Oil prices gained about 3 percent on Friday a day after recording their biggest daily drop in several years on US President Donald Trump’s vow to impose more tariffs on Chinese imports. Any resulting economic slowdown could hurt crude demand which led to most of last week’s key stock and commodities markets coming under pressure.
The global benchmark Brent slid more than 7 percent on Thursday, the steepest daily drop in more than three years. WTI crude futures for September delivery settled at $55.66 a barrel, rising $1.71, or 3.17 percent, after Thursday’s nearly 8 percent plunge, the biggest loss in more than four years. For the week, Brent lost about 2.7 percent, while WTI shed about 1.2 percent.
Trump’s announcement of an additional 10 percent levy on $300bn worth of Chinese goods undermined hopes that the two countries had reached a detente in a conflict that has weakened growth worldwide. China said it would not accept “intimidation or blackmail” and pledged countermeasures.
The escalating trade war, however, could push the US Federal Reserve toward more interest rates cuts, which would likely boost oil prices. The US Fed already cut interest rates last week after citing concerns about the global economy and muted US inflation.
US crude oil exports surged 260,000 barrels per day (bpd) in June to a monthly record of 3.16 million bpd as South Korea bought record volumes and China resumed purchases. The market also watched the weekly US oil rig count, an indicator of future production, which fell for a fifth week in a row as most producers cut spending even though majors were still pushing ahead with investments in new drilling.
Asian spot prices for liquefied natural gas (LNG) dropped to a more than three-year low this week, dragged down by cargoes trading at near record low prices. Spot prices for September delivery to Northeast Asia are estimated to be about $4.10 per million British thermal units (mmBtu), down 15 cents from the previous week.
This is the lowest the price has dropped to since April, 2016. Ample supply of LNG and still-weak demand for the super-chilled fuel has seen at least two spot trades done below $4 per mmBtu for August and September cargoes. Indian Oil Corp bought a cargo for delivery in the second half of August at $3.69 per mmBtu while CNOOC bought a cargo for delivery in early September from Vitol at $3.90 per mmBtu.
European spot LNG prices have been trading at a discount to the benchmark Dutch month-ahead gas price at levels below $3.40 per mmBtu last week. Still, traders appear to be taking advantage of the low spot prices by starting to make enquiries to book vessels in order to store or ship LNG as they bet for winter demand to boost prices. On the demand side, Turkish state energy company Botas is looking to buy three cargoes for delivery in August, September and October, while India’s GSPC sought cargo for delivery in early September.
