Worldwide oil prices slip as trade spat escalates

26 August, 2018, 20:51 | Author: Frank Williams
  • Oil Prices Gain on Falling U.S. Inventories

Brent crude oil futures LCOc1 were at $75.07 per barrel at 0424 GMT, up 34 cents, or 0.5 percent, from their last close.

A weaker dollar makes oil less expensive for buyers using other currencies.

"You're seeing somewhat of a relief rally here and part of it is technical in nature for crude", with oil bouncing off the $65 level and 200-day moving average, said Rob Haworth, who helps oversee $151 billion at U.S. Bank Wealth Management in Seattle.

On the supply side, US crude oil production C-OUT-T-EIA rose back to 11 million barrels per day, the EIA report said. China will apply 25 per cent duties on American diesel, gasoline and other petroleum products, but USA crude is excluded from the latest list of sanctions.

The key problem that India is wrestling with is that during the Obama administration sanctions on Iran, "significant reductions" in oil imports from Iran amounted to a 20 percent reduction every six months.

Higher refinery input for the time of the year was a major reason behind the large draw in crude oil inventories despite lower crude oil exports.

More news: More heavy rains likely in India's Kerala as flood death toll jumps

According to BNP Paribas' London head of commodity markets strategy, Harry Tchilinguirian, considering the amount of oil lost from Iranian exports, it would need increases in production from other suppliers like Saudi Arabia to stabilize the oil market.

Still, the incendiary media headlines that have stoked these fears don't exactly correlate to the economic declines the trade war is expected to cause: Moody's Investor Service said, "These [overall] measures are expected to shave up to 0.3-0.5 percentage points from China's real GDP growth in 2019; for the USA trade restrictions will trim off about one quarter of a percentage point from real GDP growth to 2.3 percent in 2019".

Oil prices rose 3%, with Brent crude futures hitting a three-week high. The global benchmark crude traded at a $6.90 premium to WTI.

On the geopolitical side of the equation, the trade war between the United States and China, the two largest economies in the world, is starting to weigh heavily on the energy sector.

Terminals in the port district of Houston-Galveston, Texas, recently started exporting more crude oil than was imported for the first time on record, according to an August 20 report by the Energy Information Administration (EIA). It came second to the USA port district of Chicago, at 19 percent.

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