today, the 200 DMA looks like a reasonable downside short term target. Conversely, the continuous chart is on a Golden Cross watch with the 50 DMA looking to cross above the 200 DMA, which is viewed as a bullish technical signal.
