Mnuchin: US Works With China To Cut Off All Iranian Oil Imports
Jan 15 2020
Crude oil prices fell roughly 1% Monday as Middle East tensions lessened and investors focused more on lackluster seasonal demand following last week's USA report showing large fuel inventories, Kallanish Energy learns.
Brent futures for March settlement fell 78 cents to $64.20 a barrel on the ICE Futures Europe Exchange after losing 5.3% last week.
Positive signals come from expectations that United States and China will sign phase 1 of their trade deal and raise expectations that China would increase oil imports from the US.
Oil prices turned negative for the year after dropping on Monday as traders and investors focused on the possibility of oversupply in crude amid dissipating tensions that initially threatened tanker movements in the Middle East. It lifted its Brent crude price forecast by 7.1% to $64.83 for 2020.
"Oil prices are modestly rebounding, following four days of intense selling", Edward Moya, analyst at brokerage OANDA, said pointing to trade-deal optimism and fading concerns over the U.S. -Iran conflict. -China trade deal, scheduled to be signed on Wednesday, leads to increased demand growth.
China has pledged to buy more than $50 billion in energy supplies from the United States over the next two years, according to a source briefed on a trade deal.
The recent declines came as investors unwound bullish positions built after the killing of a senior Iranian general in a US air strike on January 2, which sent oil prices to a four-month high, said Harry Tchilinguirian, global oil strategist at BNP Paribas in London.
Elsewhere, Saudi Arabia's energy minister Prince Abdulaziz bin Salman said his country will work for oil market stability at a time of heightened US-Iranian tension and wants to see sustainable prices and demand growth.
The heating oil/Brent crack spread, which measures the difference between the ICE heating oil futures and ICE Brent futures, fell from over 16.4 USA dollars per barrel on Monday morning session to around 15.6 US dollars per barrel in the afternoon session.
However, Tchilinguirian, a global oil strategist said the rise in oil prices may continue for the short term bases adding that the Organization of Petroleum Exporting Countries (OPEC) and its allies should not be bothered to talk about another production cuts for the meantime.