Oil pares gains as US escalates trade war with China

CNBC

  • Brent crude futures were at $70.41 a barrel at 0523 GMT, up 2 cents from their last close, after rising to as high as $71.23 a barrel.
  • U.S. West Texas Intermediate (WTI) crude futures <were at $61.78 per barrel, up 8 cents, after rising to as high as $62.49 a barrel earlier in the day.
Russia oil

Sergei Karpukhin | Reuters

Oil prices pared earlier gains on Friday following U.S. President Donald Trump’s tariff increase on $200 billion worth of Chinesegoods took effect, escalating the trade dispute between the world’s two biggest economies and oil consumers.

Prices had risen more than 1 percent earlier in the day as optimism mounted that the tariffs would be averted after U.S. Trump said he received a “beautiful letter” from Chinese President Xi Jinping.

With no move from the Trump administration to reverse the hikes, U.S. Customs and Border Protection imposed the new 25% duty on affected U.S.-bound cargoes leaving China after 12:01 a.m. EDT (0401 GMT) on Friday.

Brent crude futures were at $70.41 a barrel at 0523 GMT, up 2 cents from their last close, after rising to as high as $71.23 a barrel.

U.S. West Texas Intermediate (WTI) crude futures <were at $61.78 per barrel, up 8 cents, after rising to as high as $62.49 a barrel earlier in the day.

U.S. stock futures fell and Asian shares pared gains as China said it would retaliate over the tariff increases.

“Oil prices along with most risk assets are moving almost in sync on trade tariff updates,” said Edward Moya, senior market analyst at futures brokerage OANDA.

Trump threatened to levy the additional tariffs on Sunday on signs that China would not accept portions of the trade agreement that it earlier indicated it accepted.

A break down in trade between the world’s two largest oil consumers would likely impact oil demand. The two countries combined to make up 34 percent of global oil consumption during the first quarter of 2019, according to data from the International Energy Agency.

Concerns of rising oil supply on reports of growing stockpiles along with the potential impact on demand has pushed oil prices lower for the week.

U.S. crude is heading for a weekly loss of 0.3%, its third week of consecutive declines. Brent is heading for its second weekly loss, down 0.6%.

However, the efforts by the Organisation of the Petroleum Exporting Countries (OPEC) to crimp supply to reduce global inventories has supported prices.

Overall expectations are also that demand in 2019 will rise.

The U.S. Energy Information Administration expects global oil demand to rise by 1.4 million barrels per day this year.

Oil falls as trade row fears outweigh drop in US crude stocks

CNBC

  • Brent crude oil futures were at $69.72 a barrel by 0251 GMT, down 65 cents, or 0.9%, from their previous settlement. They earlier fell more than 1%.
  • U.S. West Texas Intermediate (WTI) crude futures were at $61.52 per barrel, down 60 cents, or 1%, having also fallen more than 1% earlier.
Oil operations in the Permian Basin near Midland, Texas

Nick Oxford | Reuters
Oil operations in the Permian Basin near Midland, Texas

Oil prices dropped 1% on Thursday amid concerns over the escalating trade battle between the United States and China, despite a surprise fall in U.S. crude stockpiles.

Brent crude oil futures were at $69.72 a barrel by 0251 GMT, down 65 cents, or 0.9%, from their previous settlement. They earlier fell more than 1%.

U.S. West Texas Intermediate (WTI) crude futures were at $61.52 per barrel, down 60 cents, or 1%, having also fallen more than 1% earlier.

“The inventory numbers from the U.S. only gave oil a transitory boost. It is going to be all about whether the trade talks today can stop Friday’s tariff-geddon,” said Jeffrey Halley, senior market analyst at OANDA in Singapore.

The Sino-U.S. trade war has weighed on oil prices this week as heightened tensions between the world’s two biggest economies cloud the global economic outlook.

U.S. President Donald Trump said on Wednesday that China “broke the deal” in trade talks with Washington and would face stiff tariffs if no agreement is reached.

Higher tariffs are set to take effect on Friday, during Chinese Vice Premier Liu He’s two-day visit to Washington from Thursday.

“Enough progress made to make Mr Trump roll back his threats could see oil make back all of its recent loses in double quick time,” said Halley. “A poor outcome will see the rot move deeper and oil’s recent fall continuing,” he added.

Oil prices have had some support from signs of tighter global supply on the back of production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia.

Both the Brent and WTI benchmarks have risen more than 30% so far this year.

Global supply has also been tightened by U.S. sanctions on OPEC members Venezuela and Iran.

“From a fundamental point of view, OPEC supply discipline is still in check, and U.S. supplies show tighter markets than expected while Asia demand is still robust,” said Stephen Innes head of trading at SPI Asset Management.

“All of which suggests once the trade war-induced sell-offs abate conditions could settle themselves quickly,” Innes said.

In a sign that Asia demand remains firm, China’s crude imports in April hit a record for the month, at 10.6 million barrels per day (bpd), customs data showed on Wednesday. China is the world’s biggest oil importer.

An unexpected drop in U.S. crude inventories kept oil price declines in check. U.S. crude inventories fell by 4 million barrels in the week to May 3, the Energy Information Administration said on Wednesday.

Oil prices firm amid US sanctions on crude exporters Iran, Venezuela

CNBC

Reuters

KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures were at $61.56 per barrel at 0057 GMT on Wednesday, 17 cents, or 0.3 percent, above their last settlement.
  • Brent crude oil futures were at $69.94 per barrel, 6 cents, or 0.1 percent, above their last close.
RT: Oil operations Permian Basin near Midland, Texas 180823
A worker walks through an oil production facility owned by Parsley Energy in the Permian Basin near Midland, Texas, August 23, 2018.
Nick Oxford | Reuters

Oil prices stabilized on Wednesday as markets remained relatively tight amid U.S. sanctions on crude exporters Iran and Venezuela.

