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Showing posts with label Commodities. Show all posts
Showing posts with label Commodities. Show all posts
July 19, 2018

Oil prices mixed as producers adding more oil while U.S. gasoline stocks drop

Oil prices mixed as producers adding more oil while U.S. gasoline stocks drop
TOKYO (Reuters) - Oil prices were mixed on Thursday as the market struggled to digest signs of strong gasoline demand in the United States, the world's biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.

TOKYO (Reuters) - Oil prices were mixed on Thursday as the market struggled to digest signs of strong gasoline demand in the United States, the world's biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.

Brent crude futures fell 11 cents, or 0.2 percent, to $72.79 a barrel at 0401 GMT. West Texas Intermediate (WTI) crude futures climbed 6 cents, or 0.1 percent, to $68.82.

Both benchmarks rose by 1 percent on Wednesday after inventory data from the U.S. Energy Information Administration reported on Wednesday U.S. gasoline stockpiles fell along with supplies of distillate fuels. Motor fuel demand also rose from the week before and was up from a year earlier.

However, the EIA also reported U.S. oil production reached a record 11 million barrels per day (bpd). The United States has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling.

Also, a meeting of members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer monitoring their supply pact reported on Wednesday that compliance with the agreement has declined, meaning more oil is available to the market.

The bullish tone sparked by the gasoline data is unlikely to last, said Stephen Innes, head of trading APAC at brokerage OANDA.

"President Trump is doing everything in his power to lower gasoline prices," he said.

"With Russia quick to offer the President a supply olive branch and Saudi Arabia mainly in his back pocket when it comes to increasing their supply, its challenging to see (the) gasoline numbers turning the bearish market's tide," he said.

Gasoline inventories fell by 3.2 million barrels last week, while distillate stockpiles, which include diesel and heating oil, dropped by 371,000 barrels, the EIA said on Wednesday.

A Reuters poll taken before the data release had forecast that gasoline stocks would be unchanged and distillate stockpiles would show a build of around 900,000 barrels.

A sharp jump in crude oil inventories in the United States also added to the bearish tone in the market.

U.S. crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels.

Oil markets have fallen over the last week as Saudi Arabia and other members OPEC member and Russia have increased production and as some supply disruptions have eased.

OPEC and non-OPEC's compliance with oil output curbs has declined to around 120 percent in June from 147 percent in May, two sources familiar with the matter told Reuters on Wednesday.
July 18, 2018

Oil prices drop amid surprise jump in U.S. stockpiles

Oil prices drop amid surprise jump in U.S. stockpiles
© Reuters. Oil tanker unloads crude oil at a crude oil terminal in Zhoushan

By Aaron Sheldrick

TOKYO (Reuters) - Oil prices dropped on Wednesday after an industry group reported that U.S. crude inventories rose last week, defying analyst expectations for a significant reduction.

Brent futures were down 31 cents, or 0.4 percent, at $71.85 a barrel by 0240 GMT. They rose 32 cents to $72.16 a barrel on Tuesday, after earlier touching a three-month low.

U.S. West Texas Intermediate crude was down 36 cents, or 0.5 percent, at $67.72. It settled up 2 cents at $68.08 a barrel the session before, coming off a nearly one-month low.

The benchmarks had steadied after big declines on Monday and last week as supply disruptions in Venezuela came to the fore and as analysts had been forecasting a decline of 3.6 million barrels in U.S. inventories for the week through July 13.

But the specter of oversupply quickly returned, with a rise of more than 600,000 barrels in U.S. crude stockpiles, reported by the American Petroleum Institute late on Tuesday. [API/S]

Official numbers from the U.S. Department of Energy's Energy Information Administration are due at 10:30 a.m. EDT on Wednesday.

On the demand-side, intensifying risks over trade tensions between the United States and China could drag on the global economic outlook, BMI Research said.

"Despite U.S.-China trade tensions, the economic outlook is broadly positive, but a number of headwinds are emerging, not least a stronger dollar, rising inflationary pressures and tightening liquidity," BMI said.

"Slowing trade growth will weigh on physical demand for oil, with the shipping, road and air freight sectors an important pillar of demand globally," BMI said.

One U.S. central banker added her voice late on Tuesday to those sounding caution on trade.

Kansas City Federal Reserve Bank President Esther George said that uncertainty over U.S. trade policy could slow the economy, even if the recently imposed tariffs in and of themselves are too small to have a big impact.

