Oil prices drop, Brent moves further away from 4-year high

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  • On Tuesday, Washington’s special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly that the U.S. would ensure that oil markets are well supplied before sanctions on Iran are reimposed.
  • U.S. President Donald Trump also restated calls on the Organization of the Petroleum Exporting Countries to raise oil production and curb price increments.

Brent oil edged further away from a four-year high on Wednesday and U.S. crude fell, after the U.S. said it would ensure crude markets are well supplied before sanctions are re-imposed on Iran and as President Donald Trump criticized high prices.

Brent crude futures were down 43 cents, or 0.5 percent, at $81.44 a barrel by 0041 GMT, after gaining nearly 1 percent the previous session. Earlier on Tuesday, Brent hit its highest since November 2014 at $82.55 per barrel.

U.S. crude futures were down 40 cents, or 0.6 percent at $71.88 a barrel. They rose 0.3 percent on Tuesday to close at their highest level since mid-July.

However, Brent is on course for its fifth consecutive quarterly increase, the longest such stretch for the global benchmark since early 2007, when a six-quarter run led to a record-high of $147.50 a barrel.

“We will ensure prior to the reimposition of our sanctions that we have a well supplied oil market,” Washington’s special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly.

In a speech at the UN, Trump reiterated calls on the Organization of the Petroleum Exporting Countries to pump more oil and stop raising prices.

He also accused Iran of sowing chaos and promised further sanctions on the OPEC member after restrictions on its oil exports are imposed from early November.

The so-called ‘OPEC+’ group, which includes Russia, Oman and Kazakhstan, met over the weekend to discuss a possible increase in crude output, but the group was in no rush to do so.

Mohammad Barkindo, OPEC secretary general, said in Madrid on Tuesday that OPEC and its partners should cooperate to ensure they do not “fall from one crisis to another”.

Also weighing on sentiment was an industry report showing U.S. crude stocks unexpectedly climbed last week.

Crude inventories rose by 2.9 million barrels in the week to Sept. 21 to 400 million, compared with analyst expectations for a decrease of 1.3 million barrels, the American Petroleum Institute said.

Oil prices mixed as Trump calls on OPEC to lower prices

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  • U.S. President Trump urges OPEC to lower prices.
  • OPEC and its allies are set to gather on Sunday in Algeria.

Oil prices were mixed on Friday after falling in the previous session as U.S. President Donald Trump urged OPEC to lower crude prices ahead of its meeting in Algeria this weekend.

International benchmark Brent crude for November delivery was up 5 cents at $78.75 a barrel by 0424 GMT.

U.S. West Texas Intermediate crude for October delivery fell 8 cents to $70.24 a barrel.

Trump called on the Organization of the Petroleum Exporting Countries (OPEC) to lower prices, saying on Twitter “they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices.”

OPEC and its allies are scheduled to meet on Sunday in Algeria to discuss how to allocate supply increases to offset a shortage of Iran supplies due to U.S. sanctions.

Stephen Innes, head of trading for Asia-Pacific at OANDA in Singapore, said Trump’s remarks just days before the OPEC meeting put “a focus on the likely supply impacts of U.S.-led Iran sanctions.”

“The market had until that point been trading fluidly with the assumption that Saudi Arabia is now comfortable with Brent at $80 or even higher, which is challenging the market’s long-held supposition that prompt Brent between $70 and $80 was OPEC’s sweet spot,” Innes added.

Brent has been trading just below $80 a barrel, backed by concerns of supply shortages from looming U.S. sanctions against Iran, which are set to take effect in November.

“Iranian crude exports are coming earlier and bigger-than-expected, at a time seasonal demand is strong. With spare capacity also falling sharply, the market remains exposed to supply-induced price shocks,” according to a report by ANZ Bank.

Although supply worries have pushed up oil prices, OPEC and its allies were not likely to agree to an official increase in crude output at this weekend’s meeting, OPEC sources said.

Oil prices drop as escalating US-China trade war clouds demand outlook

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  • Market watching trade war impact on crude demand.
  • U.S. sanctions on Iran continue to support prices.
  • U.S. shale output expected to rise in October.

