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Oil Set for Weekly Drop as Trade Fears Eclipse Saudi Supply Vow

Oil Set for Weekly Drop as Trade Fears Eclipse Saudi Supply Vow
(Dreamstime)

Friday, 20 July 2018 08:19 AM

Oil headed for a third weekly loss as concerns that an escalating trade clash between the U.S. and China overshadowed reassurances from Saudi Arabia that it won't flood global crude markets.

Futures pared gains in New York on Friday as President Donald Trump said on CNBC that he's "ready to go” with tariffs on $500 billion of imported Chinese goods. Crude had risen earlier after Saudi Arabia, under pressure from Trump to lower prices by pumping more, said they will keep exports steady this month and reduce them by 100,000 barrels a day in August.

"Trump is still keeping markets on tenterhooks,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.

Crude has retreated 6 percent this month as the escalating trade war between the U.S. and China rattled global financial markets. The drop has been aided by Libya restoring halted output and the U.S. signaling it may show some flexibility in sanctions on Iranian oil. That's prompted concern the extra crude promised by Saudi Arabia might not yet be needed.

West Texas Intermediate crude for August delivery, which expires Friday, was little changed at $69.54 a barrel on the New York Mercantile Exchange as of 11:45 a.m. London time. It has lost 2.1 percent this week. Total volume traded was about 21 percent below the 100-day average. The more-active September contract slipped 0.4 percent to $67.95.

The U.S. oil benchmark closed above its 50-day moving average on Thursday after slipping below that level earlier this week.

Brent for September settlement was little changed at $72.57 on the London-based ICE Futures Europe exchange, after dropping 32 cents on Thursday. The contract is down 3.7 percent this week. The global benchmark traded at a $4.60 premium to WTI for the same month.

Saudi Arabia's pledge to keep its crude exports steady from June to July, and reduce it in August, follows an agreement last month between OPEC and its partners including Russia to boost production by 1 million barrels a day. The kingdom's assurance clashes with signals it gave out shortly after last month's OPEC meeting, when people briefed on its output policy said it planned record production of 10.8 million barrels a day.

"It seems the Saudis were concerned about the abrupt shift in the market sentiment from bullish to bearish, and they wanted to draw a line in the sand around current levels,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich.

Oil-market news:

  • Oil exports from OPEC will decline to 24.38 million barrels a day in the four weeks ending Aug. 4 compared with the period that ended July 7, according to tanker-tracker Oil Movements.
  • Shell is preparing to start the Knarr oil field in Norway after strikes by workers were called off, spokeswoman Kitty Eide said. The field produced about 23,000 barrels a day of crude in April, according to the Norwegian Petroleum Directorate.
  • Gabon's National Organization of Oil Workers asked members to resume work at Total Gabon SA on Friday following a 11-day strike, according to an emailed statement.
  • Baker Hughes, the world's third-biggest oil-services provider, is expanding outside the U.S. after posting weaker-than-expected second-quarter results
  • Gasoline futures are down 2.1 percent this week to $2.0629 a gallon, heading for a third consecutive weekly drop.

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Oil headed for a third weekly loss as concerns that an escalating trade clash between the U.S. and China overshadowed reassurances from Saudi Arabia that it won't flood global crude markets.
oil, losses, trade, Saudi, supply
542
2018-19-20
Friday, 20 July 2018 08:19 AM
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