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Oil Prices Dip Ahead of U.S.,China Tariffs

CommoditiesJul 06, 2018 12:20AM ET
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© Reuters. Oil prices were under pressure on Friday - Oil prices were under pressure on Friday as a raft of import tariffs are scheduled to be imposed later in the day.

Crude Oil WTI Futures for August delivery were trading at $72.81 a barrel at 11:57AM ET (03:57 GMT), down 0.2%. Brent Oil Futures for September delivery, traded in London, were also down 0.31% at $77.15 per barrel.  

U.S. President Donald Trump confirmed on Thursday that tariffs on $34 billion worth of Chinese goods would kick-in at 12:01AM ET (04:01 GMT) on Friday morning.

Trump told reporters that another $16 billion are expected to go into effect in two weeks, and that he is considering to impose additional tariffs on $500 billion in Chinese goods if Beijing retaliate.

Chinese officials have said earlier that it would retaliate against Trump’s tariffs on Chinese goods and threatened a 25% tariff on U.S. crude imports, which could potentially make U.S. oil uncompetitive in China, forcing its refiners to seek alternative supplies.

Also weighing on prices was a ramp up in imports led to an unexpected build in U.S. crude supplies.

Net U.S. crude imports rose by 1.4 million barrels per day (bpd), while refinery operations slipped to 97.1% of capacity from 97.5% a week earlier, the EIA said on Thursday.

Inventories of U.S. crude rose by 1.245 million barrels for the week ended June 30, confounding expectations for a draw of 5.20 million barrels, according to data from the Energy Information Administration (EIA).

Gasoline inventories – one of the products that crude is refined into – fell by 1.505 million barrels, beating expectations for a draw of 0.817 million barrels, while supplies of distillate – the class of fuels that includes diesel and heating oil – rose by 0.134 million barrels, against expectations for a draw of 0.545 million barrels.
U.S. oil output, meanwhile, remained steady at 10.9 million bpd, according to the EIA.

"We're headed for an unparalleled trade conflict between the world's largest economies," said Stephen Innes, head of trading for Asia/Pacific at brokerage OANDA.
"With so much uncertainty hanging in the balance, trading was very quiet," he added.

Oil Prices Dip Ahead of U.S.,China Tariffs

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