Oil resumes steep drop as U.S.-China trade row raises demand worries
Oil futures resumed their drop Monday, tracking losses ripping through broader financial markets as concern for a prolonged trade war and its risk to global crude demand was rekindled. Last week, the U.S. oil benchmark suffered its biggest one-day fall in more than four years and ended lower for the week after President Donald Trump moved to impose additional import tariffs on Chinese goods and China pledged retaliation on other goods. China’s currency on Monday weakened below the important level of 7 yuan to the dollar, sparking a global selloff in equities and other assets perceived as risky as investors flooded into haven assets, including Treasurys. Click here to read more from MarketWatch.
China might escort ships in Gulf under U.S. proposal – envoy
China might escort Chinese commercial vessels in Gulf waters under a U.S. proposal for a maritime coalition to secure oil shipping lanes following attacks on tankers, its envoy to the United Arab Emirates said on Tuesday. Washington is lobbying other nations to join a maritime security coalition at a time of heightened tensions with Iran, which the United States has blamed for explosive blasts on tankers near the Strait of Hormuz, a charge Tehran denies. President Donald Trump said in a June 24 tweet that China, Japan and other countries “should be protecting their own ships” in the Gulf region, where the U.S. Navy’s Fifth Fleet is based in Bahrain. Click here to read more from Reuters.
Crude Inventory Draw Unable To Boost Oil Prices
The American Petroleum Institute (API) reported a crude oil inventory draw of 3.4 million barrels for the week ending Aug 1, compared to analyst expectations of a 2.848-million barrel draw. The inventory draw this week compares to last week’s large draw of 6.024 million barrels, bringing the net inventory moves for the year into net draw territory, according to API data. A day later, the EIA confirmed an inventory drawdown of 8.5 million barrels. After today’s inventory move, the net draw for the year is 8.23 million barrels for the 32-week reporting period so far, using API data. Click here to read more from OilPrice.com.
When It Comes To Oil Prices Today, It’s China, China, China
Today’s oil market is being driven by China. More specifically, it is driven by perception of the trade dispute between China and the United States, prospects for China’s economic future and forecasts for China’s oil imports. The oil market moves today based on President Trump’s tweets about trade negotiations and China’s responses to U.S. actions. China has become a bigger issue for oil traders than any other geopolitical or economic event. Click here to read more from Forbes.