Oil held gains near $69 a barrel as falling American stockpiles added to speculation of tightening supplies, offsetting concerns over escalating trade tensions between China and the US.
Futures were little changed in New York, following a one per cent advance over the previous two sessions. Nationwide crude inventories as well as supplies stored in the key hub of Cushing, Oklahoma, slipped last week, the American Petroleum Institute was said to report. Meanwhile, the US said Tuesday it will begin imposing tariffs on an additional $16 billion in Chinese imports in two weeks.
Crude has hovered within a $3 range so far this month, with a measure of oil-market volatility falling to the lowest level since May. A trade spat between the US and China has kept oil from rebounding from a seven per cent plunge last month. At the same time, President Donald Trump restored some American sanctions on Iran and has reaffirmed plans to impose tougher penalties on the nation’s oil sales in November. Australia & New Zealand Bank Group Ltd. said OPEC’s output increase may not be enough to offset any losses of Iranian supplies.
“Oil has barely made its way above $69 and is struggling to gain further, trading in a tight range, as both the upward and downward elements co-exist, pulling prices from opposite directions,” Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone from Seoul. “While concerns of a supply disruption from Iran due to the resumption of US sanctions is buoying prices, the US-China trade row is keeping oil from rising higher.”
West Texas Intermediate crude for September delivery traded at $69.11 a barrel on the New York Mercantile Exchange, down six cents, at 7:55 a.m. in London. The contract climbed 16 cents to $69.17 on Tuesday. Total volume traded was about 48 per cent below the 100-day average.
Brent for October settlement traded at $74.53 a barrel on the London-based ICE Futures Europe exchange, down 12 cents. The contract rose 90 cents to close at $74.65 on Tuesday. The global benchmark crude traded at a $6.22 premium to WTI for the same month.
Futures for September delivery lost 2.9 per cent to CNY 521.9 a barrel on the Shanghai International Energy Exchange. The contract surged 3.6 per cent on Tuesday after rising as much as their daily limit to a record.
US crude inventories fell 6.02 million barrels last week, the API was said to report. That’s more than double the three-million-barrel decline predicted in a Bloomberg survey before Energy Information Administration data. API also showed supplies stored at Cushing dropped by 576,000 barrels. If it’s confirmed by the EIA data, it would be the twelfth straight week of losses.
In America, customs will begin collecting duties on 279 product lines of Chinese goods as of 23 August, the US Trade Representative’s Office said Tuesday. China has vowed to strike back again, dollar-for-dollar, on the $16 billion tranche. This will be the second time the US slaps duties on Chinese products in about the past month, despite complaints by local companies that such moves will raise business costs and eventually consumer prices.
In Iran, America’s first round of sanctions hit on 7 August and a second, tougher set targeting oil sales, will take effect on 5 November. Washington’s reinstatement of sanctions is already isolating the Gulf nation’s economy. German carmaker Daimler AG froze a plan to make Mercedes Benz trucks in Iran, while Total SA said it couldn’t risk investing in Iran because of its large US operations.