Oil Trades Below $42 With Tension Between U.S. and China Flaring
August 7, 2020 EnergyNow Media
(Bloomberg) Oil in New York fell as U.S. President Donald Trump’s latest attack on Chinese tech companies stoked tensions between the two countries, weighing on risky assets.Futures traded below $42 a barrel as Trump signed executive orders prohibiting U.S. residents from doing business with WeChat, TikTok or the apps’ Chinese owners. The move pushed the dollar up and sent equity markets lower. Nevertheless, oil is still set for a weekly gain after American crude inventories posted their biggest back-to-back weekly decline in a year.
Crude rallied to a five-month high earlier this week, buoyed by a weaker dollar and the drop in U.S. stockpiles. But a sustained recovery in oil consumption is looking shaky, with crude imports into China shrinking in July, and Saudi Arabia this week cutting prices to Asia less-than-expected. Increased tensions between America and China only add to the market anxiety.
“Sentiment has become more gloomy in view of the tensions between China and the U.S.,” said Eugen Weinberg, head of commodities research at Commerzbank AG. “Supportive news is falling on deaf ears today.”
West Texas Intermediate for September delivery lost 1.1% to $41.50 a barrel as of 11 a.m. London time
Brent for October settlement fell 0.8% to $44.71
OPEC+ is returning some supply to the market this month as it tapers its record output curbs, but habitual quota cheat Iraq has promised to make deeper cuts following a call with Saudi Arabia on Thursday.
Oil Minister Ihsan Abdul Jabbar pledged that Iraq will cut output by an extra 400,000 barrels a day in August and September, on top of a previous commitment to slash 850,000 barrels a day in each month.
Other oil-market news
Several Asian refiners will ask Saudi Arabia for less crude next month after the kingdom cut official selling prices by a smaller amount than the processors had been hoping for.
Stena Bulk AB, one of the world’s biggest tanker lines, plans to run some of its ships on used cooking oil to offer customers a way to offset their pollution. But a major problem might be getting enough of it.
Kuwait Petroleum Corp. said the announcement of its official selling prices for September crude sales will be postponed beyond Aug. 10 due to the Eid al-Adha holiday.
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