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The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com


Lasting Damage. The Energy Report 04/29/2025

There is more evidence that the Biden administration did lasting damage on their way out the door, not only to the country and the economy, but to the US Strategic Petroleum Reserve. Yesterday, US Energy Secretary Chris Wright explained that the goal of the Trump Administration is to refill the Strategic Petroleum Reserve and address issues related to the salt caverns caused by the swift removal of oil.

During Biden’s Strategic Petroleum Reserve releases, I raised concerns regarding the potential economic impact and effects on the salt caverns. I thought that the Biden administration was using the strategic petroleum reserve strictly for political purposes with little regard to the long-term damage that their actions might leave behind.

Trying to use the SPR to control prices before an election can harm infrastructure and combined with inflation and low investment in oil and gas, lead to long-term economic damage. In May of 2023 I wrote in my daily report, “Biden’s misuse of the Strategic Petroleum Reserve and his foreign policy decisions could lead to a fossil fuel fiasco. I wrote that the way Biden released oil increased risk of domes collapsing or other issues with pumps etc.

By releasing oil from the reserve when there wasn’t a real emergency did unnecessary damage. Keep in mind that a lot of the pumps were built in the 1970s in those salt caverns so the example would be like trying to get a car from the 1970s that was basically unused for years and just trying to start it up and run it without any real preparation. In 2023 the Biden administration denied they did any damage. They said concerns of Republican lawmakers of the record drawdown of oil from the Strategic Petroleum Reserve damaged the system’s delicate salt caverns were unfounded. Of course, these are the same folks that told me that Joe Biden was sharp, focused and on top of his game.

Stupid energy policy around the globe has led to another major power failure in Spain and the Iberian Peninsula as high renewable penetration contributed to grid instability. The government said the reason was because of “atmospheric phenomenon.” Boy, I hate those darn atmospheric phenomenon. But the most dangerous atmospheric phenomenon is when policymakers have their head up in their green energy clouds.

Spain was recently bragging about their renewable energy and now they must defend it. Spain is too heavy into renewables (43% from wind and solar), with nuclear (20%) and fossil fuels (23%) and the risk of this kind of outage should not have been a surprise.

The blackout affected millions across Spain and Portugal, including major cities like Madrid, Barcelona, Lisbon, Seville, and Valencia. It also briefly impacted southern France and Andorra. The outage disrupted critical infrastructure, halting public transport (metros, trains), shutting down traffic lights, grounding flights, and affecting telecommunications, ATMs, and businesses. The outage began around 12:30 PM local time (CET), with Spain’s electricity demand dropping by over 10 GW within seconds, indicating a sudden and severe grid failure. Spain’s grid operator, Red Eléctrica, reported that power was gradually restored in regions like Catalonia, the Basque Country, Galicia, Andalusia, and parts of Madrid by late Monday. This should be a wakeup call that the world needs to get back to energy reality and it’s a good thing that we have somebody like US Energy Secretary Chris Wright showing us the way.

Crude prices continue to struggle as the market tries to assess the possibility that OPEC is going to raise production as the demand for oil may be slowing but at the same time the oil prices are reducing expectations of US production.

Bloomberg reported that oil industry consultant Rystad Energy has slashed its estimate for US onshore crude growth by more than half for this year, amid lower commodity prices and higher costs brought on by President Donald Trump’s global trade war. Expansion of oil production in the lower 48 US states is expected to be less than 150,000 barrels a day, as measured from the end of last year to the end of 2025, Rystad said Monday in a report. That’s down from a previous growth estimate of about 300,000 barrels a day. The consultant expects oil output in the region next year to decline based on current prices.

Earlier this month, the Energy Information Administration reduced its total US oil production forecast for the year, which also includes offshore and conventional wells on land. It now expects 13.51 million barrels a day, down from a previous projection of 13.61 million, amid growing unease about the US shale patch.

We expect $60 to be pretty good support for oil and any dip below that area should be a prime buying opportunity. We should be at the lower end of the trading range. Technically though if we take out 58 it’s going to look very ugly. On the product side, the crack spreads had a good day to spike the weakness in oil which suggests that demands should be strong.

Natural gas had a wild day rising over 5% partly due to options expiration but also due to the possibility of increased demand and tightness of supply going forward. The power outage in the Iberian Peninsula is a reminder that more countries are going to get off their renewable kick and start focusing again on natural gas. U.S. natural gas inventories in underground storage ended winter at a three-year low.

The EIA reported that, “After a relatively warm start to the 2024–25 winter heating season (November–March), colder-than-normal temperatures across much of the United States in January and February resulted in increased consumption of natural gas and more withdrawals from U.S. natural gas storage than normal. By the end of March, the least amount of natural gas was held in U.S. underground storage in the Lower 48 states since 2022, with inventories 4% lower than the previous five-year average for that time of year, according to our Weekly Natural Gas Storage Report.

In January and February, the colder-than-normal temperatures across the country led to increased natural gas consumption in the residential, commercial, and electric power sectors. Consumption in the combined residential and commercial sectors in January and February averaged 97 billion cubic feet per day (Bcf/d), 16% more compared with the same period in 2024. A cold snap in the second half of January resulted in the fourth-largest reported weekly withdrawal from storage at 321 Bcf for the week ending January 24. Natural gas withdrawals in January and February combined totaled nearly 1,650 Bcf, or 33% more than the five-year (2020–24) average for those months.

You know if we get a hot summer we could see natural gas prices really start to move on the back end of the curve again. Grid instability around the world is going to increase the demand expectations for natural gas not only today but further off in the future. Countries around the world are starting to wake up and come out of their green energy fantasy and if you come back to reality that means you’re going to have to come back to natural gas.

The other thing when it comes to natural gas will be weather. Time to download the Fox Weather app today. Also stay tuned to the Fox Business Network to keep up to date with earnings and other market moving news you could be missing out on.



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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Contact Phil at 1-888-264-5665 or pflynn@pricegroup.com.