Oil prices dip on concerns Sino-US trade conflict could escalate

CNBC

  • Oil prices fell on Friday amid concerns the trade war between the United States and China could intensify.
  • Looming U.S. sanctions against Iran’s oil exports prevented markets from falling further.

Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

Oil prices fell on Friday amid concerns the trade war between the United States and China could intensify, although looming U.S. sanctions against Iran’s oil exports prevented markets from falling further.

International Brent crude oil futures were at $77.55 per barrel at 0106 GMT, down 22 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 6 cents at $70.19 a barrel.

Still, with Venezuelan supply falling sharply and concerns around U.S. sanctions against Iran that will target its oil exports from November, crude markets in August are on track to post a more than 4 percent rise for Brent and a 2 percent increase for WTI.

Despite this, some analysts cautioned that the trade disputes between the United States and other major economies, especially China and the European Union, could start to drag on economic growth and, by extension, fuel demand.

“You have to wonder if it (crude) can sustain these prices in a world where President Trump doubles down on his battle with the EU and China at the same time,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Oil could hit mid-$90s in next few months, energy expert says

Oil could hit mid-$90s in next few months, energy expert says  

U.S. President Donald Trump is reportedly planning to ramp up trade conflict with China and has told aides he is ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends next week, several media reported on Thursday.

“Assuming the trade war is about to escalate again, the questions traders will be wondering about is global growth (and) demand for crude,” McKenna said.

Shanghai delivery

Meanwhile, China’s Shanghai crude oil futures, launched in March, will see delivery of their first contract on Friday.

The speed of Shanghai crude’s take-up has surprised many traders and analysts.

Among the three major crude benchmarks – WTI, Brent and Shanghai – China’s front-month crude futures now make up a share of almost 15 percent in terms of monthly volumes.

Traders said Shanghai’s fast rise reflects China’s importance as the world’s biggest oil importer. It is also part of a policy by Beijing to increasingly use the yuan currency in global trade, especially during times of economic disputes with the United States.

Since its launch in March, front-month Shanghai crude oil futures have gained almost 10 percent in value to 481 yuan ($70.31) per barrel.

Oil markets tense on Middle East crisis, US-China trade spat

CNBC

  • Oil markets remained tense on Thursday on concerns of a military escalation in Syria.
  • Prices were some way off Wednesday’s 2014 highs as bulging American supplies weighed.

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Oil markets remained tense on Thursday on concerns over a military escalation in Syria, although prices remained some way off Wednesday’s highest since late 2014 as bulging American supplies weighed.

Ongoing trade disputes between the United States and China also kept markets on edge, traders said.

Brent crude futures were at $72.14 per barrel at 0536 GMT, up 8 cents, or 0.1 percent from their last close.

U.S. WTI crude futures were at $67.03 a barrel, up 21 cents, or 0.3 percent from their last settlement.

In China, Shanghai crude futures were also up, rising 8.9 yuan to 427.1 yuan ($68.03) per barrel, up 2.1 percent and with record volumes traded on the product that was only launched in late March.

Both Brent and WTI hit their highest since late 2014 of $73.09 and $67.45 per barrel on Wednesday, respectively, after Saudi Arabia said it intercepted missiles over Riyadh and U.S. President Donald Trump warned Russia of imminent military action in Syria.

“Geopolitical risks outweighed an unexpected rise in inventories in the U.S.,” ANZ bank said on Thursday.

Ongoing concerns of a prolonged trade dispute between the United States and China are also keeping markets on edge.

China lashed out at the United States on Thursday saying that the trade disputes, in which both sides have threatened to impose tariffs on imports of several products, were “single-handedly provoked by the U.S.” and that Beijing was prepared to escalate the spat if Washington did not back off from its threatened import tariffs.

The Chinese Commerce Ministry also said there had been no bilateral negotiations with the United States on the trade frictions.

Although markets are tense, supplies remain ample especially due to the United States.

U.S. crude oil inventories rose by 3.3 million barrels to 428.64 million barrels.

Meanwhile, U.S. crude oil production last week hit a fresh record of 10.53 million barrels per day (bpd), up by a quarter since mid-2016.

The United States now produces more crude than top exporter Saudi Arabia. Only Russia, at currently just under 11 million bpd, pumps out more.

“Barring any geopolitical shocks, we see limited upside potential for oil prices from current levels due to ongoing oversupply, mainly from the U.S. and Russia, and also a slowing demand growth outlook,” said Georgi Slavov, head of research at commodities brokerage Marex Spectron.