Crude Oil Possibly Setting Up For A Big Downside Move

Crude Oil Possibly Setting Up For A Big Downside Move

On Friday, western media reported that South Korea will not lift any Iranian crude and condensate in July, halting all shipments for the first time in six years amid USA pressure to cut all imports of Iranian oil from November.

If Beijing also imposes tariffs on United States crude, it could put downward pressure on the price of benchmark U.S. crude, the West Texas Intermediate, and may weaken its spread to Brent oil, the global market standard.

China says it will retaliate, and U.S. President Trump said on Thursday he may ultimately impose tariffs on more than a half-trillion dollars worth of Chinese goods.

However, crude oil is listed as a USA product that will receive an import tariff at an unspecified later date.

On Thursday, the U.S. Energy Administration (EIA) announced that U.S. crude inventories had risen 1.2 million barrels in the week to June 29, to 417.88 million barrels.

"Because the oil market is already in tight supply due to the numerous outages, this would drive global prices (Brent) further up", Commerzbank said, in a note, Reuters reported.

The inventories at Cushing, which is the delivery point of USA crude futures, plummeted to their lowest in three and a half years, according to the data that was shown on Thursday.

Looming over the oil markets is the trade dispute between the USA and China, the world's two biggest economies.

The outage at the 360,000 barrels per day (bpd) Syncrude facility in Canada has contributed to a sharp reduction in the discount for US crude versus Brent crude over the past month.

Wilshere leaves Arsenal for London rival West Ham
The London club are also keen on the Borussia Dortmund and Ukraine forward, Andriy Yarmolenko, with a fee of around £18m mooted. In an interview, Wilshere claims his entire family were Hammers' fans and he had one specific player on the back of his shirt.

American oil producers may find a new friend in India as they brace for a trade war with China that could curb USA shipments.

South Korea is the world's fifth-largest crude oil importer, and diversity of supplies is vital.

Baker Hughes reported an increase in the number of active oil rigs in the United States today.

Tariffs would make United States oil uncompetitive in China.

Energy consultancy FGE on Friday issued a warning of looming supply shortages due to USA sanctions against Iran, and because of disruptions elsewhere.

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 U.S. curbs on buying Iranian oil. South Korea, a major buyer of Iranian oil and condensate, will not lift any Iranian oil in July for the first time since August 2012, three sources familiar with the matter said on Friday.

An increase in supply will reverse some of the output cuts that OPEC and other major producers put in place in early 2017 to end several years of supply glut.

Saudi Arabia told Opec that it increased production by nearly 500,000 barrels per day last month.

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