Published: Mon, August 06, 2018
Business | By Pearl Harrison

Oil up; traders cite industry report of crude build at Cushing

Oil up; traders cite industry report of crude build at Cushing

Crude oil costs experienced their worst monthly decline in over two years in July as a multi-year high in barrel prices broke away amidst plans by OPEC and Russian Federation to boost production limits.

The FOMC interlude was even less of an event than expected but that belies some of the headline risk creeping back into play, as the market has been waiting for a Whitehouse press release on China tariffs which has left investors to speculate if this will confirm the overnight chatter the USA is proceeding with Dollars 16 bln in tariffs. Thursday's data suggests last week's increase might have been an anomaly, traders said.

The U.S. Energy Information Administration (EIA) on Wednesday reported a large build in crude oil inventories and a production decline in the week ending July 27.

US crude inventories rose 3.8 million barrels last week, according to data from the Energy Information Administration. He also noted US monthly production figures fell in May.

US West Texas Intermediate (WTI) crude futures were at $68.70 a barrel at 8.47am GMT, down 26c from their last settlement.

Futures reversed course after trading lower on concerns about oversupply early in the session.

The Organisation of Petroleum Exporting Countries has said that crude oil production has gone up in July as Saudi Arabia pumped more volumes into the global market.


The weekly estimates for May all point to more than 10.7 million bpd of crude oil production, but the more accurate-albeit lagged-data, based on survey of producers, shows that USA oil output had trailed projections by around 300,000 bpd.

"Oil is holding up reasonably well. Yesterday you had a strong rebound supported by Cushing but there's not a lot else that is driving prices higher so we are seeing a bit of a correction", Olivier Jakob at Petromatrix consultancy said.

"At the moment, there is a mismatch in timing, where there is increasing OPEC supply and yet we're not seeing a significant reduction in Iranian supply", Patterson said.

US officials told Reuters on Wednesday that they believe Iran is preparing to carry out a major exercise in the Gulf, apparently moving up the timing due to heightened tensions.

Worries about the possible loss of Iranian supply are being somewhat offset by concerns that global trade tensions could slow economic growth and crimp energy demand.

U.S. President Donald Trump has sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports. After Trump called for a 15 percent increase in tariffs on Chinese goods earlier this week, Beijing on Friday announced it was targeting $60 billion worth of US goods in response.

Like this: