What a way to kick off the week! Overnight, we’ve got a blockbuster trade deal between the US and the European Union that’s got the markets buzzing with optimism and sending on an upward trajectory. The Trump Administration closed the deal that they said he couldn’t close. The commitment by the EU is to invest $600 billion into the US economy and to purchase $750 million in good old red white and blue US energy. According to the agreement, the EU plans to invest an additional $600 billion in the US and has agreed to purchase $750 billion in energy. This is the kind of agreement that puts American energy front and center, and by averting a potential trade war, it is opening the floodgates for US exports. A major win for US workers and jobs.
To break it down, late Sunday into Monday, the US and EU hammered out a preliminary deal that slaps a 15% tariff on most European goods heading our way – think autos and more – but in return, the EU commits to snapping up hundreds of billions in American energy products. This a whopping $600 to $750 billion in purchases of US liquefied natural gas (LNG), oil, and even nuclear fuel over the coming years isn’t just a handshake; it’s a lifeline for US producers who’ve been battling headwinds from global oversupply and geopolitical jitters.
Remember how Europe ramped up LPG and LNG imports from us back in 2022 to ditch Russian gas? This deal supercharges that trend, with exports potentially skyrocketing and helping to balance out demand as we head into the fall heating season. While some critics argue about “unbalanced” terms or higher consumer costs, these negotiations are designed to protect US jobs and energy independence. Wall Street has responded positively, with stock futures rising on recent trade developments. To date, tariffs have not led to the predicted inflation, as many foreign countries absorb the costs, and economic growth with more trade will offset any concern with any potential price increases. Can we say winning? Just asking.
Oil prices are loving it already. futures climbed about 1.2% overnight to hover around $82.50 a barrel, while West Texas Intermediate (WTI) pushed up to $78.30, building on last week’s gains fueled by strong earnings and easing tariff fears. Why the pop? Simple – this pact signals stability in transatlantic trade, reduces the risk of retaliatory tariffs that could crimp energy flows, and locks in Europe as a premium buyer for US Natural gas and crude.
It’s a win-win: Europe diversifies away from unreliable suppliers, and American drillers get a demand jolt that could tighten inventories just when the EIA is forecasting global oil consumption hitting a record 104.6 million barrels per day next year. But don’t sleep on the broader implications. With China tariff talks possibly extending and Middle East tensions simmering, this US-EU accord eases market nerves and underscores America’s role as the world’s energy powerhouse.
Bloomberg reports a growing surplus in oil and supply despite increased energy demand from trade deals, AI, and data centers. TotalEnergies (EPA:) SE recently warned of oversupply as OPEC+ eases production cuts while global growth slows. Equinor ASA’s Johan Castberg field is running at full capacity, with new Brazilian production set to add more barrels from outside OPEC+.
Earlier this month, the International Energy Agency and the US Energy Information Administration both increased their projections for next year’s oil surplus. According to the two organizations, supply is expected to exceed demand by the largest margin since the pandemic, with the IEA forecasting a surplus of 2 million barrels per day.
are perking up too, with Henry Hub up 0.8% as traders bet on export volumes surging. And hey, if you’re in the refining space, keep an eye on gasoline cracks – they’re firming as summer driving demand lingers and this deal hints at smoother international supply chains.
Natural gas prices have been really beat up lately uh that could change. Fox Weather reports that although the 2025 Atlantic hurricane season has started quietly, two potential development areas could bring increased activity in early August. The FOX Forecast Center is tracking two areas—one in the Atlantic and one in the Gulf of America—for possible tropical development over the next ten days. July may end with record-breaking heat as a heat dome brings triple-digit temperatures and heat alerts from Florida to Virginia. On Sunday, extreme heat warnings are issued for southern Georgia through southeastern Virginia as high pressure shifts intense temperatures across the Southeast.
The International Energy Agency highlights how air conditioning affects electricity demand, but it’s also important to note that air conditioning has saved millions of lives and improved longevity in many countries by helping people cope with hot weather. The IEA reported that, “Around the world, demand for cooling is increasing quickly as temperatures, populations and incomes rise. In 2024, global average temperatures reached 1.5 °C above pre-industrial levels for the first time, intensifying the frequency and severity of extreme weather events such as heat waves. At the same time, economic development is reshaping access to air conditioning in many countries – especially in emerging and developing economies, where more than 80% of projected electricity demand for cooling by 2050 is expected to occur.
Currently, about 3.5 billion people live in regions with high temperatures, yet only about 15% of them own an air conditioner. But that is set to change in the years ahead. Across Southeast Asia, for example, the stock of air conditioners is set to increase ninefold between 2020 and 2040 based on today’s policy settings. In Indonesia specifically, the share of the population that owns an air conditioning unit is expected to rise from 14% in 2023 to 85% by 2050, driven in large part by an improvement in living standards.
If you’re positioning for the day, get the trade levels. Energy equities should trend higher and watch those API inventory numbers tomorrow for confirmation of tightening supplies.