Oil Plunges to almost 7-Week Low amid US-China Trade Tension

Oil Plunges to almost 7-Week Low amid US-China Trade Tension

Oil Plunges to almost 7-Week Low amid US-China Trade Tension

For the week, Brent is set for a near 2 percent fall, while USA light crude is heading for a drop of almost 3 percent.

"There is room for [prices in] the crude market to soften a bit more", says John Woods of JJ Woods Associates, adding that inventories could rise further as refineries head toward maintenance season after the summer driving season.

Looking ahead to 2020-21, Della Vigna anxious that the impacts of the slowing pace of new projects will start to be felt, and US shale will begin to decline; however, he said now is a ideal opportunity for "big oil" firms to negotiate better tax terms with governments and "do more activity - that doesn't necessarily mean more money".

International Olympic Committee has signed a contract to buy about 6 million barrels of U.S. crude oil under single tender for delivery in November 2018 to January 2019, he said. More sanctions targeting Iran's oil sector and Central Bank will come into effect in November. Where these trade tensions threaten the volume of China's import of United States crude oil.

For the production expectations, the EIA on Tuesday slightly lowered its 2018 expectation for average 2018 USA crude output to 10.69 million barrels per day. The trading price ranged between US$76.11 per barrel, and US$69.71 per barrel.

On top of that, Iranian President Hassan Rouhani has threatened to disrupt regional oil production and exports if the Trump administration follows through with oil sanctions.

The trade war is rattling global markets.

That's all occurring as global oil investors are grappling with doubts over how demand will be affected by flaring trade tensions between the US and China, the prospect of lower exports from Iran due to American sanctions, uncertainty about Saudi Arabia's output strategy and a fall in stockpiles at the storage hub in Cushing, Oklahoma.

On Wednesday, the U.S. Energy Information Administration reported a surprise build of 3.8 million barrels in commercial crude oil inventories.

Additionally, as China limits purchases of US crude amid the trade war and risks of Middle East supply being disrupted by American intervention increase, speculation is rising that the world's top oil importer may find itself short of cargoes, he said.

Oil prices dropped nearly 4 per cent yesterday amid deepening concerns over the US-China trade war and continued signs of a slowdown in Chinese energy demand.

Analysts expect Iran's oil exports to drop more noticeably beginning in September, and the rate of decline to accelerate as the United States looks to have Iran's current customers reduce Iranian oil imports to "zero". The next stop for crude oil can be $70.35 and $71.10.

They said Iranian exports were likely to drop by up to 1 million bpd by November but even that could push Brent to $85 per barrel if oil markets were hit by other disruptions in producer countries such as Libya or Venezuela.

"You can not order 2 million barrels like ordering a coffee somewhere", Beat Wittmann, a partner at financial consultancy Porta Advisors, told CNBC recently.

Exports to Japan surged to a seven-month high as refiners rushed to secure as many cargoes as possible before U.S. sanctions are re-applied.

The U.S. crude oil production went down to 10.8 million barrels per day.

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