Published: Sat, June 08, 2019
Finance | By Loren Pratt

Oil prices extend gains, move further away from five-month lows

Oil prices extend gains, move further away from five-month lows

The American Petroleum Institute (API) on Tuesday reported an increase of 3.545 million barrels in the US crude oil inventories for the week ending May 31.

U.S. President Donald Trump, in his latest public comments about the trade war, said he would likely decide on more China tariffs at the end of June, which followed his overnight threat to put tariffs on "at least" another $300 billion worth of Chinese goods. Supply has also been limited by US sanctions on oil exports from Iran and Venezuela.

U.S. WTI settled +1.8% to $52.59/bbl and Brent futures finished +1.7% at $61.67/bbl, and both benchmarks are rallying almost 3% in post-settlement trade.

Front-month Brent crude futures, the worldwide benchmark for oil prices, were at $60.50 at 0108 GMT.

West Texas Intermediate ( WTI ) crude oil slid Thursday after slumping into a bear market the day prior, plunging by more than 20% since its late-April high.

The severe downturn in a matter of weeks comes as oil traders fret over slowing global growth that the Trump administration's unresolved trade disputes with China and Mexico have only exacerbated.

Brent crude futures were trading at $69.53 per barrel.

US sanctions limiting oil exports from Iran and Venezuela also supported prices.

"Worries about demand destruction are really driving prices lower", said Gene McGillian, vice president of market research at Tradition Energy.

"High compliance to OPEC's oil production deal and lower on-land oil inventories over the coming months should lead to supply-and-demand deficits in the second and third quarters, putting renewed upward pressure on prices", Swiss investment bank UBS said in its report.

The EIA report also showed that gasoline inventories increased by 3.21 million barrels, compared to expectations for a gain of 0.63 million barrels, while distillate stockpiles rose by 4.57 million barrels, compared to forecasts for a build of 0.50 million.

The rising dispute in the trade war between the USA and China is reflected in crude prices too. The two sides will discuss its policy at a highly anticipated meeting later this month or in early July.

Crude futures traded mostly flat throughout Thursday's session as sentiment remained weak amid new signs of a weakening global economy and ongoing concerns about growth in supply. He said the country would take a decision about output reduction in consultation with OPEC colleagues.

Opec is learning the dangers of doing deals with the Kremlin.

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