Petroleum Futures Riding On Hope For Trade Deal

Petroleum futures are flashing green across the board this morning riding on the hope that the trade deal between the U.S. and EU will result in a 15% tariff on EU exports, instead of the 30% currently scheduled to go into effect on August 1st. Diesel and gasoline futures are up around 2 cents and 50 points per gallon, respectively, while the crude oil benchmarks are up a slight 20-40 cents per barrel.

One policy reversal and prisoner exchange later and Chevron is now clear to continue drilling in Venezuela’s massive oil reserves. Whether the decision was made to restrict the nation’s authoritarian government from profiting on oil sales or to block China’s access to the oil ahead of next week’s trade negotiations, remains to be seen (likely both, or neither). The deal is expected to release an incremental 200,000 barrels per day of oil into the global market, a bearish prospect that the energy market’s brushed off this morning.

The area of lower pressure that swept through New Orleans yesterday did so without impacting energy infrastructure, despite most of the city being under flood advisory until the evening. The loose group of storms have continued to press westward, making rain over the Houston area, but are given a low chance of organizing into something more dangerous over the next 48 hours.

California dreamin’? Valero reiterated their plans to shut their Northern California refinery yesterday after news broke that the state is stepping in to ‘help’ find a buyer and keep the plant running. While the timing is certain comical, if not conspicuous, the refiner reported flaring at the Benicia refinery earlier this week, no injuries reported or expected.

The EIA published a note this morning highlighting the drop in volatility in natural gas prices in the first six months of this year. Inventory fluctuations and cold snaps aside, volatility in Henry Hub futures has been trending lower since it spiked in early 2022, when the world’s second largest nat gas producer invaded its southerly neighbor.