By Timothy S. Snyder, Matador Economics
Over the first month of the new Trump administration, markets have been stuck in a push-pull trading pattern, leading to no real direction. The initial exuberance over the re-election of President Trump has been bogged down by concerns over supposed fixing the waste, fraud and corruption of government spending.
We understand the angst, but there is an underlying uneasiness that has markets moving with greater caution. We expect this to continue for a bit, before we resume a more “bullish” posture.
A story in Oilprice.com by Irina Slav, titled “Iranian Oil Exports to China Rebound,” reports Iranian shipments of crude oil to China have rebounded after a U.S. crackdown. The Trump administration believes profits from the sale of crude oil to China will help fund Iran’s nuclear program and accelerate as oil shipments accelerate.
According to Slav “the Trump administration has threatened to return to the maximum pressure approach of Trump’s first term in a bid to force Iran to give up developing a nuclear weapon. U.S. Treasury Secretary Scott Bessent said the target is to squeeze Iranian oil exports to a tenth of their current levels.”
According to preliminary data from Kpler cited by Bloomberg, the figure is an 86% increase from January flows.
Loopholes in the sanctions have led to China and Iran finding ways around them, using new non-sanctioned terminals and ships to make the trade. These loopholes need to be closed and stop the theater that is most likely going to allow Iran to complete its development of its nuclear weapon capabilities.
Last night’s EIA report on “Retail On-Highway Fuel Prices” showed a weekly increase of 2.0 cents per gallon in gasoline and an increase of 1.2 cents per gallon for diesel fuel, both national averages. This week’s reports are delayed because of the Presidents Day federal holiday on Monday.
More on U.S. winter weather
The freeze is pushing from the Northern U.S. border deep into the Texas Rio Grande Valley with extremely cold temps. It’s 12 degrees in Dallas while the system will hit deep moisture as it moves east toward the Mid-Atlantic states. Brrrr…..
Market drivers for today
- Questions surround whether OPEC+ will back off production limits
- Russia/Ukraine ceasefire talks have markets moving sideways
- Friday’s Baker Hughes Rig Count +1 Crude oil rig & +1 natural gas rig
More energy commentary is available at www.matadoreconomics.com
