TAIFEX adds Brent Crude Oil Futures to offering

Andrew Cummings
July 9, 2018

Refiners in China were the top buyers of American crude oil in May, and have been regular importers since the US revived domestic output and exports in recent years.

Oil was mixed on Friday as a Canadian supply outage supported US crude prices, while an increase in production from OPEC's biggest exporter Saudi Arabia pushed Brent lower.

The rally appears to be a "short covering situation - we were down nearly 2% yesterday", said Yawger, Reuters reported.

But Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries have little spare capacity and oil demand has risen faster than supply over the past year.

USA crude inventories rose by 1.2 million barrels in the week ending June 29, the Energy Information Administration said on Thursday, much higher than analysts' expectations for a decrease of 3.5 million barrels.

Oil benchmarks went in different directions again on Friday afternoon, with WTI trading up and Brent trading down as fears of the escalating U.S. Standing in the line of fire are US crude supplies to China, which have surged from virtually zero before 2017 to 400,000 barrels per day (bpd) in July.


American crude shipments to China are around 400,000 barrels per day (bpd), worth $1 billion a month at current prices.

The United States says it wants to reduce oil exports from Iran, the world's fifth biggest oil producer, to zero by November, in a move that will oblige other big producers such as Saudi Arabia to pump more.

"The Chinese have to do the tit-for-tat, they have to retaliate", said John Driscoll, director of consultancy JTD Energy, adding that cutting USA crude imports was a means "of retaliating (against) the U.S.in a very substantial way".

Tariffs would make USA oil uncompetitive in China.

US markets also garnered support from a government employment report showing better-than-expected growth in jobs. In May, Indian refiners imported 4.7 million barrels or about nine times more than April and the most of any month based on US government data going back to 2015.

The U.S. rig count, an early indicator of future output, is much higher than a year ago as energy companies have ramped up production in response to higher prices.


Concerns that oil prices will be weighed down by a trade conflict between the United States and China have faded to some extent, analysts said.

The South Korean embassy in Tehran on Saturday denied that the country has stopped oil imports from Iran, IRAN Daily reported.

The major story remains the looming supply shortages due to USA sanctions against Iran.

South Korea is reported to have stopped importing Iran's oil and condensate in what appears to be a temporary halt until the country obtains an exemption from United States curbs on buying Iranian oil.

"At the same time, Venezuela... will lose another 400,000 bpd by year-end with production going to below 1 million bpd", FGE said, adding that another 300,000 bpd of Libyan capacity was disrupted.

Saudi Arabia told the Organization of the Petroleum Exporting Countries that it increased production by nearly 500,000 barrels per day last month.


Other reports by iNewsToday

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