One of the problems with artificial intelligence is that it is going to take an incredible amount of energy to make it work. I’ve often thought if artificial intelligence had the ability to figure out how to do things like cure cancer and disease and transform every business on the planet, then perhaps it could find a way to use this technology with less energy. That may be one of the reasons why the stock market is falling after the market was shocked that China may have this figured out.

Bloomberg News reported that, “DeepSeek, a Chinese AI startup that’s just over a year old, has stirred awe and consternation in Silicon Valley after demonstrating breakthrough artificial intelligence models that offer comparable performance to the world’s best chatbots at seemingly a fraction of the cost. DeepSeek’s emergence may offer a counterpoint to the widespread belief that the future of AI will require ever-increasing amounts of power and energy to develop. Global technology stocks tumbled in late January as hype around DeepSeek’s innovation snowballed, and investors began to digest the implications for its US-based rivals and their hardware suppliers.”

Now why this stock market had an epiphany on Sunday night and all of a sudden became worried about this technology remains to be seen but until the market gets a handle on this, it could change the long-term outlook for the demand for a lot of commodities. Some of the concerns of course have been the desire by major companies to build up their energy infrastructure to meet the demand for artificial intelligence and data centers. If there is a way to do this with a lot less energy consumption it could be a game changer for some of these stocks. That’s not to say that these stocks couldn’t do very well anyway, but it does alter the longer-term outlook if indeed this technology can be taken to the next level with less energy consumption.

Oil prices were also impacted by the tip for tap sanctions on Columbia. President Trump immediately put tariffs on Columbia after they refused to take in migrants that they previously agreed to take in. Those sanctions on Colombia of course are very disturbing to me because I’ve already been hoarding coffee supplies because I’m concerned about record-breaking coffee prices and tight supplies and when it comes to oil you don’t think much about Columbia but you should.

Reuters reported that the US swiftly reversed plans to impose sanctions and tariffs on Colombia after the South American nation agreed to accept deported migrants from the United States, the White House said late on Sunday. Colombia last year sent about 41% of its seaborne crude exports to the U.S., data from analytics firm Kpler shows.

And despite the call to drill baby drill the US rig count continues to plummet. Part of the reason is uncertainty about the future but mainly because of the damage that was done under the previous administration. The anti-fossil fuel agenda by Biden took its toll and only now it’s starting to show up in falling drilling rig counts.

Reuters reported that U.S. energy firms this week cut the number of oil and natural gas rigs operating for a third week in a row to the lowest since December 2021, energy services firm Baker Hughes (NASDAQ: BKR .O), opens new tab said in its closely followed report on Friday. The oil and gas rig count, an early indicator of future output, fell by four to 576 in the week to Jan. 24. Baker Hughes said this week’s decline puts the total rig count down 45, or 7% below this time last year.

Yet when it comes to oil in products today the biggest threat I think is the stock market. If we continue this major meltdown we could see some risk of buying in the crude oil. Sometimes when the stock market really gets hit we see that risk of selling in oil and gas the stock market stabilizes by looking for all the oil and products that bounce back pretty sharply. The key thing is that supplies are going to be tightening in this week’s inventory report and that should give us some underlying support. The markets are also waiting to see if OPEC is going to rise to the occasion and increase oil production in deference to President Trump. In the meantime, we have to look at how the sanctions are going to impact Iran and Russia. Things are just starting to get fun.

Natural gas pulled back dramatically as forecasting trend warmer over the weekend. The potential for a warmup will put the focus back on prolific U.S. oil and gas production this comes even as the Energy Information Administration raised their forecasts for the price of natural gas next year by a dollar. Still, the weather’s going to be the key for this market. If the weather trends colder we could get back into another price spike. But we’re getting late in the winter at this point. January,  believe it or not, is almost over. Think about Spring!