Published: Thu, August 09, 2018
Markets | By Noel Gibbs

Oil falls as concern grows over Chinese refinery demand

Oil falls as concern grows over Chinese refinery demand

Analysts estimated that Iranian production would drop further amid the restored sanctions and drive the oil price further up.

Front-month Brent crude oil futures was down $2.52, 3.4 percent, at $72.13 a barrel by 11:51 a.m. ET (1551 GMT).

Oil was trading at $74 per barrel of Brent benchmark, while the US West Texas Intermediate stood at $69.77 on Monday.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 590,000 barrels, EIA said.

Just when you thought the renewed sanctions on Iran were already priced into the crude oil market, there are signs today that this may not be the case.

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The announcement came after the Trump administration followed through with a 25% tariff on an additional $16 billion of Chinese goods Tuesday evening.

Also, the oil markets have been squeezed by the escalating trade dispute between the United States of America and China.

The Energy Information Administration is scheduled to release the data on US crude stockpiles, at 10:30 AM ET on Wednesday. China companies too are interested to continue trading in Iranian oil and natural gas.

"Gasoline demand has been one of the main bullish stories in the oil market and if that demand is slipping off a little bit, maybe we're seeing reluctance to higher prices", says Phil Flynn of Price Futures Group.

People's Republic of China imported 83.51 per cent of the total exported quantities of Omani crude oil during July 2018, a slight drop of 0.04 per cent month-on-month.

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Prices of the barrel of the American reference for the sweet light crude oil are falling further today, breaking below the $68.00 mark per barrel.

Crude inventories USOILC=ECI fell by 1.4 million barrels in the last week, the EIA data showed, compared with analysts' expectations for a decrease of 3.3 million barrels. Rebels have cut exports by up to a million barrels per day. Gasoline inventories were seen down by 1.7 million barrels, and distillate inventories were expected to rise by 220,000 barrels.

US gasoline futures fell 3.8 percent to $2.025 per gallon.

Ehsan Khoman, head of Mena Research and Strategy at MUFG Bank, said the world's largest oil producers - Saudi Arabia, the U.S. and Russian Federation - continue to attempt to manage oil prices in-check primarily for geopolitical reasons, aiming to increase supply near-term to help lower (or at least prevent further rises in) oil prices, and their bilateral relationships among them are driving near-term oil markets.

Iran's oil flows are expected to fall in the coming months as the second round of United States sanctions, which target the oil sector, resume in early November.

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