Trade Tensions Weigh on Crude Prices

Trade Tensions Weigh on Crude Prices

The direction of the crude oil market on Wednesday will be determined by the U.S. Energy Information Administration's inventories report. That wiped out earlier support for prices as Organization of Petroleum Exporting Countries output dropped to the lowest in a year in March. West Texas Intermediate crude for May delivery traded at $63.57 a barrel in electronic trade, up from its settlement of $63.51.

But BNP's Mr. Tchilinguirian said the oil market may likely "look past" any inventory data until the implications of the U.S.

Even after crude was propped up in February by rising geopolitical risks surrounding the USA and Middle East producer Iran, it's still struggling to recover to the highs of January, with concerns over a global trade war also weighing on prices. The contract rose 50c to $63.51 on Tuesday. Total volume traded on Thursday was about 23 percent below the 100-day average.

The price for Brent crude oil, the global benchmark for the price of oil, was up just 0.04 percent as of 9:16 a.m. EST to $68.05 per barrel.

The net long position in futures and options tops 600 million barrels of oil, the data shows, meaning that in the event of a sharper drop in price, sellers may find a dearth of buyers.

Oil prices have fallen around two per cent today after global stock markets were rocked by China's decision to slap retaliatory tariffs on U.S. goods.

The cuts run until the end of 2018 but Saudi Arabia has said they could be extended in some form into 2019.

An increase in Russian oil output also dented investor sentiment.

Before the rebound late on Wednesday, after the release of the Energy Information Administration (EIA) inventory data, WTI and Brent had hit two-week lows after China proposed a broad range of tariffs on USA exports, feeding fears of a trade war. Buyers initially supported the markets because the American Petroleum Institute (API) reported a surprise draw of 3.28 million barrels of USA crude oil inventories for the week-ending March 30, after analysts had anticipated a modest build in crude oil inventories of 246,000.

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