Superposition of tariff reductions between China and the United States
author: Ann
2025-05-14
Houston, May 13 (Reuters) - Crude oil futures rose strongly on Tuesday, up more than $1.60 a barrel, boosted by the temporary tariff cuts between China and the United States and better-than-expected inflation reports.
On the same day, Brent crude futures closed at $66.63 a barrel, up $1.67 from the previous trading day, a 2.57% increase; U.S. West Texas Intermediate (WTI) crude futures closed at $63.67 a barrel, up $1.72, a 2.78% increase. Earlier, after the United States and China reached an agreement to significantly reduce import tariffs for at least 90 days, the two major crude oil benchmarks rose by more than 4% in the previous trading day. At the same time, the good news also greatly boosted Wall Street stocks and the dollar.
"The crude oil market lagged behind other markets yesterday in the stock market boom and is catching up today," said John Kilduff, partner at Again Capital LLC. "In addition, the data released this morning also leaves room for the Fed to act." Data released by the U.S. Department of Labor on Tuesday showed that the consumer price index rose 2.3% in the 12 months ending in April, the smallest year-on-year increase in four years. After the release of this data, Wall Street companies such as JPMorgan Chase and Barclays have lowered their forecasts for a U.S. recession in the coming months. The mild performance of inflation data has eased the pressure on the Federal Reserve, which has kept its benchmark interest rate unchanged since its last rate cut in December last year. The Fed has previously paused rate cuts due to concerns about trade war-induced inflation. Phil Flynn, senior analyst at Price Futures Group, pointed out: "All the data today is positive, and both inflation data and economic data have performed very well." However, the Organization of Petroleum Exporting Countries and its allies (OPEC+) plan to increase oil exports in May and June, a move that may limit further room for oil prices to rise. OPEC has raised oil production by more than expected since April, with an expected increase of 411,000 barrels per day in May. Saudi Arabia's crude oil supplies to China reached their highest level in more than a year last month and will remain stable in June after OPEC+ decided to increase production, sources said. Saudi Arabia is China's second-largest crude oil supplier after Russia.
Although the crude oil market is under pressure from increased OPEC+ supply, signs of strong demand for refined fuels are generally evident. "Despite the deteriorating outlook for crude oil demand, the positive signals from the fuel market cannot be ignored. Although international crude oil prices have fallen 22% since their peak on January 15, both refined oil prices and refining margins have remained stable," JPMorgan analysts said in a report. They also added that the reduction in refining capacity, mainly in the United States and Europe, has led to tight supplies of gasoline and diesel, increased dependence on imports, and increased the possibility of price spikes during maintenance and unexpected downtime.
On the same day, Brent crude futures closed at $66.63 a barrel, up $1.67 from the previous trading day, a 2.57% increase; U.S. West Texas Intermediate (WTI) crude futures closed at $63.67 a barrel, up $1.72, a 2.78% increase. Earlier, after the United States and China reached an agreement to significantly reduce import tariffs for at least 90 days, the two major crude oil benchmarks rose by more than 4% in the previous trading day. At the same time, the good news also greatly boosted Wall Street stocks and the dollar.
"The crude oil market lagged behind other markets yesterday in the stock market boom and is catching up today," said John Kilduff, partner at Again Capital LLC. "In addition, the data released this morning also leaves room for the Fed to act." Data released by the U.S. Department of Labor on Tuesday showed that the consumer price index rose 2.3% in the 12 months ending in April, the smallest year-on-year increase in four years. After the release of this data, Wall Street companies such as JPMorgan Chase and Barclays have lowered their forecasts for a U.S. recession in the coming months. The mild performance of inflation data has eased the pressure on the Federal Reserve, which has kept its benchmark interest rate unchanged since its last rate cut in December last year. The Fed has previously paused rate cuts due to concerns about trade war-induced inflation. Phil Flynn, senior analyst at Price Futures Group, pointed out: "All the data today is positive, and both inflation data and economic data have performed very well." However, the Organization of Petroleum Exporting Countries and its allies (OPEC+) plan to increase oil exports in May and June, a move that may limit further room for oil prices to rise. OPEC has raised oil production by more than expected since April, with an expected increase of 411,000 barrels per day in May. Saudi Arabia's crude oil supplies to China reached their highest level in more than a year last month and will remain stable in June after OPEC+ decided to increase production, sources said. Saudi Arabia is China's second-largest crude oil supplier after Russia.
Although the crude oil market is under pressure from increased OPEC+ supply, signs of strong demand for refined fuels are generally evident. "Despite the deteriorating outlook for crude oil demand, the positive signals from the fuel market cannot be ignored. Although international crude oil prices have fallen 22% since their peak on January 15, both refined oil prices and refining margins have remained stable," JPMorgan analysts said in a report. They also added that the reduction in refining capacity, mainly in the United States and Europe, has led to tight supplies of gasoline and diesel, increased dependence on imports, and increased the possibility of price spikes during maintenance and unexpected downtime.
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