Published: Wed, September 19, 2018
Finance | By Loren Pratt

Oil prices fall as US-China trade war clouds demand outlook

Oil prices fall as US-China trade war clouds demand outlook

"The impact on economic growth is slowly dripping in, which again hurts oil prices".

Data from the InterContinental Exchange showed open interest in calls that give the owner the right to buy Brent futures at $80 and $85 by next week grew by almost 45 per cent on Monday and Tuesday to an equivalent of 54 million barrels of oil.

On the New York Mercantile Exchange, West Texas Intermediate futures edged down 0.17% to $69.73 a barrel.

Top White House economic adviser Larry Kudlow said on Monday that he expected the United States would soon announce tariffs on an additional $200 billion worth of Chinese goods.

Russian Federation has said that Moscow is prepared to work with the U.S. to balance the oil market after the two countries had a meeting last week to discuss boosting oil output.

Crude oil prices peaked at a near-term high of with WTI tapping into 70.40 on Tuesday, but was unable to make a challenge of last week's high of 71.25 after U.S. oil inventories showed yet another surprise build-up in their barrel counts yesterday.

Stockpiles of distillate fuels, which include diesel and heating oil, rose by 1.5 million barrels, the API data showed, compared with expectations for a 651,000-barrel gain.


US oil futures surged almost 2 percent on Wednesday as they were bolstered by a fifth weekly crude inventory drawdown and strong domestic gasoline demand amid ongoing global supply concerns over USA sanctions on Iran that come into force in November.

OPEC and non-OPEC producers Russian Federation started withholding oil supplies in 2017 to end a global glut and prop up prices.

The focus on oil supply has been reflected in the options market this week, where investors have scooped up large amounts of bullish buy, or call, options.

USA crude stockpiles rose by 1.2 million barrels to 397.1 million in the week to September 14, the American Petroleum Institute said.

Since spring when the Trump Administration said it would impose the sanctions, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from Iran, the third-largest Organisation of Petroleum Exporting Countries (OPEC) producer, are cut.

OPEC Secretary General Mohammad Barkindo said on Tuesday that OPEC and non-OPEC countries aim to agree a framework for long-term cooperation by December, when the oil producers plan to meet in Vienna.

USA sanctions affecting Iran's petroleum sector will come into force from November 4, though many buyers have already curbed their purchases, raising questions about how the market will make up the lost supply.

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