Monday, 16 July, 2018

US Crude Oil Price Rallies After Slump

Oil prices rise as looming Norway strike adds to disruptions GREAT AGAIN: US to Become World's TOP OIL PRODUCER by 2019
Ginger Lawrence | 12 July, 2018, 16:49

-China trade tensions threatened to hurt oil demand, and news that Libya would reopen its ports raised expectations of growing supply.

West Texas crude is steeply off of recent highs, with WTI collapsing almost 5% on Wednesday.

"The scope of today's sell-off is unequivocally a speculative washout", said Saucer.

Adding to the bearish mood were signs of a possible relaxation of USA sanctions on Iranian crude exports. "That's while Saudi Arabia told OPEC it pumped about 10.5 million barrels of crude a day last month as the kingdom sought to cap rallying prices by ramping up output, according to people familiar with the matter", writes Bloomberg. A stronger dollar can weaken dollar-denominated commodities, like crude.

"This will become an even bigger issue as rising production from Middle East Gulf countries and Russian Federation, welcome though it is, comes at the expense of the world's spare capacity cushion, which might be stretched to the limit".

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An announcement by Libya's National Oil Corp that four oil export terminals were reopening, ending a standoff that had shut down most of Libya's oil output, was a key catalyst for the price fall on Wednesday, analysts said.

Raising output further could shrink the country's spare production capacity - the crude left idle for emergencies - to "an unprecedented level below 1 million barrels a day", the IEA predicted. "If these tariffs are introduced, there will be an impact on global growth and demand". However, Iran exports might squeeze further if United States takes more aggressive stance on sanctions, they said.

The decline in overall inventories was partially due to a fall-off in stocks at the Cushing, Oklahoma, delivery hub for USA crude futures, which were down by 2.1 million barrels.

Washington had previously said countries must halt all imports of Iranian oil from November 4 or face US financial restrictions, with no exemptions. The report boosted hopes of rise in oil supplies in coming days, even as data released by United States suggested that crude oil stockpiles fell by more than 12 million barrels last week. Supply to the USA market has also been squeezed by the loss of some Canadian oil production. "Our markets remain open while we work directly with customers to resolve the issue", a CME spokesman said in an emailed statement.