The U.S. petroleum markets were just trying to adjust to a surprise increase in U.S. crude supply, when The Wall Street Journal reported that the Trump Administration is considering more than doubling proposed tariffs on a further $200 billion worth of Chinese goods to 25%, up from an original 10% tariff that was put in place before.
Crude oil prices are back under pressure as there are reports that the United States is looking to more than double tariffs on China, as well as a shockingly bearish weekly inventory report from the American Petroleum Institute (API). Out of nowhere, the API reported a 5.590 million barrel build, confounding experts and expectations as well as a big 2.890-million-barrel increase in distillate supply. Gasoline did fall by 791,00 barrels but with trade war fears keeping us on edge, today's Energy Information Administration (EIA) supply report will be more important than today's Fed announcement.
Dollar bulls were absent during Tuesday’s trading session as investors remained on the sidelines ahead of the Federal Reserve’s two-day monetary policy meeting. Markets could offer a muted response to the meeting, especially when considering how there will be no updated economic projections or post-announcement press conference by Federal Reserve Chairman Jerome Powell.
Crude prices, which were on the rise on concerns of tightening supply and growing desperations that the loss of Iranian oil supplies would not be easily replaced, may have found a ray of hope. Present Donald Trump said in a press conference at the White House with Italian Prime Minister Giuseppe Conte that he would be willing to meet Iranian President Hassan Rouhani any time "whenever they want” and without preconditions, raising hopes that perhaps an Iranian crude oil embargo might be avoided.
Crude oil prices are stuck between a rock and a range with seasonal weakness, as well as the promise of more oil production, which is alleviating fears of a tightening global marketplace. On Friday, the market was looking for a reason to rally or break. It got the reason to break on a report by The Wall Street Journal that Russia’s Energy Minister Alexander Novak, who said he “did not rule out… an increase in oil production in excess of 1 million barrels a day may be discussed.”
Big oil is back, and we have earnings today but so is big LNG. OK, maybe the market for Liquefied Natural gas isn’t big yet but it is going to be. President Donald Trump boasted that “Europe will be a massive buyer of U.S. LNG as they will be able to diversify their energy supply.” Some dismissed the comments as not likely, but those who did are thinking small or not looking at the big picture. In coming generations, the United States will be the LNG supplier to the world.