Oil rises 1% as dollar hits seven-week trough

Economies.com
2018-09-18 17:11PM UTC

Oil futures rose over one percent in American trade while the dollar index plumbed July 31 lows, following earlier data from the US, the world's largest energy consumer, and after remarks by several global oil officials. 

 

As of 04:34 GMT, US crude futures due in October rose 1.13% to $69.69 a barrel, while Brent November futures climbed 1.06% to $78.88 a barrel, as the dollar index traded mostly flat at 94.49, marking seven-week lows. 

 

An index tracking US housing sector steadied at 66 for the day, hours before data on housing starts and building permits. 

 

The White House announced new 10% tariffs on $200 billion worth of Chinese imports, to be increased to 25%, after the US already imposed 25% tariffs on $50 billion worth of Chinese imports, with China retaliating with tariffs on $60 billion worth of US products. 

 

President Donald Trump threatened to impose new tariffs on $267 billion worth of Chinese imports if Beijing retaliated to the latest ones. 

 

US trade secretary Wilbur Ross said China "is out of bullets" to retaliate against US tariffs, noting that the measures are intended to change Chinese behavior, with close studying to guarantee limited increases to inflation. 

 

Oil Officials Talk Cooperation 

 

OPEC General Secretary Muhammad Barkindo said producers inside and outside OPEC are seeking a long-term cooperation frame by next December, to continue supporting the market in the way they did in the past year. 

 

Barkindo asserted the strength of oil demand even as some headwinds weigh on them, adding that OPEC should work to extend the deal to cut global output in cooperation with others, mainly Russia. 

 

Otherwise, Russian energy minister Alexander Novak said the current range of $70-$80 for oil prices is only temporary, due to fears over supply shortages as the US sanctions Iranian oil exports by next November, adding that analysts expect prices to below towards $50 in the long term. 

 

On another note, Saudi oil minister Khalid Al Falih said the oil market remains in good shape despite concerns about sanctions on Tehran, and mounting US-China trade tensions. 

 

He added that Saudi Arabia is looking to diversify energy sources and invest more in nuclear and renewable energy. 

 

IEA Releases Monthly Report 

 

Last week, the International Energy Agency reported that risks for demand outlook in 2019 are still ongoing, such as weakness in emerging economies due to currency and trade issues, however the impact remains limited, with expectations prices will surpass $80 a barrel if producers didn't ramp up production to compensate drops in Iranian and Venezuelan output. 

 

The EIA expects global demand in the current quarter at 100.3 million bpd, before receding by a million bpd in 2019, while reporting that supplies reached a record 100 million bpd last month. 

 

OPEC took the lion share as usual at 32.62 million bpd, the highest in nine months despite cuts in Iranian and Venezuelan production, while US output slipped 100 thousand bpd to 10.9 million bpd. 

 

US Oil Rig Count 

 

Baker Hughes, a US oil services company, reported an increase of 7 rigs in the oil rig count to a total of 867 rigs. 

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