U.S. West Texas Intermediate (WTI) crude futures were at $61.56 per barrel at 0057 GMT on Wednesday, 17 cents, or 0.3 percent, above their last settlement.

Brent crude oil futures were at $69.94 per barrel, 6 cents, or 0.1 percent, above their last close.

With U.S. sanctions on Iran and Venezuela in place, analysts said global oil markets remained tight.

“The tight and price-supportive fundamental outlook has not gone away,” said Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank.

The United States re-imposed sanctions on Iran in November last year, demanding all countries stop importing oil from the country.

Iran has said it will defy the sanctions and continue to export oil.

Most analysts expect its crude export to fall to little more than 500,000 barrels per day, down from around 1 million bpd in April, as governments largely bow to American pressure.

Washington has also slapped sanctions on Venezuelan oil exports, further disrupting crude supply.

Wednesday’s firmer prices partly reversed bigger price falls earlier in the week, which were triggered by announcements from Washington that the United States would this Friday further hike import tariffs on Chinese goods.

“Intensifying trade tensions are raising question on … oil demand prospects,” ANZ bank said on Wednesday.

Oil prices under pressure from US-China trade dispute, market remains tense

CNBC
Reuters

  • Brent crude oil futures were at $71.09 per barrel at 0341 GMT, 15 cents, or 0.2 percent, below their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were at $62.20 per barrel, 5 cents below their last settlement.
RT: Oil Iraq OPEC flames 161014
Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, Iraq, October 14, 2016.
Essam Al-Sudani | Reuters

Oil prices were under pressure on Tuesday from concerns the escalating Sino-U.S. trade dispute could slow the global economy, while U.S. sanctions on crude exporters Iran and Venezuela helped keep the market on edge.

Brent crude oil futures were at $71.09 per barrel at 0341 GMT, 15 cents, or 0.2 percent, below their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $62.20 per barrel, 5 cents below their last settlement.

Analysts said there were a number of factors driving oil prices.

One is a concern that global economic growth is threatened by the intensifying trade dispute between the United States and China.

Talks between the world’s two biggest economies hit a wall over the weekend, when U.S. President Donald Trump announced a raft of new import tariffs on Chinese goods.

“U.S.-China trade tensions are set to be at the forefront of the market’s collective mind this week, as any nuance out of discussions in Washington could trigger knee-jerk moves by traders,” said Han Tan, analyst at futures brokerage FXTM.

Tanker brokerage Eastport said in a note that “worsening trade friction between Washington and Beijing poses a downside risk to our forecasts” for petroleum products.

On the supply-side, oil markets remain tense as the United States tightens sanctions on Iranian oil exports, saying on Monday it was boosting its military presence in the Middle East.

Iran has threatened “reciprocal actions” against U.S. sanctions, which could mean restarting some of its nuclear programme.

The U.S. sanctions have already halved Iranian crude oil exports over the past year to below 1 million barrels per day (bpd), and shipments to customers are expected to drop as low as 500,000 bpd in May as sanctions tighten.

Beyond Iran, the crisis in Venezuela has also disrupted oil supplies from this OPEC member, with Washington placing oil sanctions on the Venezuelan government under President Nicolas Maduro.

“As the White House raises the stakes on Iran and Venezuela, what is the oil endgame?” asked Bank of America Merrill Lynch in a note.

“The Venezuelan political situation seems untenable but oil exports could continue to contract until the industry receives a capital injection, a dim prospect for now,” the bank said.

“In addition … Iran oil exports could collapse further over the coming months. While America’s maximum pressure policy on these two regimes may pay off, additional oil supply losses cannot be ruled out,” it added.

Bank of America said it expected Saudi Arabia “to bring back oil production slowly as Iranian barrels exit the market”, adding that overall it saw Brent crude oil prices having a floor at $70 per barrel in current market conditions.

Oil prices tumble by more than 2 percent after Trump announces new tariffs on Chinese goods

Reuters
  • U.S. West Texas Intermediate (WTI) crude futures were at $60.44 per barrel at 0032 GMT on Monday, down $1.50 per barrel, or 2.4 percent, from their last settlement.
  • Brent crude oil futures were at $69.34 per barrel, down $1.51 per barrel, or 2.1 percent, from their last close.
Reusable: Oil tanker France sunset 151016
Jean-Paul Pelissier | Reuters

Oil prices tumbled by more than 2 percent on Monday after U.S. President Donald Trump on Sunday said he would sharply hike tariffs on Chinese goods this week, risking derailing months of trade talks between the world’s two biggest economies.

U.S. West Texas Intermediate (WTI) crude futures were at $60.44 per barrel at 0032 GMT on Monday, down $1.50 per barrel, or 2.4 percent, from their last settlement.

Brent crude oil futures were at $69.34 per barrel, down $1.51 per barrel, or 2.1 percent, from their last close.

Trump on Sunday said on Twitter he would drastically hike U.S. tariffs on Chinese goods this week, pulling down global financial markets, including crude oil futures.

The Wall Street Journal reported that Beijing is considering canceling all trade talks with Washington.

“Trump has taken the proverbial sledgehammer to the walnut this morning … by threatening to slap a 25 percent tariff on a mind-boggling $525 billion of Chinese goods by this Friday,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

Within the oil industry, there are signs of a further rise in output from the United States, where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018, to a record 12.3 million bpd. That has made the United States the world’s biggest producer ahead of Russiaand Saudi Arabia.

The number of rigs drilling for gas in the United States fell by 3 to 183 in the week to May 3, while oil-directed drilling rigs rose by 2 to 807, data from oil services firm Baker Hughes showed on Friday.