Energy markets rebound on US-China trade news
May 13, 2025
The energy markets had a strong rebound on positive China and the US trade talk news. The reaction in the markets was on the headline news that they had agreed to lower tariffs for 90 days. I still think we need to see how the details shake out. I have seen comments that nothing has really changed and all they did was kick the can down the road for 90 days. Others of course are seeing this as a great step towards an economic boom. The truth is most likely in the middle, and I would be cautious here.
If you take a step back and look at the bigger pictures the ULSD and crude oil markets are both still in a downtrend channel and are currently trading in the middle of that downtrend channel range. RBOB gasoline futures are stuck in congestion and have been trading in a range for a long time now. There is still no clear direction, and the markets are searching for some clarity. As these markets sit in the middle of their ranges there is room for these markets to trade higher or lower and not provide any longer-term guidance.
US and Iran are also still in talks on their nuclear program. The hope is that Iran will stop enriching uranium, and the US would lift economic sanctions. If sanctions are lifted it should allow Iran to provide more crude oil to the market even though they have been a habitual overproducer within OPEC+.
There is also the on and off ceasefire and or peace talks between Ukraine and Russia that if this makes progress could offer more barrels of oil to the market.
Goldman Sachs said it expects Brent and WTI prices to fall and average $60 per barrel and $56 per barrel, respectively during the rest of 2025 and to $56 per barrel for Brent and $52 per barrel for WTI in 2026. It expects solid supply growth outside the US shale to weigh further on oil prices.
Late yesterday afternoon a top Libyan military official was assassinated. This doesn’t appear to have a direct tie in to oil price uncertainty, but it bears watching as any unrest in Libya could put support under energy prices.