Welcome back to another week. Unfortunately, the trade war fiasco continues.

Premier Doug Ford spoke this morning to a room full of reporters, announcing the implementation of a 25% Tariff Response Charge on Ontario-generated electricity exports to the US (notably New York, Michigan, and Minnesota), starting today. He said he’s not afraid to increase the charge, or cut their electricity all together if necessary. If this continues into the Summer, gas may get backed-up in Ontario. There would be plenty of power for air conditioning up North, gas prices may decrease, but folks South of the border will be pinched for supply. But whether or not this conflict lasts that long is another question.

The NYMEX April front month contract, along with the whole forward curve, opened strong at 6 pm last night and rallied to a high of $4.90 US/mm, up 50 cents from Friday’s close. Wow. Remember that it’s thin trading on a Sunday night, and the impact of a few buy orders can be exaggerated. There was no fundamental news (“it will be colder” or “a pipeline is down for maintenance”). In fact, the forecast is for warm weather and low demand for the next 7 days.  Therefore, this movement is most likely all about the trade war and/or a US government shut down. This morning, the market sold off back to where we were at the end of last week (which is still quite high). Eventually the price will reflect the fundamentals of supply and demand… or this trade war will be with us so long that by the time the fundamentals take over, we will be in a brand-new situation.

All that being said, we are waiting for producers to step up production. We need more output to both meet LNG demand and fill storage this summer. The amount needed is easily within the realm of possibility, but the data suggests that they haven’t made the move yet.

The American stock market was hit and was selling hard all afternoon. The S&P500 future was down 3.5% at 3:20 pm (but bounced up at the close). Wall Steet may be getting ready for a recession.

We are living in interesting times!