Oil falls as US-China trade fears overshadow supply drop

by Ben Pena May 10, 2019, 2:15
Oil falls as US-China trade fears overshadow supply drop

Brent crude futures rose 49 US cents, or 0.7 per cent, to settle at $US70.37 a barrel, while US West Texas Intermediate (WTI) crude ended 72 US cents, or 1.2 per cent, higher at $US62.12.

Fuji Oil Co bought 1.5 million barrels of Oman crude, Banoco Arab Medium from Bahrain, and Upper Zakum, an Abu Dhabi grade, to load in June in a spot tender held last month, according to trade sources.

Last month, Washington said it will end Iran sanction waivers that have been granted to China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea to ensure low oil prices and avoid disruption to the global oil market.

Sources in state-run oil companies said that the Saudi Arabian oil giant has offered to increase crude oil supplies to India by 200,000 barrels a day (bpd) that would meet nearly half of the country's oil imports that was coming from Iran.

Oil imports by China unexpectedly surged in April to a record despite refinery maintenance outages and tepid domestic fuel demand, according to data from the Chinese General Administration of Customs.

Asian equities tumbled while oil prices plunged on Monday after the sudden deterioration in Sino-U.S. trade talks, which reversed apparent progress made in recent months.

Iran says it will continue to export oil in defiance of USA sanctions, part of a campaign by Washington aimed at halting Tehran's ballistic missile program and curbing its regional power.

Most analysts expect Iran's crude exports to fall to little more than 500,000 bpd, down from around one million bpd in April, as governments largely bow to US pressure.

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Heightened tensions between the world's two biggest economies have clouded the outlook for global growth, which influences oil demand expectations.

Washington has also slapped sanctions on Venezuelan oil exports.

The jump in inventories was due to a sharp decline in imports.

The U.S. dollar index, which measures the green against a trade-weighted basket of six major currencies, fell by 0.01% to 92.26.

Gold prices slipped after climbing to a more than three-week peak on Wednesday as safe haven demand eased after the White House said it had received an indication from China that Beijing wanted to make a trade deal. This means that global supply is likely to remain tight.

Charting-wise, we have seen a deterioration through trendline support, with the price finding support on the 200-day simple moving average (SMA) indicator.

Today's EIA Weekly Inventories report is expected to show a 1.1 million barrel increase.

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