Economy

Oil's Rally Stuck Near $59 as U.S.-China Trade Jitters Return

Oil's Rally Stuck Near $59 as U.S.-China Trade Jitters Return

Oil edged lower on Thursday but held near 2019 highs, supported by a sharp tightening of global stocks, OPEC production cuts and USA sanctions on key producers Iran and Venezuela.

While the U.S. Administration says that it continues to pursue zero Iranian oil exports, analysts expect Washington to extend waivers to at least a few of the now exempted buyers, with reduced volumes allowed under the new waivers, as the Administration wouldn't want to push oil prices too high.

According to EIA's data, USA crude oil refinery inputs averaged 16.2 million barrels per day last week, 178,000 barrels per day more than the previous week's average.

WTI and Brent prices reached their highest points this year on Wednesday, closing at $60.23 per barrel, and $68.27 per barrel.

Prices of the barrel of the West Texas Intermediate are navigating the lower bound of the daily range, easing some ground for the first time after three consecutive daily advances and coming down after testing levels just above the $60.00 mark, area last visited in mid-November 2018.

"On Thursday, both WTI and Brent crude oil hit new highs for the year, but both showed little follow-through to the upside when they took out the previous day's high", Hyerczyk added.

However, global trade tensions remain a worry.

"However, we don't think that OPEC will increase its production in anticipation of lower Iranian oil exports, but only if there are clear signs of further Iran and/or Venezuelan export cuts in the market", Vakhshouri said. Nationwide crude inventories tumbled by 9.59 million barrels last week, according to data from the Energy Information Administration.

More news: North Korea Quits South Korea Liaison Office

Shipments have dropped from at least 2.5 million bpd in April 2018, the month before U.S. President Donald Trump withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions, fueling a year of economic crisis in the country.

While tracking Iran's oil exports has become an increasingly hard task after the USA sanctions returned in early November, some of the key Iranian oil customers that received US waivers resumed Iranian oil purchases in 2019 or increased imports to their respective ceiling allowed under the waivers, after an initial "wait-and-see mode" for November and December purchases amid uncertainties who is getting waivers. The draw brought stockpiles to their lowest since January.

Meanwhile, China and the US will resume trade talks next week following conflicting reports over the progress of negotiations in recent days.

During Thursday's trading sessions on the commodity exchanges of London and NY, the crude oil prices receded, Kazinform correspondent reports.

USA crude oil stockpiles last week fell by almost 10 million barrels, the most since July, boosted by strong export and refining demand, the Energy Information Administration said on Wednesday.

USA crude oil supplies dropped more than expected yesterday.

The U.S. -China trade dispute continues to weigh on demand also due to its impact on the global economy.


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