In 2024, the global energy market is witnessing significant fluctuations, driven by a complex interplay of geopolitical tensions and economic policies. With 11.11 million barrels per day (b/d) of crude oil imports recorded, only a marginal 1.7% originated from the United States. Meanwhile, gasoline inventories have surged by 5.4 million barrels, juxtaposed against a sharp decline in distillate stocks by 7 million barrels. The sustained weakness of the US Dollar, owing to uncertainties around Trump-imposed tariffs and Federal Reserve rate cuts, has been supporting the GBP/USD pair. Moreover, China's recent announcement of retaliatory tariffs against the US, targeting American energy supplies, adds another layer of complexity to an already volatile market.
China's move to impose a 10% tariff on US crude oil and a 15% tariff on US liquefied natural gas (LNG) is set to come into effect on February 10, leaving a narrow window for possible negotiations. These tariffs are part of a broader strategy to counter President Trump's directive aimed at increasing economic pressure on Iran, which has incidentally bolstered crude prices. Trump's initial reimposition of oil sanctions against Iran during his first term remains a pivotal factor influencing the current market dynamics.
The API numbers released overnight indicate a rise in US crude oil inventories by 5 million barrels over the past week. This development comes at a time when nervousness pervades the market regarding storage levels and the pressing need to replenish reserves in Europe. Last year, of the 105 billion cubic meters (bcm) of LNG imported, 5.6% was sourced from the US. However, the latest tariffs from China have resulted in TTF prices settling 3.25% lower, underscoring the potential impact on global energy flows.
As market participants grapple with these challenges, attention now shifts to upcoming US ADP and ISM PMI data, which are expected to provide further insights into economic trends and potential directions. The interconnected nature of these economic indicators with global trade policies and energy markets makes them critical focal points for stakeholders across the board.