Oil falls near 2pc as US-China trade war intensifies

Daniel Fowler
May 13, 2019

U.S. President Donald Trump has said he had called Saudi Arabia and OPEC and told them to lower oil prices, but he did not say whom he spoke to or when the conversations took place.

Brent for July settlement fell 8 cents, or 0.1 per cent, to US$70.31 a barrel on the London-based ICE Futures Europe exchange after closing little changed on Thursday.

U.S. West Texas Intermediate (WTI) crude futures settled down 42 cents at $61.70 per barrel. Brent is heading for its second weekly loss, down 0.6%.

The U.S. tariffs on $200 billion of Chinese goods would rise to 25 percent without a deal on Friday.

Talks were to continue on Friday.

Two of the sources said Sinopec and CNPC have skipped bookings for cargoes loading in May as the companies were anxious that taking oil from Iran could invoke USA sanctions and cut them out of the global financial system.

They later resumed bookings after the USA granted waivers to China and other seven global clients of Iranian oil, and purchased additional cargoes to make up the delayed shipments, according to the third source and trade flow data.

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Still, prices were pressured by the trade war between the world's two largest economies.

The July Brent crude contract was trading at almost US$1 a barrel above the August contract in a market structure known as backwardation.

The United States reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and six world powers past year, although it allowed Tehran's biggest buyers to continuing buying some crude oil via waivers for another six months.

Before that, prices rallied as Washington tightened United States sanctions on Iran with the aim of reducing its oil exports to zero.

This shows how Riyadh is reluctant to boost oil supply too quickly and risk a price crash and a build-up in inventories, despite pressure from Washington to reduce oil prices.

US crude oil production is expected to rise by 1.49 million barrels per day (bpd) in 2019 to average 12.45 million bpd, the US Energy Information Administration (EIA) said on Tuesday, up from its previous forecast for a rise of 1.43 million bpd.

The Organisation of Petroleum Exporting Countries, OPEC's April supply dropped to 30.23 million barrels per day (bpd) showing a four-year low.

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