Oil climbs to approximately $80 as equities appreciate, supply disruptions persist

14 Julio, 2018, 07:58 | Author: Arnold Perez
  • Crude Oil

Firstly, if the new list of tariffs on China are eventually imposed then China could turnaround and tax USA oil. Other risk assets also dropped, with Asian stocks and USA equity futures slumping, while safe-haven securities, such as the yen and Treasuries rose.

In other news, the U.S. Energy Information Administration said on Wednesday that U.S. crude stockpiles fell by 12.6 million barrels during the week-ending July 6.

If trade tensions do escalate, OPEC economists warned, there could be global consequences.

The selling pressure intensified as trade tensions between the US and China raised concerns about demand.

With geopolitics-tariffs and sanctions-reshuffling the oil interests and oil flows of the U.S., China, India, and Iran, India alone may not be enough to absorb the U.S. oil exports to China, now America's second-largest single oil customer after Canada. The prospect of lower demand for OPEC crude would enable the group to deal with upside surprises, the report said.

U.S. West Texas Intermediate (WTI) CLc1 added 46 cents, or 0.7 percent, to $70.84 a barrel, after falling 5 percent the previous session. The contract climbed 26 cents to $74.11 on Tuesday. The decline was the largest one-day move on a percentage basis since February 9, 2016. The global benchmark traded at a premium of $5.55 to WTI for the same month.

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On the one hand, the United States is pressing Iran's oil customers to cut their Iranian crude imports by as much as possible. "Iran is also heading into a crucial period, with U.S. sanctions to take effect from mid-November". As well as consumer items, including clothing, television components and refrigerators, the list of goods targeted by the White House also includes petroleum products, such as motor fuels, kerosene and naphtha.

Although the North American pricing benchmark WTI's discount against Dubai and Brent crudes narrowed sharply in recent weeks, Asian refiners may continue to favor USA crude, if the suppliers continue to offer attractive prices on a CFR basis. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger United States crude oil bearish contrarian trading bias.

September-loading cargoes are set to be the last to head for Japan if the Asian nation doesn't receive an exemption from the USA, people with knowledge of the matter said.

Analysts polled by Reuters forecast that crude stocks fell on average by 4.5 million barrels, ahead of government data at 10:30 a.m. EDT (1430 GMT) on Wednesday.

Oil rose on Tuesday, supported by gains in equities and supply concerns in Norway and Libya.

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