USA crude stockpiles unexpectedly rise in week

Jeannie Matthews
August 9, 2019

In July, OPEC and allies led by Russian Federation agreed to extend oil output cuts until March 2020 to prop up the price of crude as the global economy weakens and USA production soars.

Meanwhile, financial times also revealed that the latest drop is traceable to the escalating trade war tensions between the USA and China as oil demand outlook has been badly hit while inventory is building.

Brent crude had rebounded to $57.52 a barrel, up $1.29, or 2.29%, from its last close by 0032 GMT, while USA crude futures jumped $1.30, or 2.54%, to $52.39 a barrel.

Meanwhile, West Texas Intermediate (WTI) crude CLc1 futures were down 8 cents, or 0.15%, from their last close to $53.56 per barrel.

Besides, global crude oil investors remained fretted over the fact that a tit-for-tat tariff on each other's economy could limit crude demands from two of the world's largest crude oil buyers amid faltering factory activity, while factory orders for both China and United States had been hovering near multi-year lows. His comments failed to prevent shares in Asia from falling for an eighth straight session while London's FTSE 100 gained 0.4%. "Worries about the worsening trade war is still keeping the oil market in a stranglehold", noted Commerzbank analyst Carsen Fitsch. However, with sentiments concerning oil price weak, Saudi's oil minister has restated the kingdom's desire to maintain production below 10.0mb/d. "Assuming there is no recession, oil demand should continue to see robust growth", Commerzbank said in a note.

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Data on U.S. energy inventories showed crude oil stockpiles were up by 2.4 mln bbl in the week to Friday and output by 100,000 bbl per day.

In other news, Iran on Monday said it will no longer tolerate "maritime offences" in the Strait of Hormuz, a day after it seized a second oil tanker near the strategic waterway that it accused of smuggling fuel.

"It's not a huge move.What we're looking at is steady, reflecting concerns among traders whether or not the trade dispute development is fully priced in", said Michael McCarthy, chief market strategist at CMC Markets.

Official data from the government's Energy Information Administration (EIA) is due later on Wednesday.

The 2019 budget, which was signed by President Muhammadu Buhari in May, was based on oil production of 2.3 million bpd (including condensates) with an oil benchmark price of $60 per barrel.

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