Energy analysts believe oil market volatility will continue until the build-up in U.S. crude stockpiles reverses.
U.S. crude fell to an 18-month low on Monday, only to post its best one-day performance in more than two years on Wednesday.
One catalyst for the oil market slump is Trump’s decision to allow several of Iran’s biggest customers to continue buying crude oil from the Islamic Republic despite U.S. sanctions. Anticipating strict enforcement, Saudi Arabia and several other countries hiked production before the sanctions snapped back into place last month. That pushed the market deeper into oversupply.
The U.S. government has agreed to let eight countries, including close allies South Korea and Japan, as well as India, keep buying Iranian oil after it re-imposed sanctions.
Iran’s biggest oil customers – all in Asia – had been seeking sanctions waivers to allow them to continue buying some of its oil and have argued that a total ban would spur a further rally in the price of crude.
China has begun imposing new tariffs to crude oil from the U.S
China has begun imposing new tariffs to crude oil from the U.S. In the continued escalation to Trump’s trade war, China also filed a complaint against the United States at the World Trade Organization (WTO).
West Texas Intermediate crude for the October delivery CLV19, -3.43% was down $1, or 1.8%, to reach $54.10 a barrel on the New York Mercantile Exchange. In August, front-month prices for the U.S. benchmark suffered a 5.9% monthly decline, according to Dow Jones Market Data.
Last week Trump demanded U.S manufacturing Companies move out of China.
A Failure Of OPEC+ Could Turn The U.S. Oil Boom Into Another Bust?
The prevailing conventional “wisdom” appears to be that they will take their medicine one more time, and agree to at least extend their agreement through the end of 2019, and possibly make further cuts to their export levels. One thing is certain: The U.S. industry, which has benefited greatly from the OPEC+ agreement, is holding its collective breath hoping that does happen. Because if it doesn’t, this great oil boom of the past few years could turn into another bust almost overnight. @ forbes.com
Just in case you aren’t thinking about it yet.