Energy Futures Rally on Tariff Delay but Weekly Losses Loom

Energy futures are seeing a modest rally of 1-1.5% Friday after the US announced another delay in tariffs on good covered under the USMCA agreement Thursday. While there’s some sense of relief that negotiators have more time to hammer out a new NAFTA, Canadian officials are making it clear that a trade war is still going on, so we’re not off the rollercoaster just yet.

Despite today’s early rally attempt, prices are still on pace for another weekly loss, and are hovering near the low end of their trading ranges, leaving the market susceptible to more selling, although the seasonal tailwind of a spring gasoline rally may soon start to encourage RBOB prices to lead the complex higher.

Rack prices from Boston north to Maine saw the 17-24 cent tariff premium disappear overnight as Irving Oil’s imports get another 1 month reprieve. Markets further south in New England hadn’t seen as dramatic of an impact this week as other supply options were more readily available so their price drops were much lower.

Russia apparently didn’t like oil prices reaching a 2 year low after OPEC & Friends announced they’d start relaxing their output cuts in April, and made it known that they may change their mind. Shocking. Kazakhstan meanwhile has been exceeding their promised quota by a large margin (also shocking) but promised to do better on not overproducing going forward, which was no doubt aided by Ukraine’s missile strike on the Caspian pipeline system last month.

The February payroll report showed a softening labor market with a government estimate of 150,000 jobs added during the month, while the prior 2 months of estimates saw a slight revision lower of 2,000 jobs. The official unemployment rate ticked up by just a tenth to 4.1% while the less-manipulated “U-6” unemployment rate jumped by 5 tenths to 8%.