War Updates Around The World Having Little Impact On Energy Futures

Market TalkWed, May 07, 2025
War Updates Around The World Having Little Impact On Energy Futures

It’s a quiet start for energy markets following a strong Tuesday trading session in what promises to be a busy news day with inventory reports and a FED announcement coming on top of significant war stories from multiple points around the world.

Energy futures so far seem to be showing little reaction to reports that the U.S. and Houthi’s have agreed to a ceasefire, perhaps because the war between Israel and the Houthis is quickly escalating.


Futures also seem to be shrugging off the latest war between India and Pakistan that also saw a rapid escalation overnight. Neither country is a major oil producer, but India is quickly taking over China’s role as the engine of global oil demand growth as its population has become the largest in the world and its growing refinery network is a big piece of the global supply puzzle. India is taking steps to protect refineries on the western side of the country that could theoretically become targets, particularly the giant Jamnagar facility that is both the world’s largest refinery and a big player in export markets including to the U.S..

California’s spot prices continued to outpace the rest of the country after Monday’s fire at the Valero Benecia refinery, and a report from Energy News Today on Tuesday that suggests Chevron was forced to shut the smaller crude unit at its El Segundo refinery for unplanned repairs. San Francisco spot prices were bid at a $1.10/gallon premium to futures with offers a solid 50 cents/gallon higher to end Tuesday’s session. LA Spot CARBOB values are now holding at “only” a 50 cent premium to futures, while the eastern two thirds of the country remain at discounts to futures.

The EIA sharply reduced its global and U.S. GDP estimates in its latest Short Term Energy Outlook. The forecast suggests that trade-war-induced drop in economic activity will keep a lid on petroleum prices through 2026, even though it forecasts a modest tick higher in U.S. gasoline consumption this summer. The report took a closer look at the rapid expansion of U.S. ethane exports, half of which go to China and were recently exempted from a 125% tariff that should allow US producers to continue their record setting pace of petroleum liquid output without struggling to find a home for that byproduct.

The API estimated that gasoline inventories continued their seasonal slide last week with a drop of just under 2 million barrels, while distillate inventories increased by 2.24 million. Crude oil inventories were estimated to decline by 4.5 million barrels. The EIA (DOE) weekly report is due out at its normal 9:30am central time.

The FOMC announcement is due out at 1pm central, and while just about nobody expects a rate cut at today’s meeting, the outlook for the summer is much less clear so every word in the statement will be parsed for clues. The U.S. President has taken a step back after his “termination” comments following the last FOMC announcement which roiled markets around the globe, which has helped to calm markets that were on the brink of a meltdown. The CME’s fedwatch tool shows just 1% of bettors on fed fund futures expect a rate cut today, while 75% expect at least one cut by July. See tables below.

War Updates Around The World Having Little Impact On Energy Futures