George called trade policy a "significant" downside risk to her outlook for economic growth, even as tax cuts and other fiscal policy is an upside risk.
July 17, 2018

Trade war puts the hoof into U.S. pig part exports to China

Trade war puts the hoof into U.S. pig part exports to China
© Reuters. Trade war puts the hoof into U.S. pig part exports to China

By Tom Polansek

CHICAGO (Reuters) - Before the U.S.-China trade war, American pig processors exported nine out of every 10 pigs' feet and heads they shipped overseas to China and Hong Kong - for prices higher than they would fetch anywhere else.

Those parts and others that most Americans won't eat - hearts, tongues, stomachs, entrails - have a special place in Chinese culinary culture and, consequently, in the profit margins of U.S. pork exporters.

"You often hear that the products are what keep the plants running," said Erin Borror, economist for U.S. Meat Export Federation, a trade group.

The pipeline for these profitable pig parts, known collectively as offal, is closing fast after China slapped two tariffs on U.S. pork totaling 50 percent.

That's forcing U.S. processors to sell an increasing amount of such parts for pennies to be rendered into food for pets and livestock.

U.S. shipments of byproducts affected by the duties fell by about a third in April and May combined, after China imposed the first 25 percent tariff on American pork in April, according to the latest data from the U.S. Department of Agriculture.

On July 6, Beijing implemented an additional 25 percent duty as the world's two largest economies slapped tariffs on $34 billion worth of each others' goods.

U.S. President Donald Trump has said the U.S. tariffs - which have provoked equivalent Chinese retaliation - aim to close the $335 billion annual U.S. trade deficit with China.

The USDA declined to comment on the drop in offal exports.

Exporting pig offal to China has been a money-maker because consumers there enjoy its strong flavor. Stewed pigs' feet with white beans, for instance, is a famous dish from Sichuan province, one of the country's culinary capitals.

At least one product exported to China has almost zero value anywhere else: hind pigs' feet. Rear feet are nearly impossible to sell elsewhere because they have holes in them from where hogs are hung upside down in packing houses, which turns off consumers in other countries, said Dermot Hayes, an agricultural economist at Iowa State University.

"They go from zero value outside of China to a significant value when the Chinese market is fully open," Hayes said.

ALTERNATIVE SUPPLIES OF STOMACHS, LIVERS

China will likely have little trouble finding supplies to replace U.S. pig offal, analysts said.

An expansion of its domestic hog industry had already made buyers less dependent on American pork before the trade tensions.

Chinese buyers could also import more from Europe, where hog prices have been trading at their lowest levels in at least two years, analysts said.

"The Chinese aren't going to get hurt by this," said Ken Maschhoff, chairman of The Maschhoffs, the largest family-owned U.S. pork producer. "Chile or Europe or somebody else is going to say, 'Well, we've got a bunch of stomachs or livers or feet that we're not using...'"

The slowdown hurts major processors in the United States, such as WH Group Ltd's Smithfield Foods Inc; Seaboard Foods, a division of Seaboard Corp; and the JBS USA unit of Brazil's JBS SA. Such companies benefited from record total U.S. offal sales of more than $1.1 billion in 2017.

Smithfield, the biggest U.S. pork processor and exporter to China, declined to comment. The company, owned by China-based WH Group, sells offal, jowls and lard, according to its website.

Meat processor Tyson Foods Inc (NYSE:TSN) also declined to comment. Seaboard and JBS did not respond to requests for comment.

Margins for U.S. pork processors are under pressure due to the impact of the trade fight and last month slipped to their lowest level in three years.

WH Group's stock price has tumbled 28 percent so far this year. Tyson shares are down 19 percent and Seaboard shares have dropped 13 percent.

$860 MILLION IN LOSSES

The average value of U.S. offal exports to China was about 76 cents per pound in 2017, according to the U.S. Meat Export Federation.

If packers do not sell them elsewhere for human consumption, the byproducts will be rendered in the United States for about 18 cents per pound - a decrease equating to a loss of $1.55 per hog for the volume exported to China, the federation said.

Overall, it estimated lower offal prices could translate into losses of $860 million for the U.S. pork industry over the next year. Processors will try to pass on losses to farmers by paying less for live hogs, Hayes said.

"It is the pork farmer who suffers," he said.

