American Petroleum Benchmarks Moving Higher

Energy futures are trading higher so far this morning in what headlines are describing as a ‘shaking-off’ of US tariff concerns, despite the fresh 25% tax on aluminum and steel being announced yesterday. The big three American petroleum benchmarks are moving higher in unison in pre-market trading, each exchanging hands ~1.5% over yesterday’s settlement prices.

Today’s bullish sentiment in petroleum futures stands in defiance to a report published by the EIA this morning, highlighting the decrease in Chinese crude oil imports. The report details that it isn’t the much-feared slowdown in demand responsible for the decrease in oil imports, rather a switch-up in the country’s petroleum demand mix. Despite an increase in gasoline and jet fuel consumption last year, the drop in diesel usage, which has been replaced by LPG and naphtha for petrochemical manufacturing, was more than enough to offset the growth.

The article also noted Malaysia as China’s trade partner with the highest increase in oil imports from 2023-2024. While only producing 597mb of crude oil per day in 2023, the small Southeast Asian country exported around 1.4 million barrels per day to China last year. It’s suspected that Malaysia is importing Iranian oil and scrubbing the “Made In-“ stickers off before shipping them north to the Chinese.

Despite calls from the U.S. President to increase its oil production to lower prices, OPEC’n’Friends seem content to continue slowly ramping production in accordance with a long-term strategy, rather than appease the U.S. for a political win. The cartel’s monthly report is due out early tomorrow morning, followed by the DOE’s weekly status update at 9:30am CST, and the IEA’s monthly communiqué on Thursday.