Economy

Oil falls on slowing Chinese demand, U.S.-China trade spat

Oil falls on slowing Chinese demand, U.S.-China trade spat”

Oil futures rose Monday after OPEC sources told Reuters Saudi crude production unexpectedly fell in July, raising concerns about global oil supplies as the usa prepares to reinstate sanctions against major exporter Iran.

Brent crude for October delivery increased by 1.03 percent and steeled at 75.55 dollars per barrel on ICE Futures Europe.

Washington wants as many countries as possible to cut imports of Iranian oil to zero, a senior US administration official said in a telephone press briefing.

Saudi Arabia pumped around 10.29 million barrels per day (bpd) of crude in July, two sources at the Organization of the Petroleum Exporting Countries said on Friday, down about 200,000 bpd from June.

The heightened fear of a looming supply shock prompted Amrita Sen, chief oil analyst at Energy Aspects, to tell CNBC, "As we go more towards (the fourth quarter) ... that's when we really see the risk of prices going well into the $80s and potentially even into the $90s, but very critical is how much Iranian production we lose". On November 5th, the United States will resume sanctions against Iran's energy-related financial transactions. In April, vessels belonging to the National Iranian Tanker Co. were hauling a little under half of country's crude and condensate exports.

European officials have said their governments are considering opening accounts for Iran at their national banks, which could receive oil payments. However, Russia, the United States and the Saudi's are still producing 10 million to 11 million bpd of crude.

Jameel Ahmad, global head of currency strategy and market research at FXTM, said the escalation "is just reminding investors that their trade war concerns are going nowhere anytime soon".

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $69.15 per barrel, down 2 cents. "The reports that Saudi Arabia's production actually dropped in July continue to provide support for the market".

EIA also reported on Wednesday that USA oil production declined to 10.9 million barrels per day during the week ending July 27, dropping from its record high level of 11 million barrels per day.

"Even before their implementation, these proposed (Chinese) tariffs are starting to have an impact, with Chinese imports of USA crude falling by 70 percent from April to July", Goldman Sachs said in a note on Wednesday. Crude inventories USOILC=ECI fell by 1.4 million barrels in the last week, the EIA data showed, compared with analysts' expectations for a decrease of 3.3 million barrels.

Market participants will look for signals on USA inventory levels from a preliminary report due for release by the American Petroleum Institute later Tuesday. China has proposed to impose retaliatory tariffs on $60 billion worth of USA goods, including Liquefied Natural Gas (LNG), fueling speculation that it could also impose tariffs on oil.

This is not about bombarding the market with oil and pushing the price into the $50s, it is about preparing the market and easing the transition, he said.



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