Published: Чт, Июля 05, 2018
Business | By Kate Woods

Oil prices climb on tightening USA market

Oil prices climb on tightening USA market

A survey of analyst expectations from S&P Global Platts revealed expectations of a drain on USA crude oil inventories of 4.5 million barrels last week, adding support to the concerns about a market deficit. Long story short, he's anxious that higher prices at the pump will eat away at the savings he imagines are accruing to USA consumers as a result of the tax cuts.

Oil prices rose on Tuesday after Libya declared force majeure on some of its crude exports, while the loss of Canadian supplies helped lifted USA crude to 3-1/2-year highs.

Benchmark Brent crude oil was up 50 cents at US$77.80.

The price of West Texas Intermediate crude oil is now around $74 a barrel.

Prices could weaken over the short-term because technically, the markets may be overvalued.

Iranian President Hassan Rouhani appeared on Tuesday to threaten to disrupt oil shipments from neighboring states if Washington continued to press all countries to stop buying Iranian oil.

If Gulf countries do not increase oil outputs to cover the shortfall left by Iran, America may not defend them, US President Donald Trump has warned in a tweet.

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"Your tweets have increased the prices by at least $10. These are, however, no normal times as supply outages are nearly weekly occurrences", PVM Oil Associates strategist Tamas Varga said.

United States crude inventories fell by 4.5 million barrels to 416.9 million barrels in the week to June 29, the American Petroleum Institute (API) said on Tuesday. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 2.6 million barrels, API said.

Traders said the decline in fuel inventories was largely down to the outage at Syncrude Canada's 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta, which is expected to last through July.

Trading activity is expected to be limited on Wednesday by the US Independence Day holiday.

Barely a week after OPEC's decision to ramp up oil supplies, Trump surprised the world on Saturday by announcing a new side agreement with the Saudis to compensate for supply shortages from two crisis-hit producers, Iran and Venezuela.

"When there is consolidation in the market, there is also the expectation of an eventual price breakout in either direction. So in the options market, the volatility gets bid up", he told the Reuters Global Oil Forum.

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