China: China is rapidly expanding its renewable energy capacity, particularly in solar and wind, but its approach to decarbonization differs from that of Western nations. While Western countries have used renewables to displace coal, China continues to build coal-fired power plants even as it adds record levels of clean energy. Instead of replacing coal, China’s renewables are more directly reducing reliance on crude oil by accelerating the electrification of its economy and transportation systems. In the first five months of the year, 93% of new power capacity came from renewables, yet China still leads the world in coal plant construction and operation. This dual-track strategy means that while coal’s share of total generation is slowly declining, its absolute capacity is still growing. Overall, China is adding electricity generation capacity faster than any other major economy, balancing economic growth, energy security, and long-term environmental goals.

U.S Clean Energy: Several major clean energy projects in the U.S. are now uncertain following a policy shift under President Donald Trump’s administration, which includes ending subsidies for solar and wind power and tightening rules on remaining incentives. Companies like Bila Solar, Heliene, and NorSun are reconsidering or suspending plans for new solar manufacturing facilities, while two offshore wind farms in the Northeast may never be built. Analysts warn that this reversal could significantly reduce renewable energy installations over the next decade, jeopardize over $370 billion in investments, and raise industrial energy costs. The new law accelerates the phase-out of tax credits, requiring projects to begin construction within a year or be operational by 2027, creating urgency and uncertainty for developers. The Treasury Department is also reviewing the definition of “beginning of construction,” which could further complicate financing. Experts caution that these changes could hinder the growth of AI infrastructure due to limited power supply and increase household electricity costs by $280 annually by 2035.

U.S. Inventories: Yesterday the Department of Energy released its official data for U.S. inventories in energy. The only surprise was a much larger draw on WTI crude oil than expected. Expectations were for a 600-thousand-barrel draw but actual data showed a 3.2-million-barrel draw helped by a 1.6% increase in refinery production. Both gas and diesel were more in line withe xpectations, gas seeing a draw of 1.7 million barrels and an increase in demand of 5.6%, while diesel saw a build of 2.9 million barrels with demand dropping 2.3%. Both crude and diesel inventories remain well below the 5-year average.

Market Overview: Oil prices are on the rise this morning due to optimism surrounding U.S. trade negotiations and a larger-than-expected drop in U.S. crude inventories.  Analysts attributed the price support to both the inventory draw and progress in trade talks, including a potential U.S.-EU deal involving tariffs and exemptions. Additionally, temporary disruptions in oil exports from Turkey and Russia contributed to supply concerns. However, analysts remain cautious, citing ongoing uncertainty in U.S.-China trade relations and peace talks between Russia and Ukraine as limiting factors. Looking ahead, market watchers are focusing on demand indicators during the peak season, which could influence refining margins and price trends.

The heating oil chart shows a steady upward trend since June of this year, with the current trade price at $2.4275, sitting above the 40-day, 100-day, and 200-day moving averages—indicating bullish momentum. The 40-day MA (purple) is at $2.3178, the100-day (green) at $2.2194, and the 200-day (blue) at $2.2695, all acing as levels of support but trending upward. The Relative Strength Index (RSI) is at 54.32, suggesting neutral momentum with room for further upside before reaching overbought territory.  Although the market is seeing some relief for heating oil early in the session, some key points of support will need to be met to further push the market downward. Given how low diesel inventories are today, traders will be watching that key point of data released from the DOE in the coming weeks to help provide further direction.

Oil prices initially rose on Thursday but pared gains after reports that the Trump administration might allow Chevron to resume operations in Venezuela, which could increase global supply. WTI settled at $65.69, up slightly but off earlier highs, while the products saw declines on the day. The market had been buoyed earlier by news of a U.S. crude inventory draw, potential U.S.-EU trade deals, and Russia’s plan to cut gasoline exports. However, the Chevron news dampened momentum, with analysts suggesting it’s a limited, one-off move. Additional support came from temporary disruptions in Azeri and Russian oil exports, though those issues were largely resolved. Traders are also watching developments in Russia-Ukraine peace talks and further updates on global oil loadings.