Quantcast

UPDATE 10-Oil soars near 5% as U.S. delays tariffs on some Chinese goods


Shutterstock photo


* China vice premier holds talks with U.S. trade officials

* U.S. crude stocks forecast 2.8 mln bbls lower - Reuterspoll

* U.S. crude oil stocks rise 3.7 mln bbls -API

* Saudi expected to prop up oil prices ahead of IPO -analyst (Adds API's U.S. crude oil inventory data)

By Scott DiSavino

NEW YORK, Aug 13 (Reuters) - Oil prices on Tuesday jumped bythe most so far this year after the United States said it woulddelay imposing a 10% tariff on certain Chinese products, easingconcerns over a global trade war that has pummelled the marketin recent months.

The Chinese products include laptops and cellphones. Thetariffs had been scheduled to start next month. urn:newsml:reuters.com:*:nL2N2590HM

"The U.S.-China trade war has caused energy demand growth totake a big hit. Any glimmer of hope revives the prospects for amore positive demand landscape," said John Kilduff, partner atenergy hedge fund Again Capital Management in New York.

Brent LCOc1 futures rose $2.73, or 4.7%, to settle at$61.30 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 gained $2.17, or 4.0%, to settle at $57.10.

That was the biggest daily percentage gain for Brent sinceDecember when the contract gained] 7.9%.

Oil prices pared some of their gains in post-settlementtrade after data from industry group the American PetroleumInstitute (API) showed U.S. crude stocks unexpectedly rose lastweek.

Crude inventories climbed 3.7 million barrels to 443million, compared with analysts' expectations for a decrease of2.8 million barrels, the API said. urn:newsml:reuters.com:*:nZXN04NF00

U.S. government data on crude stocks is due on Wednesdaymorning. EIA/S

Since falling to their lowest levels since January on Aug.7, Brent has gained 9% and WTI 12%. That bigger gain in WTI overthe past four days briefly cut Brent's premium over WTI WTCLc1-LCOc1 to its lowest since March 2018.

The Chinese Ministry of Commerce said in a statement onTuesday that U.S. and Chinese trade officials spoke on the phoneand agreed to talk again within two weeks. urn:newsml:reuters.com:*:nL4N2593DZ

"The possibility that the United States and China can getthe trade talks on track ... is raising hopes that they mightactually get some type of deal," said Phil Flynn, analyst atPrice Futures Group in Chicago.

"That's why we are seeing this big rebound in prices," Flynnsaid.

Before the U.S. announcement about the tariff delay, Brentfutures were still trading about 20% below the 2019 high theyhit in April.

In addition to the cooling of the U.S.-China trade war,analysts said prices were propped up by expectations U.S. crudeinventories declined last week and a belief Saudi Arabia willstick with production cuts.

In the United States, analysts forecasts crude stockpilesfell by 2.8 million barrels last week, according to a Reuterspoll. EIA/S

"If we get the drawdown in (U.S.) inventory that most peopleare looking for, that is going to get the market a lot tighter,"said Flynn at Price Futures.

Saudi Arabia, the de facto leader of the Organization of thePetroleum Exporting Countries (OPEC), last week said it plannedto keep its crude exports below 7 million barrels per day (bpd)in August and September to help drain global oil inventories.OPEC and its allies, known as OPEC+, have agreed to cut 1.2million bpd of production since Jan. 1. urn:newsml:reuters.com:*:nL8N25451J

The kingdom's plan to float its national oil company SaudiAramco in what could be the world's largest initial publicoffering (IPO) gives it further impetus to boost prices. urn:newsml:reuters.com:*:nL8N2582MJurn:newsml:reuters.com:*:nD5N22601E

"Saudi Arabia and its Gulf allies standing firm on theircommitment to the OPEC+ output-cut agreement has supportedprices," said Abhishek Kumar, head of analytics at InterfaxEnergy in London.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Brent futures   https://tmsnrt.rs/2M55YzY
Brent-WTI spread   https://tmsnrt.rs/2H4qI6U
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Additional reporting by Ron Bousso in London, Roslan Khasawnehin Singapore and Laila Kearney in New York; Editing byMarguerita Choy and David Goodman) ((scott.disavino@thomsonreuters.com; +1 646 223-6072; ReutersMessaging: scott.disavino.thomsonreuters.com@reuters.net))






This article appears in: Politics , Stocks , World Markets , Commodities



More from Reuters

Subscribe







See Reuters News













Research Brokers before you trade

Want to trade FX?