China Looks to Replace U.S. Crude: Chinese refiners are looking for alternative supplies to U.S. crude oil after the Chinese government put tariffs on U.S. crude in retaliation for Trump’s additional 10% import tax rate on Chinese goods. Bloomberg reports that Chinese state majors were looking to resell U.S. oil cargos for delivery over the next two months and seeking alternatives from the Middle East and Africa. Energy Aspects has reported that Chinese importers of petroleum would need to find around 200,000 barrels daily in alternative crude oil supply to replace U.S. volumes. 

U.S. Oil Rigs: Baker Hughes reported Friday that U.S. oil rigs increased by one to 480, while the gas rig count advanced by two to 100 for the week ending February 2nd. The total number of rigs in the here in the U.S. currently stands at 586, up by 4 from last week and decreasing by 37 from this time last year. The number of oil rigs in Canada fell by 9 to 177.

Heating Oil Demand, Europe: Europe’s soaring natural gas prices, at a two year high surpassing the equivalent of $100 per barrel of oil, is more cost effective to utilize heating oil for industrial use, potentially boosting the regions demand for heating oil barrels. This circumstance aided in the spike in Q2 2022.  

Market Overview: Oil prices finished with gains on Friday after new sanctions were imposed on Iran's oil exports, and those gains are continuing into trading this morning. Over the weekend, President Trump announced new global tariffs on steel and aluminum, which could affect the U.S. energy sector, including oil drillers reliant on specialty steel not produced domestically. Tariffs on U.S. goods coming from China take effect today, though their impact is expected to be limited due to China’s modest U.S. energy imports.

U.S. Wheat Production Estimates 2025

The USDA estimated that the U.S. would produce over 1.9 billion bushels of wheat in the 2024/2025 marketing year. This is a 9% increase from the previous year and the highest level since 2016/2017. The NASS (National Agricultural Statistics Service) estimates that the amount of winter wheat planted in the U.S. will increase again in 2025/2026. Increased planting will also increase the demand for fuel needed for planting, as we know it is a notable expense for farmers. Even with the push on the NYMEX prices higher today, diesel prices are close to $0.50 lower than they were at this time last year, declining for most of 2024 before rising in December and January. This could be a good opportunity to get the farmers filled, and lock in their needs for later in the summer and of course will hopefully be a robust fall harvest.  Diesel stocks remain below the typical range from the previous five-year years, about 12% below the five year average, they have been improving slightly since 2022 and 2023, but are still at the bottom range of normal supplies.    

Oil prices rose in today’s trade, climbing over 2% to a settle of $72.32 after three consecutive weekly declines on President Trump's new tariff announcement on all steel and aluminum imports. The U.S. also stepped up pressure on Iran last week, with the U.S. Treasury imposing new sanctions on a few individuals and tankers that help to ship Iranian crude oil to China.