Rising crude oil exports continued making a dent in the U.S. trade deficit, new government data released on June 9 show.
The international goods and services trade deficit narrowed 1.2 percent, or about $600 million, to $55.9 billion in April, according to the Bureau of Economic Analysis. This came in slightly below economists’ expectations of $56.1 billion.
Exports climbed almost 3 percent, or $8.3 billion, to a record $327.1 billion.
Energy shipments accounted for a large share of export growth. Crude oil rose by $6.4 billion, followed by fuel oil ($1.3 billion) and other petroleum products ($1 billion).
The United States has witnessed surging demand for American energy during the Iranian conflict—now in its 14th week—as the Strait of Hormuz has impacted global energy markets.
May’s crude exports soared to an all-time high of 5.87 million barrels per day, up from 3.99 million before the war started, according to the Energy Information Administration. But domestic oil inventories keep dwindling, with stockpiles at the Cushing, Oklahoma, delivery hub declining by 583,000 barrels at the end of last month.
Energy producers might be expecting tensions in the Middle East to drag on, as firms appear to have begun investing in additional oil rigs. In the week ending June 5, the Baker Hughes crude oil rig count jumped to 431, up from 407 when the war began.
Capital goods, meanwhile, also contributed to record exports in April, rising by $4 billion due to greater demand for computers and civilian aircraft.
Service exports dipped by $400 million amid drops in travel, transport, and maintenance services.
The artificial intelligence (AI) infrastructure buildout was ubiquitous in the latest trade data.
U.S. imports jumped 2 percent, or $7.6 billion, to a one-year high of $383 billion.
This was almost entirely driven by a $7 billion increase in capital goods purchases, including computers, semiconductors, and telecommunications equipment.
America’s AI hyperscalers—Alphabet, Amazon, Meta Platforms, Microsoft, and Oracle—have been accelerating their capital expenditure plans. They could spend a cumulative $1 trillion on AI-related investments by the year’s end, utilizing a wide array of tools, from stock sales to bond issuances.
Markets will receive fresh insights into the capex situation this week when Oracle releases its fiscal year fourth-quarter earnings report after the closing bell on June 9.
Investors will be concentrating on whether the “AI cloud infrastructure boom can keep accelerating while the company manages heavy capex, rising debt concerns, and pressure to convert its massive backlog into revenues,” Austin Hankwitz, head analyst at Grit Capital, said in a June 9 research note.
“Commentary around OpenAI, Nvidia GPU capacity, multi-cloud partnerships, and the durability of AI infrastructure demand will be key for sentiment,” he said.
Trade Relations
The bureau reported that deficits were narrowing with several key trading partners, including China.
The U.S.–China deficit narrowed by $2.6 billion to $12 billion in April. While exports were little changed at above $10 billion, imports fell by nearly $3 billion to $22.1 billion.
This comes one day after Beijing reported that China’s shipments to the United States rose by more than 35 percent year over year in May—the highest growth since March 2021.
Overall, Chinese exports rose 19.4 percent year over year.
“The takeaway is that China’s external trade engine remains firm despite ongoing tariff and supply-chain tensions, with export demand still resilient and imports pointing to stronger internal demand or front-loading of raw materials and components,” PJ Quaid, senior vice president at StoneX, said in a June 9 note.
Meanwhile, the trade gap with the European Union eased slightly, falling below $8.2 billion from $9 billion in March.
The U.S.–India deficit also shrank to $3.41 billion, from $4.02 billion.
America’s trade deficit with Canada and Mexico was mixed in April.
The U.S.–Canada shortfall widened to $5.287 billion from $2.435 billion. The U.S.–Mexico deficit fell by more than $3 billion to $15.349 billion.
Officials from all three countries have been engaged in the joint review of the trilateral trade agreement. Content rules, economic security, and tariffs are among the key issues under negotiation.
Last week, Ottawa sent a letter to U.S. Trade Representative Jamieson Greer and Mexico’s Economy Secretary Marcelo Ebrard stating that Canada wants the USMCA renewed for 16 years ahead of the July 1 review.
“Canada looks forward to continued engagement with both the United States and Mexico on opportunities to expand our trading partnership and is willing to consider any proposal that can be beneficial to all three nations’ long-term prosperity,” Canada–U.S. Trade Minister Dominic LeBlanc said in the letter.
“In parallel, discussion with the United States on addressing sectoral tariffs will be essential.”
Noé Chartier contributed to this report.
