Oil near $69 as trade conflict counters latest supply risks

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US crude futures rose 8 cents to $67.02 a barrel, having closed down 3.2 percent the day before.

"There is room for [prices in] the crude market to soften a bit more", says John Woods of JJ Woods Associates, adding that inventories could rise further as refineries head toward maintenance season after the summer driving season.

"The market continues to price in geopolitical risk from the reimposition of sanctions by the USA on Iran", said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

USA crude stockpiles were expected to have dropped 3.3 million barrels last week.

All the Persian Gulf oil exporters such as Saudi Arabia, Iran, Iraq, Kuwait, Qatar, the UAE, and Bahrain, ship their crude oil to the global market through the Strait of Hormuz. U.S.net imports increased by 1.35 million barrels per day during that week.

While U.S. crude exports to China appear to have held up in August, with about 342,000 bpd expected to arrive, they seem set for a slump in September. Lee said the actual imposition of additional tariffs by the USA on Chinese products could be delayed and concerns about higher consumer prices in the US may discourage President Donald Trump's administration from imposing further tariffs.

"Another factor to consider is that trade tensions might escalate and lead to slower economic growth, and in turn lower oil demand", said the IEA.

Meanwhile, traders looked ahead to a report from The American Petroleum Institute on USA crude inventory, due this evening.

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West Texas Intermediate, the USA benchmark for the price of oil , was down 0.1 percent to $68.89 per barrel. Total volume traded was about 30 percent below the 100-day average.

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Whether to comply with USA sanctions or keep doing business in Iran is a "purely economic decision", one senior official argued. USA officials said that more than 100 worldwide firms have already agreed to leave the Iranian market.

Prices of the barrel of the West Texas Intermediate are trading on a weaker footing today after the EIA reported United States crude oil inventories decreased less than initially estimated by 1.351 mbpd during the week ended on August 3.

Oil prices steadied on Wednesday despite relatively weak Chinese import data as the market was still supported by falling USA crude inventories and the introduction of sanctions against Iran.

"As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging and would come at the expense of maintaining an adequate spare capacity cushion", the IEA said.

This time around, some of Iran's former creative methods in trade with Asian customers, including a barter system which avoids sanctionable transfers to the nation, may also work with the Europeans.

India is the world's third-largest crude importer, and if it cuts its purchases from Iran, another likely major beneficiary besides the United States is Tehran's regional rival and Trump ally Saudi Arabia.

"Long-term contracts will be central to the US strategy", said Abhishek Kumar, a senior energy analyst at Interfax Energy in London. If more oil leaves the market than expected then the bulls will win the supply/demand battle.

Official U.S. fuel storage data is due later on Wednesday from the Energy Information Administration.

For the past week, crude imports averaged 7.9 million barrels a day, up by 182,000 compared with the previous week.