Lower demand also has processors rendering more offal into animal feed, according to the federation. Prices in that segment could come under pressure, however, as more processors try to grab market share.

Ohio-based JH Routh Packing Company sells most of its offal to feed animals at less than 20 cents per pound, sales manager Tony Stearns said.

"Everybody who can sell the stuff," he said about offal, "they're pretty much selling everything they can."

Pet food makers could use more offal in their products in response to an increase of supply, said Dana Brooks, president of the Pet Food Institute, an industry group that represents the pet units of companies including Nestle SA (SIX:NESN), which sells Purina, and Mars Inc, which sells the Pedigree and Whiskas brands.

"The parts that we don't eat here in America for pork often have nutritional value to our pets," Brooks said.

Oil climbs from 3-mth low as more oil workers strike in Norway

Oil climbs from 3-mth low as more oil workers strike in Norway
FILE PHOTO: A general view shows the Bangchak oil refinery in Bangkok

By Aaron Sheldrick

TOKYO (Reuters) - Brent crude prices rose from a three-month low on Tuesday after more oil workers went on strike in Norway, supporting a market that has been dominated by oversupply issues in recent days.

Brent crude futures had climbed 28 cents, or 0.4 percent, to $72.12 a barrel by 0331 GMT. They fell 4.6 percent on Monday, at one point touching their lowest since mid-April.

U.S. West Texas Intermediate futures were down 1 cent at $68.05. They fell 4.2 percent on Monday.

An oil worker strike in Norway intensified on Monday when hundreds more walked out in a dispute over pay and pensions after employers failed to respond to union demands for a new offer.

The strike, which began last Tuesday, has had a limited impact on Norway's oil production so far, but some drillers warned of possible contract cancellations if the dispute goes on for a month or more.

"The threat of further supply disruptions hasn't totally evaporated," ANZ said in a morning note.

ANZ also said that "production from Libya remains susceptible to further declines, despite its ports reopening".

While Libyan ports are reopening, output at the Sharara oilfield was expected to fall by at least 160,000 barrels per day (bpd) after two workers were abducted by an unknown group, the National Oil Corporation said on Saturday.

On July 11, the NOC said four export terminals were being reopened after eastern factions handed over the ports, while a lengthy shutdown at the El Feel oilfield in the southwest also ended. Two days later, output at the nearby 300,000 bpd Sharara was slashed.

U.S. oil output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the U.S. Energy Information Administration said in a monthly report on Monday.

Production is expected to climb in all seven formations, with the largest gain of 73,000 bpd seen in the Permian Basin of Texas and New Mexico. All shale regions except for Appalachia are at a high, according to the data.
July 16, 2018

Oil prices dip as markets eye potential supply increases

Oil prices dip as markets eye potential supply increases
FILE PHOTO: Pump jack lifts oil out of well during sandstorm in Midland

SEOUL (Reuters) - Oil prices fell on Monday as concerns about supply disruptions eased and Libyan ports resumed export activities, while traders eyed potential supply increases by Russia and other oil producers.

Brent crude futures were down 26 cents, or 0.4 percent, at $75.07 a barrel at 0057 GMT.

U.S. West Texas Intermediate (WTI) crude was down 27 cents, or 0.4 percent, at $70.74 a barrel.

Supply outages in Libya and strike action in Norway and Iraq pushed oil prices higher late last week, although prices still ended down for a second straight week.

"Crude oil prices fell as fears of supply disruptions eased. News that Libya's state oil producer had restarted output from a major oil field ignited the selloff earlier in the week," ANZ Bank said in a note.

The market focus shifted towards possible supply increases, even as a Norwegian union for workers on offshore oil and gas drilling rigs stepped up a six-day strike.

Russia and other major oil producers may increase output further should supply shortages hit the global oil market, Russian Energy Minister Alexander Novak said on Friday.

Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA, said U.S.-China trade tensions "should subside this week and could be a possible plus for oil prices," but a possible sale of U.S. oil reserves would weigh on prices.

"With the Trump administration actively considering tapping into the nation's Strategic Petroleum Reserve, it could weigh negatively," Innes said.

The United States holds a reserve of about 660 million barrels, and the Trump administration was considering drawing on the country's oil reserve, which would increase supply, according to a Bloomberg report.

