Crude oil futures fall 0.78% on overseas cues

Roman Schwartz
August 6, 2018

Crude oil prices were mixed ahead of the start of US trading on Friday.

On Wednesday, prices sank when the USA government reported that in the prior week, total US inventories rose 3.8 million barrels, while supplies at Cushing fell 1.3 million barrels.

United States crude inventories rose by 3.8 million barrels last week as exports declined, creating the largest increase in Gulf Coast stocks since March, the Energy Information Administration said.

Prices of the barrel of the American reference for the sweet light crude oil are grinding lower today, revisiting the mid-$68.00s in the wake of the EIA's weekly report.

Crude oil futures remained relatively stable in European morning trading, following yesterday's rally of more than $1/b, as the market held up against short-term bearish factors that continue to weigh on sentiment.

James Knightly, the chief global economist at ING, said the latest payroll figures paint something of a mixed picture, though the USA economy remains strong.

West Texas Intermediate (WTI) crude for September delivery traded at $67.85 at 3:51 Tokyo.

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Besides, higher inventories dragged CPO prices in futures trade.

Crude fell to the lowest in more than five weeks as a surprise rise in US crude inventories and increases in production from OPEC and Russian Federation has investors anxious that global supply levels are on the upswing.

The survey shows Saudi Arabia's output was below the 10.8 million barrels a day threshold that the kingdom was said to be indicating it would pump in July, suggesting demand for its oil isn't as strong as initially expected.

U.S. President Donald Trump's decision to pull out of an global nuclear deal and reimpose sanctions on Iran has angered Tehran. "This primary USA oil hub's inventory now sits at the lowest levels since 2014", he said.

"A clear definition around the macros is what the market is looking for and until we get that, it is likely to be volatile in the range", said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.

China has said it plans to impose tariffs on liquefied natural gas, raising concerns that it could also impose tariffs on oil, said John Kilduff, partner at Again Capital Management in NY.

Trump has turned up pressure on China for trade concessions by proposing a higher 25% tariff on $200 billion of Chinese imports and China has said it will retaliate. West Texas Intermediate, the US benchmark for the price of oil, was down 0.1 percent to $68.89 per barrel. Senior Iranian officials have warned the country would not easily yield to a renewed USA campaign to strangle Iran's vital oil exports. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. This article is strictly for informational purposes only.

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