Oil prices fell slightly on Friday as concerns about the impending US sanctions on Iranian crude were outweighed by anxiety over the ongoing trade war between the United States and China. Encana photo.
Oil prices down as Trump prepares to step up trade war with China
After making gains this week, oil prices fell slightly on Friday on growing concerns about the Trump administration’s trade war with China.
The markets anxiety over the ongoing trade dispute outweighed crude supply concerns as the November 4 start-date for the reimposition of US sanctions on Iranian crude nears.
By 3:12 p.m., EDT, Brent crude was down 41 cents to $77.61/barrel and US West Texas Intermediate slipped 47 cents to $69.78/barrel. The Canadian Crude Index fell 55 cents to $43.87.
For August, Brent is set to increase by 4.3 per cent and US crude is expected to show a 1.6 per cent increase.
Recently, oil prices were underpinned by plummeting production out of Venezuela and declining Iranian crude shipments.
Reuters reports that Jim Riddterbusch, president of Ritterbusch and Associates said in a note that oil “appears to be following equities lower amidst renewed U.S./Chinese tariff concerns that could easily escalate in slowing global economic growth and, hence, world oil demand”.
Following reports that US President Donald Trump is preparing to intensify his trade war with China, the MSCI Emerging Markets fell for a second straight day. Analysts and investors are concerned that the ongoing trade war will dampen risk appetite. According to Reuters, in the previous session concerns over weakening Argentinian currency diminished the outlook for emerging markets.
On Thursday, Trump threatened to withdraw from the World Trade Organization and impose new tariffs on $200 billion worth of Chinese imports.
Baker Hughes released its weekly rig count on Friday. According to the data, the US rig count rose by two last week for the first time in three weeks, hitting 862, up 103 from the same time last year. In Canada, the number of oil rigs fell by two to 151.
Also on Friday, the US Energy Information Administration released data for US crude output in June showing production hit a record high of 10.674 million barrels per day (b/d).
As well, crude exports rose by nearly 200,000 b/d in June to a new record of 2.2 million b/d, more than twice the level reported in June 2017.
The discount between US WTI and Brent crude widened by nearly one-third in August and has boosted US exports, Bob Yawger, director of energy futures at Mizuho told Reuters.
OPEC increased its production in August by 220,000 b/d, according to a Reuters survey.
In a poll of oil analysts by Reuters, these experts cut their price forecasts for 2018 in August, for the first time in almost a year, mostly on growing concerns about global trade. The Reuters’ survey of 45 economists and analysts forecast Brent prices would average $72.71/barrel in 2018, down 16 cents from the $72.87 projected in July.
The analysts project oil prices in 2019 to average $72.58.
Be the first to comment