Oil markets fell on Tuesday as the latest escalation in the Sino-U.S. trade war clouded the outlook for crude demand from the two countries, which are the world’s top two oil consumers.

Brent crude futures dropped 44 cents, or 0.6 percent, to $77.61 per barrel by 0424 GMT.

U.S. West Texas Intermediate (WTI) crude was down 28 cents, or 0.4 percent, to $68.62 per barrel.

U.S. President Donald Trump on Monday said he would impose 10 percent tariffs on about $200 billion worth of Chinese imports.

“The growing trade dispute has hurt trading sentiment. The impact on economic growth is slowly dripping in, which again hurts oil prices,” Wang Xiao, head of crude research at Guotai Junan Futures, said on Tuesday.

Refineries in the United States consumed about 17.7 million barrels per day (bpd) of crude oil last week while China’s refiners used about 11.8 million bpd in August, according to government data from the countries, the most among the world’s countries.

The tariffs are likely to limit economic activity in both the China and the United States and that should lower oil demand growth as less fuel is consumed to move goods for trade.

The countries are the world’s two largest economies.

However, potential supply cuts caused by U.S. sanctions on Iran, the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC), are providing some support for oil prices.

Sanctions affecting Iran’s petroleum sector will come into force from Nov. 4.

Iranian crude oil export loadings have declined by 580,000 bpd in the past three months, Bank of America Merrill Lynch analysts said in a note to clients.

Meanwhile, oil output from seven major U.S. shale formations is expected to rise by 79,000 bpd to 7.6 million bpd in October, the U.S. Energy Information Administration said on Monday.

Technical analysis from Reuters market analyst Wang Tao showed that U.S. oil prices have repeatedly failed to overcome a resistance level of $69.85 per barrel, signalling a dissipation of positive outlook.

Brent may fall more than $1 to $76.37 a barrel while WTI crude prices may revisit the Sept. 14 low of $67.94, he wrote.

On Monday, Russia’s Energy Minister Alexander Novak said that OPEC and non-OPEC members will discuss all possible supply scenarios when they meet this month in Algeria. Russia, the world’s largest oil producer, and other producers in OPEC have kept in place a supply agreement to maintain prices while at the same time providing enough oil to the market.

Oil prices ease as trade row clouds demand outlook

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  • Oil prices dipped on Monday as worries that the U.S. could impose additional tariffs on China outweighed concerns over the supply impact of impending sanctions by Washington on Iran.
  • U.S. President Donald Trump is expected to announce fresh tariffs on Chinese imports worth approximately $200 billion as early as Monday, according to a source which spoke to Reuters.

Global oil prices eased in early Asian trading on Monday on concerns that the United States is poised to impose additional tariffs on China, outweighing supply fears from upcoming sanctions on Iran.

Brent crude oil futures dipped 16 cents, or 0.2 percent to $77.93 a barrel by 0035 GMT.

U.S. West Texas Intermediate (WTI) futures fell 20 cents or 0.3 percent, to $68.79 a barrel.

“The market’s expectation of shortages has cooled after data from last week showed increases in supplies, while investors have lowered the outlook for oil demand,” said Wang Xiao, head of crude research with Guotai Junan Futures.

U.S. President Donald Trump is likely to announce new tariffs on about $200 billion on Chinese imports as early as Monday, a senior administration official told Reuters on Saturday.

The escalating trade row is raising concerns about the potential for slower growth in oil consumption, offsetting supply concerns stemming from upcoming U.S. sanctions on Iran over its nuclear program.

Refiners in India, Iran’s second largest crude buyer will cut their monthly crude loadings from Iran for September and October by nearly half from earlier this year.

Also weighing on oil prices, U.S. drillers added two oil rigs in the week to Dec. 1, bringing the total count up to 749, the highest since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.

China tariffs on LNG, oil aim at U.S. energy dominance agenda

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Scott DiSavino and Chen Aizhu

NEW YORK/BEIJING, Aug 3 (Reuters) – China’s proposed tariffs on U.S. liquefied natural gas and crude oil exports opens a new front in the trade war between the two countries, at a time when the White House is trumpeting growing U.S. energy export prowess.

