Oil prices continue to decline, despite an understanding between the US and China
14 May 09:31
Oil prices declined again on Wednesday as traders expect a possible increase in US crude stockpiles. However, they are holding close to two-week highs due to optimism after the United States and China agreed to temporarily reduce mutual duties, "Komersant Ukrainian" reports citing Reuters.
Thus, according to OilPrice.com, futures for Brent crude oil fell by 41 cents, or 0.62%, to $66.22 per barrel as of 08:34 Kyiv time. U.S. West Texas Intermediate (WTI) fell 38 cents, or 0.6%, to $63.29. At the same time, both benchmarks rose by more than 2.5% the day before.
The US and China: warming up
The world’s two largest economies agreed on Monday to suspend their trade war for at least 90 days. The United States reduced tariffs from 145% to 30%, and China cut duties on American imports from 125% to 10%.
“The economic pause between the US and China could create a scenario that could boost demand amid cautious optimism,”
– said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Analysts at Rystad Energy said in a research note that the deal “has reduced some demand pessimism” while warning against any lasting impact of tariffs, despite their reduction.
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US inventories
Nevertheless, expectations of a sharp increase in US oil inventories are tempering optimism for now, Sachdeva said.
“This sharp contrast to last week’s substantial decline signals that the demand side is still struggling with significant challenges, leaving market observers tense and wondering where the next turn will come from,”
– the expert said.
According to the American Petroleum Institute (API), which was cited by market sources on Tuesday, US crude oil inventories rose by 4.3 million barrels in the week ended May 9.
Investors are closely monitoring demand signals.
US activity in the Middle East
The market is also watching U.S. President Donald Trump’ s trip to the Persian Gulf, which began on Tuesday with his appearance at an investment forum in Riyadh. There, he announced that the US would lift longstanding sanctions against Syria and received commitments from Saudi Arabia for $600 billion in investments.
On Tuesday, the United States imposed new sanctions on about 20 companies that, according to the United States, helped the General Staff of the Iranian Armed Forces and its front company Sepehr Energy to supply Iranian oil to China.
The sanctions were imposed after the fourth round of talks between the United States and Iran in Oman to resolve disputes over Iran’s nuclear program.
Mukesh Sahdev, global head of commodity markets at Rystad Energy, said that preventing oil price spikes during the summer tourist season will be a key part of the US president’s agenda during this trip.
The United States could take advantage of lower prices to buy more Middle Eastern oil for its Strategic Petroleum Reserve, he added.
“The big unknown variable for the market is how US actions against Iran, Russia and Venezuela will disrupt or increase supply,”
– Sahdev said.
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