Energy Czar, Interior Secretary Doug Burgum’s call to every U.S. power plant to produce 10-15% more electricity to meet the growing energy needs to expand artificial intelligence is right on and is welcomed by the US oil, natural gas and utility industry that has been hamstrung by a lack of clarity and commitment by the previous Administration and is getting a ‘right on’ by those in the industry.
The AI revolution is going to power the economy of the future, and the US should not lose out to our competitors because of policies that were strong on virtue signaling but short of the relatives and real needs of the American people.
According to current forecasts, the electric power demand for AI is expected to significantly increase in the coming years, with predictions of a substantial rise in data center power consumption driven largely by the growing adoption of generative AI, potentially doubling electricity demand by 2026 compared to current levels. This could represent a major challenge for power grids due to the sheer scale of energy required to run complex AI models. Reports of China’s Deep Seek that some say could lower those demand expectations somewhat but why take chances? Some believe that China may have stolen some chip technology to get to that breakthrough.
Today, Bloomberg reports that “Trump officials recently met with their Japanese and Dutch counterparts about restricting Tokyo Electron Ltd. (TYO:8035) and ASML Holding NV (AS:ASML) engineers from maintaining semiconductor gear in China, according to people familiar with the matter. The aim, which was also a priority for Biden, is to see key allies match China curbs the US has placed on American chip-gear companies, including Lam Research Corp (NASDAQ:LRCX)., KLA Corporation (NASDAQ:KLAC). and Applied Materials Inc (NASDAQ:AMAT)."
This comes that day after Apple (NASDAQ:AAPL) CEO Declares that in America he is ‘Bullish on the future’.
Fox Business reported that Apple is committing $500 billion to the US economy in a historic initiative, the company announced on Monday, marking “an extraordinary new chapter in the history of American innovation.”
Fox Business reports that, “Apple’s 11-figure commitment will roll out over the next five years. It will involve building an advanced AI server manufacturing factory near Houston, as well as doubling the company’s Advanced Manufacturing Fund from $5 billion to $10 billion."
The tech giant also plans to establish an Apple Manufacturing Academy in Detroit, as well as hiring 20,000 new employees with focuses on research and development, silicon engineering, artificial intelligence and machine learning. Bloomberg reported that, “Apple Inc., as it seeks relief from US President Donald Trump’s tariffs on goods imported from China, said that it will hire 20,000 new workers and produce AI servers in the US. “
The disclosure comes days after Trump and Apple Chief Executive Officer Tim Cook met in the Oval Office. “He’s investing hundreds of billions of dollars,” Trump said after the meeting last week. He implied that the iPhone maker is investing locally because it does not want to pay tariffs. Trump has threatened an additional 10% tax on items imported from China, where Apple builds the vast majority of iPhones and other products. But he has traded investment in the US for relief in the past.
In the meantime, oil prices are still stuck in the same old trading range. The market seems to be complacent on the supply side because of recent increases in inventory but at the same time must be wary as the Trump administration signals much tighter sanctions on those doing business with Iranian oil.
Amena Bakr reported that UBS is more bullish than some on the street, They say that “despite many expecting the oil market to flip into a surplus, the structure of the crude futures curve is still downward sloped. This suggests the oil market remains tight, with OPEC+ aiming to keep the market in balance”.
Reuters reports that the Trump administration imposed a new round of sanctions on oil brokers, ships and people it said were linked to illicit shipments of Iranian crude, framing the move as a return to a “maximum pressure” strategy to squeeze the country’s economy. Twenty-two people and 13 vessels were targeted in the latest sanctions, the State and Treasury Departments said in statements Monday.
The agencies said they were targeting a network linked to the shipment of tens of millions of barrels of crude oil, and that the sanctioned entities are located in Iran, the United Arab Emirates, Hong Kong, India and China.
“Iran continues to rely on a shadowy network of vessels, shippers, and brokers to facilitate its oil sales and fund its destabilizing activities,” Treasury Secretary Scott Bessent said in a statement. “The United States will use all our available tools to target all aspects of Iran’s oil supply chain, and anyone who deals in Iranian oil exposes themselves to significant sanctions risk.”
So for oil and products, we stay locked in a pretty tight trading range. Crack spreads are improving suggesting that the demand for products is very good. Weakness in the stock market didn’t help the prospect for oil. In the short term, we’re playing range trade with both options and futures.
The big warm-up cooled off the red-hot natural gas futures. Amazingly though the market is still concerned by the fact that supplies are well below the five-year average and at the lowest level for the last two years.