Oil prices firmed as optimism grew around ongoing US-China trade talks, while Iranian nuclear negotiations remain stalled, creating mixed signals in the energy market.
Energy Market Updates: Trade Talks Boost Oil Prices
Oil prices strengthened yesterday and continued their upward trend early today, driven by positive developments in trade discussions between the US and China. Negotiators plan to resume talks, with indications that the US may ease some technology export restrictions if China relaxes limits on rare earth metal exports. This tentative progress is lending support to oil markets.
In contrast, nuclear talks between Iran and the US face persistent deadlock. Iran insists on maintaining its right to enrich uranium—a stance unacceptable to the US—keeping geopolitical risks high and further underpinning oil prices.
Chinese crude oil imports in May showed a slight decline, averaging about 11 million barrels per day (b/d), down 5.7% month-on-month and 0.8% year-on-year. The dip is largely attributed to scheduled refinery maintenance typical for this season. However, year-to-date imports remain marginally higher than last year by 0.3%.
The ICE gasoil market signals tight supply conditions. The prompt ICE gasoil spread’s backwardation surged to nearly $16 per ton, doubling last week’s $8 level. Additionally, the ICE gasoil crack margin remains steady. Speculators increased their positions last week, while open interest in ICE gasoil futures hit record highs, driven largely by swap dealers—an indication of growing consumer hedging activity.
Metals: China Increases Gold Reserves; Copper and Iron Ore Imports Decline
China’s central bank added gold reserves for the seventh straight month in May, increasing holdings by 60,000 troy ounces to a total of 73.83 million troy ounces.
Industrial metals showed mixed signals. Preliminary customs data revealed that China’s unwrought copper imports fell 2.9% month-on-month and 16.2% year-on-year to 427.2 thousand tonnes (kt) in May, with cumulative imports down 6.3% year-on-year to about 2.2 million tonnes (mt) for the first five months. Copper concentrate imports also dropped 18% month-on-month to 2.4 mt, despite stable smelter output. However, year-to-date copper concentrate imports rose 7% year-on-year to 12.4 mt.
Ferrous metals saw declines as well. Monthly iron ore imports decreased 3.8% year-on-year and 4.9% month-on-month to 98.1 mt, reflecting reduced purchasing ahead of expected seasonal slowdowns in domestic steel demand. Year-to-date iron ore imports fell 5.3% to 486.6 mt. On the export front, China’s unwrought aluminium shipments dropped 5.1% year-on-year to 2.4 mt during January–May 2025, while steel product exports increased 8.6% year-on-year to 48.5 mt.
Agriculture: China’s Soybean Imports Surge to Record Levels
China’s soybean imports surged 36.2% year-on-year and an exceptional 128.9% month-on-month to a record 13.9 mt in May. This increase is attributed to cheaper Brazilian supplies and rising demand for soybean meal among animal producers. Nonetheless, total soybean imports for the first five months of 2025 slightly decreased by 0.7% year-on-year to 37.1 mt.
According to USDA export inspection data for the week ending June 5, US corn and soybean export inspections rose compared to previous weeks and last year’s levels, while wheat inspections declined. Corn inspections stood at 1,656.6 kt, up from 1,641.7 kt the prior week and 1,340.8 kt a year earlier. Soybean inspections increased to 547 kt from 301.5 kt, also surpassing last year’s 234 kt. Wheat inspections fell to 291 kt from 553.4 kt and 353 kt a year ago.