Meanwhile, the number of rigs drilling in the United States remained unchanged at 863 in the week to July 13 as the rate of the growth slowed amid a fall in crude prices. [RIG/U]
July 15, 2018

U.S. oil boom delivers surprise for traders - and it's costly

U.S. oil boom delivers surprise for traders - and it's costly
U.S. oil boom delivers surprise for traders - and it's costly

By Julia Payne, Devika Krishna Kumar and Dmitry Zhdannikov

LONDON/NEW YORK (Reuters) - The world's biggest oil traders are counting hefty losses after a surprise doubling in the price discount of U.S. light crude to benchmark Brent in just a month, as surging U.S production upends the market.

Trading desks of oil major BP (L:BP) and merchants Vitol [VITOLV.UL], Gunvor (GGL.UL) and Trafigura [TRAFG.UL] have recorded losses in the tens of millions of dollars each as a result of the "whipsaw" move when the spread reached more than $11.50 a barrel in June, insiders familiar with their performance told Reuters.

The sources did not give precise figures for the losses, but they said they were enough for Gunvor and BP to fire at least one trader each.

The companies declined to comment, and none of them publish details of their individual trading books.

It highlights the challenges of trading in WTI futures (CLc1), the benchmark for U.S. crude, when U.S. pipeline and storage infrastructure struggles to keep pace with surging shale output, that has lifted the United States above Saudi Arabia to become the world's second biggest crude producer behind Russia.

"As the exporter of U.S. crude, traders are naturally long WTI and hedge their bets by shorting Brent. When the spreads widen so wildly, you lose money," said a top executive with one of the four trading firms.

The discount of WTI to Brent hit $11.57 a barrel on June 6, the widest in more than three years, as U.S. output surged to record highs and surpassed pipeline capacity as traders rushed to export. The discount had been about $5 just a month before.

Betting on the price spread, a popular trade in oil markets, is based on predictions of price differences between European and U.S. market fundamentals.

For a graphic on WTI to Brent Spread, click https://reut.rs/2Lf0iQ0

"WIDOWMAKER"

The jump in U.S. output, now almost 11 million barrels per day (bpd) from below 5 million bpd a decade ago, has upended the spread. Until 2010, U.S. crude mostly traded at a premium to Brent. But the growing availability of U.S. crude has meant that it has almost always been at a discount since then.

However, it is the big, sudden moves that tend to claim trade casualties, sometimes earning the moniker "widowmaker".

Since the June spike, the spread has narrowed sharply again. The shrinking discount was helped by a rise in the price of WTI due to an unexpected outage at the Syncrude oil sands site in Canada, which can produce up to 360,000 bpd.

Due to the Canadian outage, inventories last week at the Cushing delivery point for U.S. crude futures fell to their lowest since December 2014, U.S. data showed.

Volatility in the spread has been just one of several trading hazards that emerged in the first quarter of 2018.

Traders have also had to pay heavy premiums to exit U.S. storage leases as the oil price structure flipped to "backwardation", when near-term prices are higher than those for later delivery, making it unprofitable to store crude.

Climbing U.S. output has put strains on the pipeline network, particularly in the Permian basin in Texas which has been the biggest contributor to the production surge.

A bottleneck that hit U.S. crude for delivery in Midland, Texas caught BP off guard and led to losses when the discount to WTI shifted sharply during April to June, according to four market sources and one source close to BP.

In late April, the discount was close to $6 a barrel before widening to as much as $13 on May 4. This was followed by a sharp bounce back to around $5 in the second half of May followed by a similar see-saw move in June.

Three BP traders took the heat for losses related to the Midland rollercoaster. The source close to BP said one was sacked and two others were reshuffled internally.
July 13, 2018

Oil edges lower, set for big weekly decline

Oil edges lower, set for big weekly decline
© Reuters. Oil edges lower, set for big weekly decline

TOKYO (Reuters) - Oil prices edged lower on Friday and were set for a second weekly fall, as the market shrugged off a warning that spare capacity may be stretched as OPEC and Russia increase production.

Brent crude (LCOc1) eased 20 cents, or 0.3 percent, to $74.25 by 0059 GMT. On Thursday it gained $1.05 a barrel, rebounding from a session low of $72.67. It is heading for a weekly fall of nearly 4 percent.

U.S. crude (CLc1) dipped 6 cents, or 0.1 percent, to $70.27, after a five cent decline in the previous session. It is heading for a weekly decline of nearly 5 percent.

