Published: Sat, July 21, 2018
Money | By Ethel Goodwin

Oil prices steady as trade worries weigh

Oil prices steady as trade worries weigh

Oil prices reversed early losses Wednesday after the market digested government data that showed a surprise build in US crude inventories, but also indicated bullish demand for gasoline. West Texas Intermediate (WTI) crude futures climbed 6 cents, or 0.1 per cent, to $68.82.

The International Energy Agency reported that Saudi Arabia boosted production sharply last month, raising crude shipments to world markets by 390,000 bpd to 7.6 million bpd.

Figures showing refineries processing plenty of crude and stockpiles dropping at the Cushing, Oklahoma, delivery hub also supported the market, said John Kilduff, founding partner at energy hedge fund Again Capital. There was no mention in the statement of Saudi June crude exports.

Expectations of a dramatic influx of product from Saudi Arabia and Russian Federation has been one of the main bearish drivers of crude prices this week, alongside what continues to be robust gains in U.S. supply.

Crude imports from the US rose 800 percent month-on-month to 4.72 million barrels in May, the largest volume since at least 2015 for which data is available.

Prices have been dragged down by concerns about oversupply as some production returned after outages, while trade tensions stoked fears of damage to economies and commodities. China, on the other hand, is already fighting a massive trade war with the US.

After sliding lower early on in the session, crude oil futures cut losses and rebounded into positive territory amid high volatility on Thursday.

Distillate fuels stockpiles, which include diesel and heating oil, rose by 1.7 million barrels, compared with expectations for an 873,000-barrel gain, the data showed. "For the energy renaissance to continue, the USA natural gas and oil industry critically needs policies that advance energy infrastructure around the country as well as the access of USA energy to global markets".

U.S. crude oil inventories increased in the week ending July 13, the U.S. Energy Information Administration (EIA) said in a report on Wednesday.

U.S. President Donald Trump said in a CNBC interview he was ready to put tariffs on $500 billion of imported goods from China.

"The handful of comments from the Saudis" boosted prices, said Bob Yawger, director of futures at Mizuho Securities USA NY. That would mean a roughly 1 million bpd increase in output.

"The impact on world economic growth of a levy of this magnitude will be severe and will likely have a strong negative impact on markets", said Olaf van den Heuvel, chief investment officer at Aegon Asset Management. USA crude oil production last week hit 11 million barrels per day (bpd) for the first time in the nation's history.

In 2017, Turkey imported 24.9 million tons of crude oil in total, mainly from Iran (almost 50 percent) and the rest from Iraq, Russia, Kuwait and Saudi Arabia.

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