Alaskan Pipeline: President Donald Trump announced that Japan, South Korea, and other countries are interested in partnering with the U.S. on a massive natural gas pipeline project in Alaska, with potential investments of trillions of dollars. South Korea has expressed interest in the project, with discussions already underway, and both countries are working on forming a working-level group to explore the pipeline and related energy matters. Japanese Prime Minister Shigeru Ishiba supported expanding U.S. gas imports, seeing it as beneficial for both countries' energy security and trade balance. Despite the logistical and cost challenges, there is growing interest from Japan, South Korea, and others in the project, though no official agreements have been made. Additionally, Trump plans to impose reciprocal tariffs on countries, including South Korea, citing trade imbalances and higher tariff rates.

Tariffs: Enbridge Inc. CEO Greg Ebel stated that tariffs on Canadian oil would take years to significantly alter U.S. imports of crude from Canada, given the deep integration of the two countries' energy systems. Ebel highlighted that the U.S. would struggle to replace the 4 million barrels per day it imports from Canada, while Canadian producers would also face challenges finding alternative markets. Ebel's comments came after the enactment of U.S. tariffs on Canadian goods, including a 10% tariff on energy products. Around 90% of Canada’s crude oil exports go to the U.S., and Enbridge’s Mainline pipeline transports a significant portion of this oil. Despite the tariffs, Enbridge has not seen a shift from its Mainline to Canada’s Trans Mountain pipeline, which is already at full capacity. Enbridge plans to invest $1.7 billion in its systems, with $2 billion Canadian dollars allocated to the Mainline through 2028.

U.S. Weekly Energy Stocks: API Energy Stocks Tuesday afternoon reported a draw in crude stocks of 1.460 million barrels, a build on distillate stocks of 1.140 million barrels, and a draw on gasoline of 1.250 million barrels. The latest poll for EIA Energy Stock report, being released at 9:30am CST today, is calling for a build in crude of 341,000 barrels, a buildon distillates of 220,000 million barrels, and a draw on gasoline of 369,000 barrels. 

Market Overview: The energy sector is starting out as a very bearish day with continued news on tariffs, continued talk about OPEC+ increasing their production, fear that tariffs could result in a recession, and reports of U.S. stocks being strong again. Energy futures continue to be bearish mid-week with crude down $1.55 to $66.71, HO is down $0.0608 to $2.2264, and RBOB is down $0.0600 to $2.1342.

The days of supply for motor gasoline are expected to remain near historical averages based on inventory levels and the three-year average consumption rate. For distillate fuel, biofuels like biodiesel and renewable diesel are playing an increasing role, implementing about 9% of U.S. distillate consumption in 2026, up from 5% in 2021, including these biofuels in the calculation of days of supply results in roughly 10% more supply than if only petroleum distillate inventories were considered. Despite this increase, distillate inventories and days of supply will still be relatively low compared to historical averages if the data continues correctly. Biofuels are helping, however, supply remains tight for distillate fuel.

The energy complex started out unpredictably bearish and continued throughout the day with continuous uncertainties regarding all the news on tariffs. China and Canada have had conversations with President Trump and have announced that they will have retaliatory tariffs against the United States, while Mexico has yet to respond and should by the end of the week. According to Reuters, OPEC+ oil output rose in February 2025, which exported approximately 26.74 million barrels per day last month. With the increase in crude production and apprehensions regarding U.S. tariffs, panic selling and trading has contributed to the volatile market. At the end of today crude oil finished down $1.95 to $66.31 a barrel, HO down to $2.2408, and RBOB down to $2.1370.