Sunday, 26 May, 2019

Oil dips in nervous markets with U.S., China on brink…

Oil Prices Up on Weak US Crude Inventory Oil prices inch up in face of tight market
Ginger Lawrence | 10 July, 2018, 04:04

Refiners in China were the top buyers of American crude oil in May, and have been regular importers since the USA revived domestic output and exports in recent years.

US crude futures fell on Thursday as official data showed the country's oil inventories rose unexpectedly last week.

"This allows investors to respond to policy changes and price movements in volatile energy markets, which occur mostly in the European or USA time zones".

Trump's trade war with China - which like the Iran conflict was predicated on the not entirely inaccurate argument that the USA was getting the short end of the stick with regards to business relations - is another example in which pundits are predicting rough road ahead, despite compelling arguments from minority voices that the dispute will eventually resolve in the Americans' favour.

Conflicting opinions over what will happen to crude supplies in the near future, coupled with concern over the escalating trade war between the US and China, was appropriately matched by mixed market performance for crude on Friday, with the USA benchmark achieving modest price gains and the global benchmark slipping slightly.

USA crude output stayed flat at 10.9 million barrels per day (bpd).

At 0734 GMT, August WTI crude oil was trading at $73.02, up 0.07 or +0.10 per cent and September Brent crude oil is at $77.17, down $0.22 or -0.28 per cent.

Beijing has threatened a 25 percent tariff on US crude imports, although it has not specified a date.

USA crude futures slipped on Thursday after data showed an unexpected 1.3-million-barrel build in crude inventories.

The rally appears to be a "short covering situation - we were down nearly 2% yesterday", said Yawger, Reuters reported.

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But by appointing Brexit campaigner Dominic Raab as Davis's replacement, May might hope to quell some of that anger. They say May's Brexit plan would put the Conservatives on course for an election defeat and could split the party.

An additional fact to consider: Tariffs would make USA oil uncompetitive in China.

Looming larger over markets is the U.S./China trade dispute.

An executive from China's Dongming Petrochemical Group said he expected Beijing to soon impose the tariff on U.S. oil imports.

Oil prices rose on Monday as investors focused on tight market conditions after data late last week showed US crude inventories fell to their lowest in more than three years.

The tightness at Cushing and the potential increase in Gulf exports "both have implications for how quickly the prompt overhang in the market can clear, and thus provide some direction for prices", Chauhan said.

Energy consultancy FGE warned on Friday of looming supply shortages due to USA sanctions against Iran, and because of disruptions elsewhere.

"Iran's exports are some 2.7 million bpd, including condensate", it noted.

Meanwhile, Brent oil price was under pressure on Friday amid an escalating global trade tensions.

Although Saudi Arabia and Russian Federation have both said they would raise output to make up for these disruptions, FGE said "there simply is not enough capacity to make up for Iran's crude losses, plus Venezuela and Libya", and warned of the possibility of oil prices rising to $100 per barrel.