Oil Price Soars to $60 on Easing US, China Trade Tensions

Crude oil prices rose by over three per cent yesterday, with Brent hitting the $60 mark, after the United States announced a delay in imposing a 10 per cent tariff on certain Chinese products, easing concerns over a global trade war that has pummelled the market in recent months.

The targeted Chinese products include laptops and cell phones and the tariffs have been scheduled to start next month.

Following this development, the price of the global benchmark crude, Brent, was up $2.08, or 3.6 per cent, to $60.65 per barrel, while US West Texas Intermediate crude was up $1.86, or 3.4 per cent, to $56.79.

Prior to yesterday’s gain, Brent was trading down more than 20 per cent since hitting its 2019 high in April.

Also earlier yesterday, the premium of Brent over fell to its lowest since March 2018.

The US dollar index jumped and bond yields also turned higher after the US Trade representative said the US President Donald Trump’s administration would delay imposing the tariffs on certain Chinese products.

Reuters reported that oil prices see-sawed earlier in the day, caught between demand worries and rising global supplies and expectations for deeper production cuts from leading producers.

US oil output from seven major shale formations was expected to rise by 85,000 barrels per day (bpd) in September to a record 8.77 million bpd, the Energy Information Administration forecast in a report.

Saudi Arabia, the de facto leader of the Organisation of the Petroleum Exporting Countries (OPEC), last week said it planned to keep its crude exports below seven million bpd in August and September to help to drain global oil inventories.

The kingdom’s plan to float its national oil company, Saudi Aramco, in what could be the world’s largest initial public offering (IPO) gives it further impetus to boost prices.

OPEC and its allies, known as OPEC+, have agreed to cut 1.2 million bpd of production since January 1.

In the United States, analysts forecast crude stockpiles dropped by 2.8 million barrels last week, according to a Reuters poll.

The American Petroleum Institute (API), an industry group, released its inventory report yesterday, followed by US government data today.

Meanwhile, Reuters reported that some promptloading Nigerian crude cleared yesterday but there was still an overhang of at least 25 cargoes of Nigerian grades due to the plentiful availability of light, sweet crude in the Atlantic Basin.

Nigerian September loading Brass River was on offer at dated Brent plus $2; Usan at dated Brent plus 70 cents; Qua Iboe at dated Brent plus $2.245-$2.65 a barrel and Forcados at dated Brent plus $2.25 for early September and close to plus $2.70 for end-month cargoes.

Traders were quoted as saying that Glencore sold a cargo of end-August loading Qua Iboe into the Mediterranean.

One said the cargo was split with some of the oil going to Italy.