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Offbeat Crude crumbles as trade war imperils economic growth

21:35  11 july  2018
21:35  11 july  2018 Source:   bloomberg.com

Trump Wants Oil That the World Doesn't Have to Give

  Trump Wants Oil That the World Doesn't Have to Give President Donald Trump’s request for more Saudi Arabian oil put a spotlight on growing U.S. unease about rising oil prices, but a boost in Middle East production may not be enough to stem the price rallies that have hit consumers. Supply disruptions in major producers like Canada and Venezuela, coupled with strong crude demand from robust global growth, have tightened the oil market faster than many analysts expected. Early Monday, Libya’s state-run oil company said it couldn’t honor contracts to deliver oil at two ports, widening outages there, after rebels blocked exports. Prices have shot up in recent sessions in response.

Crude plunged the most in two years as the escalating U.S.-China trade war that threatens economic growth overshadowed the biggest drop in OPEC expects supplies from its rivals to increase by the most in five years in 2019, with extra oil from the U.S. alone sufficient to meet global demand growth .

China's central bank on Sunday announced a steep cut in the level of cash that banks must hold as reserves, stepping up moves to lower financing costs and spur growth amid concerns over the economic drag from an escalating trade dispute with the United States.

Crude slumped Wednesday as the escalating U.S.-China trade war that threatens economic growth overshadowed the biggest drop in American crude inventories in almost two years.

Futures fell as much as 2.1 percent in New York on Wednesday. U.S. President Donald Trump is poised to slap tariffs on almost half the products Americans import from China within weeks, and the Asian nation has pledged to retaliate. Meanwhile, surplus crude in U.S. storage tanks shrank by 12.6 million barrels last week while oil imports in the biggest American refining region fell the most since 2012.

“There’s no doubt that that uncertainty continues to weigh, not only on the crude oil markets, but really all markets,” said Brian Kessens, who helps manage $16 billion in energy assets at Tortoise. As for the storage report, “there was a little bit of noise in the data. It just depends when the ships actually hit the docks.”

Oil surges above $75 as supply outages outpace OPEC

  Oil surges above $75 as supply outages outpace OPEC Crude soared above $75 a barrel in New York for the first time since 2014 on signs global supply outages outweigh OPEC’s pledged production rise. Futures in New York jumped as much as 1.7 percent. Even as U.S. President Donald Trump -- facing sky-high retail gasoline prices ahead of midterm elections -- pushes Saudi Arabia to boost output more than it planned, outages around the world from Libya to Canada and Venezuela are keeping prices elevated. U.S. crude stockpiles, already the lowest since January, are expected to tighten further.

China's central bank on Sunday announced a steep cut in the level of cash that banks must hold as reserves, stepping up moves to lower financing costs and spur growth amid concerns over the economic drag from an escalating trade dispute with the United States.

“The trade war ’s impact on the economy is showing. There is room for further reductions and I expect another 1 percentage point cut by the year-end,” Xu added. China would also adopt a more proactive fiscal policy, including potential tax cuts on a larger scale, to safeguard economic growth , state-run

Shrinking Supplies © Bloomberg Shrinking Supplies

Oil topped $75 a barrel last week amid actual and anticipated supply disruptions from Canada to the Persian Gulf. Saudi Arabia has promised to ramp up output to help cover shortfalls from other major suppliers, though some observers questioned the kingdom’s capacity to do so.

In the U.S. Gulf Coast region that includes refining centers in Texas and Louisiana, oil imports plunged by 1.13 million barrels last week, the steepest decline since September 2012, according to the EIA.

“There’s a sense that Saudi Arabia’s going to increase their exports to the U.S.,” Kessens said. “There’s a lingering sense in the back of people’s minds that we’ll see that a little bit later this summer.”

West Texas Intermediate crude for August delivery slipped $1.18 to $72.93 a barrel at 11:05 a.m. on the New York Mercantile Exchange.

Brent for September settlement fell $1.85 to $77.01 on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $5.54 to WTI for the same month.

Prices were also under pressure as Libya’s eastern ports prepared to resume exports after control of the terminals was returned to the state oil producer.


U.S. oil boom delivers surprise for traders -- and it's costly .
<p>The world's biggest oil traders are counting hefty losses after a surprise doubling in the price discount of U.S. light crude to benchmark Brent in just a month, as surging U.S production upends the market.</p>Trading desks of oil major BP (BP.L) and merchants Vitol [VITOLV.UL], Gunvor [GGL.UL] and Trafigura [TRAFG.UL] have recorded losses in the tens of millions of dollars each as a result of the "whipsaw" move when the spread reached more than $11.50 a barrel in June, insiders familiar with their performance told Reuters.

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