Oil Price - April 2
Posted: Mon Apr 02, 2018 12:15 pm
On Sunday China increased tariffs by 25% on 128 different U.S. products including pork, wine, nuts and seamless steel pipes, in response to trade tariffs from the U.S. The news has increased trade tensions between the two biggest economies in the world and risen investor fear of a trade war.
The White House is expected to list Chinese imports that will be tariffed, which will include about $50 billion to $60 billion worth of technology products.
Trading volumes were thin, as European markets were still closed for the Easter holiday.
The price of oil had risen earlier in the day, supported by data last week that showed U.S. drilling activity had declined for the first time in three weeks. Energy services firm Baker Hughes on Thursday reported that the number of active U.S. rigs drilling for oil fell by seven to 797. The report eased worry that U.S. shale oil production would derail efforts by the Organization of the Petroleum Exporting Countries’ to curb supply.
OPEC has been cutting crude output by 1.8 million barrels per day (bpd) to prop up oil prices. The pact began in January 2017 and is set to expire at the end of 2018.
However, concerns of oversupply resurfaced on Monday after Russia reported an increase in production in March, to 10.97 million bpd from 10.95 million bpd in February.
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Overall stock market selloff does have an impact on oil because the same large hedge funds that hold equities also hold NYMEX oil futures contracts. The "Trade War" between China and the U.S. will have very little impact on demand for oil (IMHO), but the oil markets do react to headlines. Demand for oil based fuels and feedstock are on the rise and will continue to increase this summer, just like they do every year. U.S. inventories of oil and refined products will decline in April and the decline will accelerate in May.
The White House is expected to list Chinese imports that will be tariffed, which will include about $50 billion to $60 billion worth of technology products.
Trading volumes were thin, as European markets were still closed for the Easter holiday.
The price of oil had risen earlier in the day, supported by data last week that showed U.S. drilling activity had declined for the first time in three weeks. Energy services firm Baker Hughes on Thursday reported that the number of active U.S. rigs drilling for oil fell by seven to 797. The report eased worry that U.S. shale oil production would derail efforts by the Organization of the Petroleum Exporting Countries’ to curb supply.
OPEC has been cutting crude output by 1.8 million barrels per day (bpd) to prop up oil prices. The pact began in January 2017 and is set to expire at the end of 2018.
However, concerns of oversupply resurfaced on Monday after Russia reported an increase in production in March, to 10.97 million bpd from 10.95 million bpd in February.
----------------------------------
Overall stock market selloff does have an impact on oil because the same large hedge funds that hold equities also hold NYMEX oil futures contracts. The "Trade War" between China and the U.S. will have very little impact on demand for oil (IMHO), but the oil markets do react to headlines. Demand for oil based fuels and feedstock are on the rise and will continue to increase this summer, just like they do every year. U.S. inventories of oil and refined products will decline in April and the decline will accelerate in May.