MARKET WATCH: Oil price benchmarks rise as US delays tariffs on China

Crude oil benchmarks shot up more than $2/bbl on New York and London markets Aug. 13 after US officials announced a delay in imposing 10% tariffs on $300 billion in Chinese products until Dec. 15.

Previously, US President Donald Trump had set Sept. 1 as the effective date. US-China officials talked recently and plan to talk again within 2 weeks.

Meanwhile, analysts noted that Saudi Aramco is showing renewed interest in making an initial public offering.

“With Saudi Aramco reportedly eyeing an IPO once again, there is some support to the idea that Saudi Arabia has a heightened interest in strong crude prices and will cut its own output accordingly,” said analysts at JBC Energy in Vienna.

The Energy Information Administration forecast US oil production across key shale regions will reach 8.768 million b/d in September, an increase of 85,000 b/d from August.

Carsten Fritsch, Commerzbank analyst, said EIA’s forecast indicates “a somewhat steeper rise than in the previous months,” but that it still would be smaller than a year ago when shale oil production rose by nearly 250,000 b/d.

Fritsch also noted rising shale oil production currently is limited to the Permian basin of West Texas and eastern New Mexico. He said shale producers are concentrating on profitable wells, “which explains why production is becoming detached from the declining drilling activity.”

Energy prices

Light, sweet crude oil on the New York Mercantile Exchange for September delivery gained $2.17 to settle at $57.10/bbl on Aug. 13 while the October contract rose $2.25 to $57.10/bbl.

The NYMEX natural gas price for September increased 4¢ to a rounded $2.15/MMbtu.

Ultralow-sulfur diesel for September rose 7¢ to $1.87/gal. The NYMEX reformulated gasoline blendstock for September increased nearly 7¢ to a rounded $1.73/gal.

Brent crude for October jumped $2.73 to $61.30/bbl. The November contract rose $2.62 to settle at $60.92/bbl.

Gas oil for September gained $19 to $576/tonne on Aug. 13.

The average for the Organization of Petroleum Exporting Countries’ basket of crudes was $59.47/bbl, up $1.51.

Contact Paula Dittrick at pdittrick@endeavorb2b.com.