Oil steady as easing US-China tension, US stockdraw support

08 April, 2018, 02:13 | Author: Natasha Holloway
  • WTI Crude Oil

The threat of a trade with with China has impacted the U.S. economic outlook, and generated demand worries in the oil patch.

"Equities have been the most significant external driver for the short-term price direction of oil, with the significant volatility coming (partly) from the perception of a trade war", said Dominic Chirichella, senior partner at the Energy Management Institute in NY.

At the time of writing, WTI traded at US$62.38 a barrel and Brent crude was at US$67.11.

Brent for June settlement declined 2 cents to US$68 a barrel on the London-based ICE Futures Europe exchange, after slipping 10 cents yesterday. Prices erased most of their losses on Wednesday after data showed supplies stored in USA tanks shrank the most since January, in contrast to a forecast for a 2 million-barrel gain.

Brent crude futures were down 1.81 per cent at $66.89 per barrel at the time of writing, while the USA benchmark West Texas Intermediate (WTI) was down 1.89 per cent at $62.31 per barrel.

Brent crude futures fell $1.23 on the day to $66.89 a barrel by 0918 GMT, bringing losses for the week so far to almost 5 percent.

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Oil prices rose on Thursday, holding onto a late-session rally the previous day, buoyed by the US government data showing a surprise drawdown in crude stockpiles.

Oil fell after China said it would levy tariffs on $50 billion of USA imports in retaliation against measures by President Donald Trump, fanning concerns that economic growth and fuel demand could be hurt.

After the Easter break, oil prices started the week on a weaker note as geopolitical development exacerbated operational concerns.

The API report also showed a build for gasoline for the week-ending March 30 of 1.123 million in gasoline stockpiles.

"Oil prices are profiting from the general brightening of sentiment on the markets as signs emerge that the trade dispute is easing between the United States and China", analysts at Commerzbank said in a note.

Output from the 14 members of OPEC dropped to 32.04 million barrels a day in March, the lowest since last April, according to a Bloomberg News survey.

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