Crude oil benchmark prices plunged by more than $2/bbl on New York and London futures markets Aug. 8 on investors’ concerns about an escalating US-China trade dispute. Officials in Washington, DC, and Beijing have been levying tariffs on one another’s imported products.
“Sinopec is already cutting its purchases of US crude oil so even though crude oil is not on the list, it is as good as if it was,” said Olivier Jakob of Petromatrix.
Jakob believes weakening demand for US crude in China likely will pressure Brent price lower.
On Aug. 23, China said it will impose additional tariffs of 25% on $16 billion worth of US imports including fuel, steel products, vehicles, and medical equipment. China’s final list differs from a draft it published in June, which included crude oil. The number of categories of goods subject to tariffs rose to 333 from 114 in the June draft.
The Chinese tariffs are retaliation after US President Donald Trump announced tariffs on $34 billion in goods in July. China previously proposed tariffs on $60 billion of US goods after Trump raised planned tariffs on $200 billion worth of Chinese imports to 25% from 10%.
Regarding US oil supplies, the US Energy Information Administration reported US crude oil inventories, excluding the Strategic Petroleum Reserve, declined by 1.4 million bbl for the week ended Aug. 3 to 407.4 million bbl. US oil inventories are about 1% below the 5-year average for this time of year (OGJ Online, Aug. 9, 2017).
EIA’s Weekly Petroleum Status Report showed US oil production for the week ended Aug. 3 was 10.8 million b/d, down by 100,000 b/d from the week ended July 27. Production across the Lower 48 accounted for the decline.
Energy prices
The light, sweet crude contract for September delivery on the New York Mercantile Exchange dipped by $2.23 to close at $66.94/bbl on Aug. 8. The October contract declined $2.08 to settle at $66.25/bbl.
The NYMEX natural gas price for September gained 5¢ to a rounded $2.95/MMbtu. The Henry Hub cash gas price gained 4¢ to $2.97/MMbtu.
Ultralow-sulfur diesel for September decreased 5¢ to a rounded $2.12/gal. The NYMEX reformulated gasoline blendstock for September fell 8¢ to a rounded $2.02/gal.
Brent crude oil for October decreased $2.37 to $72.28/bbl on London’s International Commodity Exchange. The November contract fell $2.35 to settle at $72.64/bbl. The gas oil contract for August was $646.75/tonne, down $12.
The OPEC basket of crudes average price for Aug. 8 was $72.21/bbl, down 37¢.
Contact Paula Dittrick at [email protected].
