President Trump took down the global elites at Davos and oil prices at the same time. The President put OPEC and on oil on notice when he said he was going to ask Saudi Arabia and OPEC to bring down the cost of oil but at the same time fed into the animal spirits of global bankers by signaling a new golden age to invest in America. President Trump started the talk about removing some of the ridiculous regulations that Biden put into place and reducing the cost of doing business with major tax cuts and fast-tracking projects. And the President realizes it’s going to come back down to American energy and American energy dominance.
Trump said, “I declared a national energy emergency—and it’s so important, a national energy emergency—to unlock the liquid gold under our feet and pave the way for rapid approvals of new energy infrastructure. The United States has the largest amount of oil and gas of any country on Earth, and we’re going to use it. Not only will this reduce the cost of virtually all goods and services, but it will also make the United States a manufacturing superpower and the world capital of artificial intelligence and crypto.”
Trump signaled to the business leaders of the world and the bankers that if they don’t get on board they are going to be left out. Trump said, “My message to every business in the world is very simple: Come make your product in America, and we will give you among the lowest taxes of any nation on Earth. We’re bringing them down very substantially, even from the original Trump tax cuts. But if you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff—differing amounts, but a tariff—which will direct hundreds of billions, and even trillions, of dollars into our Treasury to strengthen our economy and pay down debt.
Under the Trump administration, there will be no better place on Earth to create jobs, build factories, or grow a company than right here in the good old USA.”
He also put OPEC on notice. The crude oil market should respect that because during his last presidency, President Trump had a lot of influence over OPEC. As I said before, I used to think President Trump couldn’t tweet oil out of the ground but he did it anyway. Yep, President Trump also is making the point that he realizes that while inflation is being driven mainly by government spending he also realizes that lower oil prices can have a direct impact on the ability of the Federal Reserve and central banks around the globe to raise or lower interest rates.
Trump said, “It’s also reported today in the papers that Saudi Arabia will be investing at least $600 billion in America, but I’ll be asking the Crown Prince—who’s a fantastic guy—to round it out to around $1 trillion. I think they’ll do that because we’ve been very good to them. I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil. You’ve got to bring it down, which, frankly, I’m surprised they didn’t do before the election. That didn’t show a lot of love by them not doing it. I was a little surprised by that. If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue. You’ve got to bring down the oil price—you could end that war. They should have done it long ago. They’re very responsible to a certain extent, for what’s taking place. Millions of lives are being lost.
With oil prices going down, I’ll demand that interest rates drop immediately—and likewise, they should be dropping all over the world. Interest rates should follow us.
I think there’s little doubt that this is probably going to be one of the most memorable speeches in Davos history if not in global history. It will be truly a golden age in America if President Trump can fulfill this vision that cannot be blocked by those who want to resist.
The truth of the matter is that everything that President Trump is saying generally is based on common sense. If you were a leader of America, you want America to be the leader in energy technology and artificial intelligence. You want to have jobs and prosperity for your own people you want to have safety in the streets. It is common sense. This is probably the most amount of common sense we have heard since Thomas Paine wrote ‘Common Sense’ in 1775–1776 when he advocated independence from Great Britain to the people of the Thirteen Colonies.
Still in the short term before we can get a commitment by OPEC to raise production and until we get more of a clear vision as to how President Trump is going to enforce sanctions on Iran, Venezuela and Russia the global and US oil market is very tight.
Even though we saw an increase in Cushing, OK oil supplies from the Energy Information Administration (EIA) last week, they’re still near historic lows for this time of year. And we continue to see the US supply of petroleum below average and demand higher than a year ago.
The EIA reported that, “U.S. commercial crude oil inventories fell by 1.0 million barrels from the previous week. At 411.7 million barrels, {{8849|U.S. crcrude oil inventories are about 6% below the five-year average for this time of year. Gasoline inventories increased by 2.3 million barrels from last week and are 1% below the five-year average for this time of year. Distillate fuel inventories decreased by 3.1 million barrels last week and are about 6% below the five-year average for this time of year. Total commercial petroleum inventories decreased by 4.1 million barrels last week.
Oil demand on the four-week moving average averaged 19.7 million barrels a day, up by 0.7% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.3 million barrels a day, up by 1.9% from the same period last year. Distillate fuel product supplied averaged 3.6 million barrels a day over the past four weeks, up by 6.2% from the same period last year. Jet fuel products supplied were up 8.9% compared with the same four-week period last year.
The bottom line here is that if you look at the market it’s extremely tight and the fundamentals are very bullish but we also have to remember that President Donald Trump can change the fundamentals with a Truth Social post or a speech. While we think that breaks should be bought, we are going to see some extreme volatility so get ready to change positions on a dime. Traders should buy calls on brakes, but traders are going to have a lot of fun trying to ride what should be some very fun volatility.
A report says that, “A massive fire broke out at a crude oil processing facility in the Rumaila oil field in Basra Governorate, Iraq.”
India of course doesn’t seem like they want to stop buying Russian oil despite new sanctions. Reports are saying that India’s oil minister will be happy to buy Russian crude if it is at a very good discount. Because that means he’s putting India first.
Natural gas lost a little momentum because of the EIA report that showed that the inventory drawing was not as big as one might have expected with the record cold temperatures. Still, it’ll probably be next week when we feel the full impact of the Arctic blast on the nation and the inventory reports. The EIA reported that the cost of keeping your home with natural gas will also go up.
The EIA reported that in their January Short-Term Energy Outlook (STEO), they forecast the U.S. benchmark Henry Hub natural gas spot price to increase in 2025 to average $3.10 per million British thermal units (MMBtu) and in 2026 to average $4.00/MMBtu from the record low set in 2024. The EIA reported that working gas in storage was 2,892 Bcf as of Friday, January 17, 2025, according to EIA estimates. This represents a net decrease of 223 Bcf from the previous week. Stocks were 57 Bcf less than last year at this time and 21 Bcf above the five-year average of 2,871 Bcf. At 2,892 Bcf, the total working gas is within the five-year historical range.