Oil rises due to firm yuan, expectations of more OPEC cuts

Oil Resumes Decline as Trade War Overshadows Iran Tanker Seizure

Oil Resumes Decline as Trade War Overshadows Iran Tanker Seizure

Prices have lost more than 20% since hitting their 2019 peak in April.

Bearish news for oil then, yet it has managed to stave off heavier declines due to supply side factors.

-China trade spat threatened to expand into a currency war and investors despaired about the damage to crude demand.

Prices for the black gold fell early on worries about the trade war between Washington and Beijing, then extended losses after US government data showed a build of 2.4 million barrels in USA stockpiles instead of the 2.8 million draw analysts had expected.

Last month, the U.S. Energy Information Agency (EIA) cut its forecasts for 2019 world oil demand growth and U.S. crude production in light of the growing trade tensions between the world's two largest economies that have crippled economic activity.

"It's not a huge move.What we're looking at is steady, reflecting concerns among traders whether or not the trade dispute development is fully priced in", said Michael McCarthy, chief market strategist at CMC Markets.

Brent crude futures had risen 10 cents, or 0.17 per cent, to $59.91 a barrel by 0149 GMT after earlier dipping to their lowest since mid-January at $59.07.

USA crude could fall to around the low-$40 a barrel range unless bearish sentiment changes, but US oil production is still surging and the stock market is signaling rising fears of an economic downturn, said Josh Graves, senior market strategist at RJO Futures in Chicago.

"Most importantly, higher tariffs are likely to depress economic growth in Asia and the USA because they are expected to raise costs for businesses that import goods or result in higher prices for consumer goods, or both", reports Avi Salzman for Barron's.

After seven weeks of consecutive crude drawdowns, "there was a thought that today's report would turn oil's fortunes around", said John Kilduff, partner at Again Capital LLC in NY.

Last week, news that President Trump is considering a new 10% tariff on $300 billion of Chinese goods sent the price of WTI down by as much as 8%.

US crude oil refinery inputs averaged 17.8 million barrels per day during the week ending August 2, 2019, which was 786,000 barrels per day more than the previous week's average.

EIA expects West Texas Intermediate crude oil prices will average $5.50/b less than Brent prices during the fourth quarter of 2019 and in 2020, narrowing from the $6.60/b spread during July.

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