Opec confident China-US dispute won't hit demand

Roman Schwartz
August 15, 2018

Oil's losses were capped by concerns over lower global crude supply from top producers.

Brent crude LCOc1 dipped 15 cents to settle at $72.46 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 16 cents to close at $67.04 a barrel.

That came despite the Saudi move coming in anticipation of a slowdown in oil demand.

Oil prices edged lower on Tuesday, weighed down by a strengthening US dollar as investors remained concerned about the financial crisis in Turkey.

"Consequently, worries over contagion are apt to increase in the process of reducing risk appetite and renewing downside pressures on oil pricing".

"If 1 million bpd or more of Iranian exports go AWOL, the current fragile supply-demand balance will be upended, potentially sending oil prices above the May peak".

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On Friday, Bloomberg also reported that the Islamic Republic's state-run National Iranian Oil Company was planing to reduce official prices for September sales to Asia to their lowest level in 14 years.

Opec has revised down its forecast oil demand growth by 20,000 barrels a day from last month's report, to 1.64 million barrels a day this year. Riyadh told Washington in June it would increase output in attempt to make up for Iranian barrels taken off the market by USA sanctions. Iran is OPEC's third-largest oil producer - behind Saudi Arabia and Iraq - and now pumps around 3.65 million barrels per day, according to Reuters data.

The data released by the American Petroleum Institute on Tuesday showed that crude inventories rose by 3.7 million barrels in the week to August 10 to 410.8 million, compared with analysts' expectations for a decrease of 2.5 million barrels. The data is due to be released at 4:30 p.m. EDT (2030 GMT).

It also said that trade friction between the United States and China was unlikely to have much impact on global oil demand growth, unless the rifts spread beyond those two nations.

Economists, analysts, and investment banks haven't fundamentally altered their assumptions for global economic growth and oil demand growth, but they all warn that trade disputes are adding yet another-quite bearish-wild card to watch for in oil price trends.

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