The Energy Report: The World on a String

Stocks gapped open higher on Sunday night as the trump administration is suggesting that the tariffs that go into play on April 2nd might be only reciprocal and more targeted.

Yet the move on the stock market back up is also the realization that what President Trump is doing for the economy is going to provide long term growth.

The reality is that moving money from the government sector to the private sector is going to create an enormous boost to the US economy. Considering all the waste and fraud we see uncovered by DOGE and Elon Musk you find out that with every dollar invested by our government, you get a quarter return. Now put that same dollar to work in the private sector you will get $4 back.

In the meantime, last week we saw strong data on US manufacturing not only on the jobs report but on the industrial production numbers so we’re already starting to see an early return from the Trump policies and on the big issue of peace reports overnight say that the Kremlin is saying that “ there is a common understanding with the US and the willingness to move towards settlement.”

And President Trump’s hard line on Iran with new sanctions and targeting of their favorite pirates that they back with cash, the Houthi Rebels Iran may now be willing to talk. Reports overnight are saying that Iran says that there is a path for indirect talks to the US and that possibility remains open.

This report comes in the aftermath of the letter sent by President trump giving Iran a deadline to come to a nuclear agreement with the United States. I think Iran realizes either they deal with the United States through negotiations, or they may have to deal with United States weapons taking out their nuclear facilities.

“The Trump administration is calling on Iran to give up its entire nuclear program or face the consequences," National Security Advisor Mike Waltz told Fox New on Sunday.

Waltz said it was time for Iran to “walk away completely” from its pursuit of nuclear weapons, pushing for a “full dismantlement” during an appearance on CBS’ “Face the Nation.” “This isn’t some kind of, you know, kind of tit-for-tat that we had under the Obama administration or Biden,” Waltz said. “This is the full program. Give it up or there will be consequences.” Waltz did not specify what kind of consequences Iran could face, though he said President Donald Trump is keeping “all options on the table,” including diplomacy.

This comes up against the backdrop where the Trump Administration is making energy security a national priority even the International Energy Agency (IEA) which lost its way by telling the world to stop investing in fossil fuels is now acknowledging the demand for energy is going to absolutely explode .

The IEA reported that the growth in global energy demand surged in 2024 to almost twice its recent average. They point out that Global energy demand grew at a faster-than-average pace in 2024 as the consumption of electricity rose around the world – with increased supply of renewables and natural gas covering the majority of additional energy needs.

The IEA report finds that global energy demand rose by 2.2% last year – lower than GDP growth of 3.2% but considerably faster than the average annual demand increase of 1.3% between 2013 and 2023. Emerging and developing economies accounted for over 80% of the increase in global energy demand in 2024, despite slower growth in China. Notably, after several years of declines, advanced economies saw a return to growth, with their energy demand increasing by almost 1% in aggregate.

The IEA says that “record temperatures, which boosting cooling demand, contributed significantly to the annual 0.8% rise in global CO2 emissions to 37.8 billion tonnes – highlighting the deepening links between the energy sector, climate and weather. However, according to the report, the deployment of solar PV, wind, nuclear, electric cars and heat pumps since 2019 now prevents 2.6 billion tonnes of CO2 annually, the equivalent of 7% of global emissions.

And back here in the US oil prices are starting to creep ever higher as we creep closer to the summer driving season as we all know the refiners will start ramping up production and the negativity surrounding the U.S. economy should start to go away even though we saw reports of falling consumer confidence the reality is is that inflation is already starting to come down in some areas while gasoline prices did pop up a little bit last week the overall trend has been lower of course gasoline prices always start to rise as we get closer to the summer driving season so the increase in gasoline supplies is not normal we’ve drawn down supplies of gasoline of the winter blends we should start increasing the summer time blends which always add about 10 to $0.15 per gallon.

And despite the fact that President Trump’s drill baby drill program is going to keep prices from spiking as high as they would have in the past, we will see prices move higher supply versus demand will drive the prices but that demand of course is going to be in a stronger economy.

Now if you’re hoping for spring, you might get your wish. Fox Weather is predicting moderating temperatures, which may lead to a slight drop in natural gas prices. The market is still adjusting to last week’s bearish injection report, and an increase in supplies is expected this week. The early estimate is an increase of 25 BCF.

And while this market’s going to be volatile we think this dip could be bought because the overall demand for natural gas is going to be strong and production is tight we see a shift in the natural gas market something that we haven’t seen for a couple of years from a fundamentally oversupplied market to a potentially undersupplied market as we look out into the future.