It has been a wild week for oil prices with both the main benchmarks suffering heavy losses on Wednesday as traders focused on the return of Libyan oil to the market amid concerns about a China-U.S. trade war.

However, a warning on spare capacity by the International Energy Agency (IEA) pushed Brent higher on Thursday, helping it recoup some losses.

The IEA cautioned that the world's oil supply cushion "might be stretched to the limit" due to production losses in several different countries.

"Rising production from Middle East Gulf countries and Russia, welcome though it is, comes at the expense of the world's spare capacity cushion, which might be stretched to the limit," the Paris-based IEA said in its monthly report.

"This vulnerability currently underpins oil prices and seems likely to continue doing so," the agency said.

U.S. sets Gulf of Mexico oil, gas lease sale despite lackluster demand

U.S. sets Gulf of Mexico oil, gas lease sale despite lackluster demand
Unused oil rigs sit in the Gulf of Mexico near Port Fourchon, Louisiana

By Timothy Gardner

WASHINGTON (Reuters) - The U.S. Department of the Interior said on Thursday it would hold a record-sized auction for oil and gas leases in the Gulf of Mexico next month, in an attempt to spark interest in offshore drilling months after a similar sale received a weak response from energy companies.

The sale, to be held on Aug. 15, includes all available unleased areas in federal waters of the Gulf of Mexico in about 78 million acres (31.5 million hectares) off Texas, Louisiana, Mississippi, Alabama and Florida. It is the third sale in the agency's 2017-2022 program, which aims to hold 10 sales in all.

The sale is part of what the Interior Department calls President Donald Trump's America-First Offshore Energy Strategy. Vincent DeVito, an adviser to Interior Secretary Ryan Zinke, said the sale "is just one piece of the administration's comprehensive effort to secure our nation's energy future."

The last Gulf of Mexico lease sale, held in March, brought in only $124.8 million, as just 1 percent of the then-record 77 million acres (31.2 million hectares) offered found bidders. In addition, nearly all the purchases showed big drillers stuck closest to existing operations.

In April, Zinke, who had earlier proposed opening up nearly all the country's coasts to drilling, said the sale in March held "modest to little" interest from drillers and added there was little likelihood for strong demand elsewhere in the country. His plan to open up the Pacific and Atlantic coasts was criticized by environmentalists, politicians and tourism and fishing interests.

The U.S. government estimates the Outer Continental Shelf in the Gulf of Mexico contains about 48 billion barrels of undiscovered technically recoverable oil and 141 trillion cubic feet of undiscovered technically recoverable gas.

Most of the recent U.S. oil boom has occurred onshore, where it is cheaper to drill than in deepwater. In addition, many drillers are exploring in other places, such as Mexico, where energy reforms have brought in billions of dollars in investments.
July 12, 2018

Mexico's new government to focus on boosting fuel output at home

Mexico's new government to focus on boosting fuel output at home
© Reuters. Mexican Congresswoman Rocio Nahle, top energy advisor to presidential frontrunner Andres Manuel Lopez Obrador, talks to Reuters in Mexico City

MEXICO CITY (Reuters) - Mexico's next energy agenda will prioritize increasing gasoline and diesel production and later decide on possible changes to the industry reform championed by the outgoing government, according to a top aide to President-elect Andres Manuel Lopez Obrador.

Rocio Nahle, tapped by Lopez Obrador to be energy minister, told local outlet Aristegui Noticias on Wednesday that the country's next government will address the "energy imbalance" in which Mexico produces less fuel at home and turns to imports to meet national demand.

Lopez Obrador won a landslide victory in the July 1 election and will take office in December.

"We will be assessing if any legislative changes (to the oil opening) are necessary," said Nahle, adding that the transition team would not immediately propose changes to the existing laws.

The comments by Nahle, who also won a Senate seat in the election, are in line with Lopez Obrador's pledge last weekend to end Mexico's massive fuel imports over the first three years of his term.

So far this year, Mexico has imported an average of about 590,000 barrels per day (bpd) of gasoline and another 232,000 bpd of diesel, almost all of it from the United States, as gasoline output at the country's six refineries owned and operated by state-run Pemex [PEMX.UL] has halved since 2013, the first year of outgoing President Enrique Pena Nieto's term.

Domestic gasoline output barely meets a quarter of national demand from the country's legions of motorists.