China included LNG for the first time in its list of proposed tariffs on Friday, the same day that its biggest U.S. crude oil buyer, Sinopec, suspended U.S. crude oil imports due to the dispute, according to three sources familiar with the situation.

On Friday, China announced retaliatory tariffs on $60 billion worth of U.S. goods, and warned of further measures, signaling it will not back down in a protracted trade war with Washington.

That could cast a shadow over U.S. President Donald Trump’s energy dominance ambitions. The administration has repeatedly said it is eager to expand fossil fuel supplies to global allies, while Washington is rolling back domestic regulations to encourage more oil and gas production.

The juxtaposition here is clear: it is hard to become an energy superpower when one of the biggest energy consumers in the world is raising barriers to consume that energy. It makes it very difficult,” said Michael Cohen, head of energy markets research at Barclays.

The United States is the world’s largest exporter of fuels such as gasoline and diesel, and is poised to become one of the largest exporters of LNG by 2019. U.S. LNG exports were worth $3.3 billion in 2017. China is the world’s biggest crude oil importer.

China had curtailed its imports of U.S. LNG over the last two months, even before its formal inclusion in the list of potential tariffs. It had also become the largest buyer of U.S. crude oil outside of Canada, but Kpler, which tracks worldwide oil shipments, shows crude cargoes to China have also dropped off in recent months.

It comes at a time when the United States has several large-scale LNG export facilities under construction, and after Trump’s late 2017 trip to China that included executives from U.S. LNG companies.

China became the world’s second-biggest LNG importer in 2017, as it buys more gas in order to wean the country off dirty coal to reduce pollution.

“This will not affect the trade but will simply make gas more expensive to Chinese consumers,” said Charif Souki, chairman of Tellurian Inc, one of several companies seeking to build a new LNG export terminal.

China, which purchased almost 14 percent of all U.S. LNG shipped between February 2016 and May 2018, has taken delivery from just one vessel that left the United States in June and none so far in July, compared with 17 in the first five months of the year.

“The U.S. gas industry will be much harder hit by this as China imports only a small volume whereas U.S. suppliers see China as a major future market,” said Lin Boqiang, professor on energy studies at Xiamen University in China.

(For an interactive graphic on U.S. LNG shipments to China, see https://tmsnrt.rs/2n9bQKn)

Meanwhile, according to Kpler, crude exports to China dropped to an estimated 226,000 barrels per day (bpd) in July, after reaching a record 445,000 bpd in March. Sinopec, through its Unipec trading arm, is the largest buyer of U.S. crude.

China would likely hike purchases from Saudi Arabia, Russia, the United Arab Emirates and Iraq if the tariffs slowed U.S. flows, said Neil Atkinson, head of the oil industry and markets division at the International Energy Agency.

There will be “others who will be offering barrels to China, so it could find itself able to replace lost volumes from the U.S.,” Atkinson said.

With LNG demand expected to skyrocket over the next 12 to 18 months, there are still some two dozen firms seeking to build new LNG export terminals in the United States and tariffs may limit their ability to secure sufficient buyers to finance their proposed projects.

“Cheniere continues to see China as an important growth market and LNG as a win-win between the United States and China,” said Eben Burnham-Snyder, a spokesman at Cheniere Energy Inc, which owns one of the two LNG export terminals currently operating in the United States. He added they do not see tariffs as productive.

One project being developed is in Alaska, which would carry natural gas through an 800-mile (1,287 km) pipeline across the state to a terminal that would convert it to LNG to take it to China.

The $43 billion project is still in development, and the Alaska Gasline Development Corp said on Friday that it believes the “current trade tensions between the United States and China will be resolved well in advance of Alaska LNG exports to China.”

(Reporting by Scott DiSavino and Aizhu Chen Additional reporting by Jessica Resnick-Ault and Andres Guerra Luz in New York, Collin Eaton in Houston, Yereth Rosen in Anchorage, and Josephine Mason in Beijing Writing by David Gaffen Editing by Chris Reese and Susan Thomas)