geopolitics

Oil prices slid about 3 percent last Wednesday as the trade dispute between the US and China escalated and after Chinese import data showed a slowdown in energy demand.

Oil prices fell last week mostly on concerns that the looming US-China trade war would stifle demand. There was a short-lived rally on Thursday after the stocks report showed a 3.8 million barrel increase in total crude stocks mostly due to lower exports, but a 1.1 million drop in the inventory at Cushing, Okla.

Oil prices climbed steadily through Thursday last week, supported by easing US-EU trade tensions and a temporary shutdown by the Saudis of a critical crude oil shipping lane. 

The $3 drop in US oil prices last Monday was a signal that the forces moving the oil market are changing. Last year, the main forces pushing the oil markets higher were the agreement by OPEC and its partners to lower production and the growth of global demand.

Oil prices dropped suddenly last Wednesday on the news that yet another dispute in Libya had been settled so that the traditional Libyan National Oil company was back in business exporting oil from its major terminals.

Oil prices traded in a narrow range last week, between $73-$74 a barrel in New York, and $77-78 in London. A surprise increase in the US crude stocks balanced off the uncertainties of the US-China trade war that began on Friday.

In the two weeks since the OPEC+ coalition decided to increase oil production by an undefined amount, oil prices have risen steadily on fears that there will be oil shortages and higher prices in the coming months. 

Oil prices, which have been falling since mid-May, fell more than $2 on Friday to settle at $65.06 in the US and $73.44 in London.  For now, the chief concern is that the OPEC + coalition will raise or lift the production cap this coming Friday…

Oil futures traded in a narrow range last week, at circa $65 a barrel in New York, and $76 in London. The standoff between higher and lower oil prices continues apace.

In a short trading week, oil prices closed mixed with London futures holding steady but New York declining on higher US oil output.  US oil prices continue to fall well behind world prices, as booming shale oil production deals with pipeline constraints, leading to the biggest discount to North Sea Brent in three years.

The price spike continued through last Monday and then collapsed as word spread that Russia and the Saudis were considering phasing out the 1.8 million barrel production freeze that has been in effect for nearly 18 months. From Tuesday on it was all downhill.

Brent crude traded briefly at $80.18 a barrel on Thursday before slipping back to close the week at $78.51. This was the highest that London oil futures have traded since November 2014.  New York futures closed the week at $71.28 which is more than $7 a barrel lower than London giving another push to US crude exports.