The recent pause on tariffs by President Trump has brought some relief to the energy sector, leading to a rally in oil prices and other risk assets. The tariff adjustments return many rates to a baseline of 10%, benefiting most trading partners not facing retaliatory measures.
However, the situation remains tense with tariffs on Chinese imports increasing to 125% due to Beijing’s countermeasures on U.S. goods. While this pause provides temporary relief, the ongoing trade uncertainties continue to raise concerns about global growth and its potential impact on oil demand.
The ICE Brent forward curve signals a more balanced oil market, particularly in the short term. The market shows signs of shifting to contango from January 2026 onward, indicating a potentially softer balance in the future.
Recent data from the Energy Information Administration (EIA) reflected an increase in U.S. crude inventories, which grew by 2.55 million barrels, reaching levels not seen since July. Meanwhile, although crude stocks at Cushing rose, data on refined products indicated a decline, with gasoline and distillate stocks falling by 1.6 million and 3.5 million barrels, respectively.
In other sectors, copper and base metal prices responded positively to the tariff pause, despite the ongoing concerns over tariffs on China. A prolonged trade conflict could harm consumer confidence and diminish demand for raw materials.
However, expectations for stimulus measures from Beijing could help stabilize the market for copper and other industrial metals. Additionally, the USDA will release its monthly World Agricultural Supply and Demand Estimates (WASDE) report today, with market forecasts predicting an increase in U.S. soybean ending stocks and a decline in corn ending stocks.
Global estimates are expected to remain relatively stable, reflecting nuanced shifts in agricultural supply dynamics.