China: Oil and gas traders are expected to seek waivers from Beijing for tariffs on U.S. crude and LNG imports starting February 10. China’s Finance Ministry announced levies of 15% on U.S. coal and LNG and 10% on crude oil, farm equipment, and some autos, following U.S. tariffs on China. Four tankers with 6 million barrels of U.S. crude and two LNG vessels are enroute to China. Companies may apply for waivers for already booked tankers, but new deals might face difficulties.
Saudi Exports: Saudi Aramco, the world’s top oil exporter, significantly raised crude prices for March shipments to Asia due to rising demand from China and India, as U.S. sanctions impact Russian supply. In a statement on Wednesday, Aramco announced an increase in the official selling price for its flagship Arab Light crude by $2.40 to $3.90 per barrel above the Oman/Dubai benchmark average. The company also hiked crude prices for March shipments to all other regions. Consequently, Chinese and Indian refiners rushed to secure alternative supplies, pushing spot premiums for Oman and Dubai crude to their highest levels since November 2022.
U.S. Inventories: Yesterday morning the Department of Energy released its official data for stockpiles in the U.S. A quite large build on crude was reported at 8.7 million barrels. Gasoline saw a build of 2.2 million barrels while diesel saw a big draw of 5.5 million barrels. Demand was relatively unchanged, and refinery utilization jumped a percent to 84.5%.
Market Overview: With very little new news, the complex is opening the morning relatively quiet. Earlier this week tariffs were delayed by 30 days for Canadian and Mexican good being imported to the United States, followed by President Trump's announcement on sanctioning Iranian oil in efforts to stop them from obtaining nuclear weapons. Given the wild start to the week, the energy complex is in position to see loses for crude and the products given nothing else significantly changes. Still keep an eye on $70 a barrel for crude as a level of support. We have come close to testing that level but have yet to break through it recently.
RBOB (gasoline) Daily Candlestick Chart
The above chart is showing gas futures back to early October of last year. Although the chart does appear to be very choppy, looking at the trade range gas futures have stayed within at 25 cent range ($1.90 - $2.15) for quite a while now. We are currently trading on the higher end of that range but are trending down this week. Resistance can be seen at the 25-day moving average (purple) at $2.0663 and support can be seen at the 14-day moving average (green) at $2.0636 followed by the 50-day moving average (blue) at $2.0123.
Today, President Trump reiterated his commitment to increasing U.S. oil production, which is already the highest globally, aiming to reduce oil prices and alleviate consumer inflation. Following his remarks, oil prices relinquished early gains. However, analysts remain skeptical about whether U.S. oil producers will be inclined to ramp up production in the current market conditions. WTI saw small loses on the day inching closer to $70 a barrel, while the products saw small increases on the board. As a reminder, keep an eye on your markets basis values and let your account manager know if you have any questions.
