Oil falls on trade fears after Trump tariff threat

Oil prices are likely to be weighed down by the trade conflict as investors are concerned about the impact of the tariffs and counter tariffs on global economic growth analysts said. — Reuters pic

The decline in overall inventories was partially due to a fall-off in stocks at the Cushing, Oklahoma, delivery hub for USA crude futures, which were down by 2.1 million barrels. That dropped overall crude inventories, not including the USA strategic reserve, to 405.2 million barrels.

"The scope of today's sell-off is unequivocally a speculative washout", said Saucer. Higher gas prices can leave USA households with less money to spend on other products.

Adding to the bearish mood were signs of a possible relaxation of US sanctions on Iranian crude exports.

The dollar index.DXY, which measures the currency against a basket of six rivals, was up 0.7 percent over the day to a high of 94.702. A further escalation of trade disputes could depress demand for oil from China and elsewhere.

In its monthly report, the Organization of the Petroleum Exporting Countries said buoyant world trade in 2017 and 2018 had helped impulse economic growth, and therefore demand for crude.

Libyan oil production has fallen to 527,000 barrels per day (bpd) from a high of 1.28 million bpd in February following port closures in late June, the NOC said on Monday. "That's while Saudi Arabia told OPEC it pumped about 10.5 million barrels of crude a day last month as the kingdom sought to cap rallying prices by ramping up output, according to people familiar with the matter", writes Bloomberg.


Washington will consider requests from some countries to be exempted from sanctions it will put into effect in November to prevent Iran from exporting oil, U.S. Secretary of State Mike Pompeo said on Tuesday.

China was the world's biggest oil importer past year, followed by the US.

Prospects of a relaxation of USA sanctions on crude exports from Iran, the world's fifth-biggest oil producer, has helped push up oil prices in recent weeks, with both crude contracts trading near 3-1/2-year highs until Wednesday.

Analysts polled by Reuters forecast on average that crude stocks fell by 4.5 million barrels, ahead of government data at 10:30 a.m. EDT on Wednesday.

Due to higher US oil production, however, higher prices are not necessarily a net loss for the USA economy.

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