Huge drop in stockpiles spurs oil prices higher

26 August, 2018, 20:50 | Author: Corey Lynch
  • Latest US crude oil sentiment data

Benchmark Brent crude oil LCOc1 was down 30 cents a barrel at $74.48 by 0825 GMT.

A weaker U.S. dollar makes oil, which is priced in dollars, less expensive to buyers in other currencies.

As the result of these sanctions, Iranian oil exports are forecast to fall by between 700,000 to 1 million barrels per day, a range consistent with the 2011 sanctions, when Iranian exports fell by 900,000 barrels per day.

Despite the logistics changes, China, the largest Iranian oil buyer, has said it won't halt purchases as requested by the U.S. India, the second biggest purchaser of Iranian crude, has also adapted to the changes, contracting NITC to carry and deliver its supplies.

At the same time, concerns about global crude supply intensified with signs that US sanctions on Iran are curbing shipments. USA light crude was 60 cents higher $68.43, heading for a gain of 3.8 percent this week.

"This week's report was bullish for crude", said Societe Generale oil analyst Michael Wittner. Saudi Arabia told Opec it cut supply in July, rather than increasing output as expected.




The strength of the greenback has an inverse relationship to the price of crude oil.

Still, the incendiary media headlines that have stoked these fears don't exactly correlate to the economic declines the trade war is expected to cause: Moody's Investor Service said, "These [overall] measures are expected to shave up to 0.3-0.5 percentage points from China's real GDP growth in 2019; for the USA trade restrictions will trim off about one quarter of a percentage point from real GDP growth to 2.3 percent in 2019".

Over the past four weeks, crude oil imports averaged 8.05 million barrels per day, 2.2 percent lower than the same four-week period previous year. For this month so far, Brent is trading at a premium of $6.73 on the West Texas Intermediate.

Giovanni Staunovo, a commodity analyst and chief investment officer at Swiss bank UBS, said in response to questions emailed from UPI that API is the main driver behind the rally this morning, though official data from the U.S. Energy Information Administration could make or break the rally. Workers at Total SA's North Sea oil and gas fields will go ahead with scheduled strikes after talks broke down.

Oil markets were steady on Friday as the unresolved trade dispute between Washington and Beijing muted activity.

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