Oil Prices Go Up Before Supply Data

Oil Prices Go Up Before Supply Data

USA oil prices on Thursday extended gains from the previous session on a fall in US commercial crude inventories, while worldwide crude markets were weaker due to the trade dispute between the United States and China.

Despite the logistics changes, China, the largest Iranian oil buyer, has said it won't halt purchases as requested by the U.S. India, the second biggest purchaser of Iranian crude, has also adapted to the changes, contracting NITC to carry and deliver its supplies.

In its August market report, OPEC, which expected increased demand had stated: "In 2018, oil demand growth is anticipated to increase by 1.64 mb/d, 20 tb/d lower than last month's projections, mainly due to weaker-than-expected oil demand data from Latin America and the Middle East in 2Q18".

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Benchmark Brent crude oil was down 35 cents a barrel at US$74.43 by 0935 GMT. USA light crude CLc1 was 3 cents lower at $67.83 a barrel.

Oil prices rose by a significant 2% on Wednesday to exceed the $74 mark, the highest recorded in the last two weeks.

Concerns also remain over how much oil will be removed from global markets by renewed sanctions on Iran, despite worries that demand growth could weaken amid a trade disputes between the USA and China, the world's two biggest economies. It lost more than 1.5 per cent in the previous five sessions. "The fundamental picture is tighter than it was a year ago". Instead, both countries activated another round of dueling tariffs on $16 billion worth of each other's goods. Washington is holding hearings this week on a proposed list of an additional $200 billion worth of Chinese imports to face duties.

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"These (overall) measures are expected to shave up to 0.3-0.5 percentage points from China's real GDP growth in 2019", said rating agency Moody's Investor Service.

The American Petroleum Institute, an industry group, late Tuesday released data showing a 5.2 million barrel decline in US crude oil stockpiles for the week ended August 17.

In options activity, December 2018 puts for oil at $50 a barrel traded, though the volume was thin with just a few hundred contracts exchanged, said Bob Yawger, director of futures at Mizuho in NY.

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West Texas Intermediate, light crude oil is on track for a seventh week of losses, with a fall of more than three per cent.

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