During the election campaign, Lopez Obrador was sharply critical of the Pena Nieto's policy to allow foreign and private oil companies to operate fields on their own for the first time in decades, ending Pemex's monopoly.

The overhaul was designed to reverse a decade-long oil output slide and has already resulted in competitive auctions that have awarded more than 100 exploration and production contracts, deals Lopez Obrador has repeatedly promised to review for signs of corruption.

Nahle said the next government will also begin construction of at least one new oil refinery, which she expects to be operating by the halfway point of Lopez Obrador's six-year term.

So far this year, Pemex's existing refineries are producing an average of 220,000 bpd of gasoline and about 125,000 bpd of diesel, according to company data.

Brent oil gains $1 to claw back some losses

Brent oil gains $1 to claw back some losses
Brent oil gains $1 to claw back some losses

TOKYO (Reuters) - Brent crude rose more than $1 on Thursday as focus turned to a big drawdown in U.S. stockpiles, recouping some of the market's heavy losses from the previous session that had been sparked by news that Libya would resume oil exports.

Brent crude (LCOc1) was up 96 cents, or 1.31 percent, at$74.36 by 0102 GMT, after earlier rising to $74.46. On Wednesday, the contract slumped 6.9 percent in its largest one-day percentage decline since Feb. 9, 2016.

U.S. crude (CLc1) rose 21 cents, or 0.3 percent, to $70.59, after falling 5 percent the previous session.

"Both oil contracts have recently stalled around key long-term and psychologically-important levels at $80 and $75 respectively, as market participants weigh the risks of a potential correction in prices," Fawad Razaqzada, an analyst at FOREX.com, said in a note.

The announcement by Libya's National Oil Corp that four export terminals were being reopened, ending a standoff that had shut down most of Libya's oil output, was the catalyst for a correction, Razaqzada said.

The reopening allows the return of as much as 850,000 barrels per day of crude into international markets.

But in the U.S. stockpiles are falling as refiners suck crude out of inventories to produce more gasoline for drivers in the peak summer season.

U.S. crude oil stocks fell by nearly 13 million barrels last week, the most in nearly two years, dropping overall crude stocks to their lowest point since February 2015, the Energy Information Administration said on Wednesday.
July 11, 2018

Oil falls after U.S. softens stance on Iranian sanction waivers

Oil falls after U.S. softens stance on Iranian sanction waivers
Oil falls after U.S. softens stance on Iranian sanction waivers

TOKYO (Reuters) - Oil prices fell on Wednesday, with Brent dropping by more than $1, after the United States said it would consider requests for waivers from sanctions due to snap back into place on Iranian crude exports.

Brent crude futures (LCOc1) were down $1.10, or 1.4 percent, at $77.76 a barrel by 0112 GMT. U.S. crude (CLc1) was down 68 cents, or 0.9 percent, at $73.43.

Both contracts had posted gains earlier in the previous session after industry data showed inventories fell more than expected last week in the United States.

Washington will consider requests from some countries to be exempted from sanctions it will put into effect in November to prevent Iran from exporting oil, U.S. Secretary of State Mike Pompeo said on Tuesday.

"There will be a handful of countries that come to the United States and ask for relief from that. We'll consider it," Pompeo said, according to the text of an interview in Abu Dhabi with Sky News Arabia released by the U.S. State Department. He did not identify any countries.

Washington had earlier told countries they must halt all imports of Iranian oil from Nov. 4 or face U.S. financial measures, with no exemptions.

The U.S. pulled out of a multinational deal in May to lift sanctions against Iran in return for curbs to its nuclear program.

Later on Tuesday, after arriving in Brussels for a NATO summit, Pompeo stressed the need to keep up pressure on Iran in coordination with allies. He also planned to reassure allies about alternative oil supplies.

Efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers have led to a tighter oil market after a persistent glut.

With the impending sanctions on OPEC member Iran and supply disruptions from Canada to Libya, prices have risen and sparked fears of shortages, amid rising demand.

U.S. crude inventories fell last week by 6.8 million barrels, according to data from industry group, the American Petroleum Institute.

That decline was larger than expected, causing crude futures to gain in post-settlement trading. [API/S]

Analysts polled by Reuters forecast that crude stocks fell on average by 4.5 million barrels, ahead of government data at 10:30 a.m. EDT (1430 GMT) on Wednesday. [EIA/S]
July 10, 2018

Iran vows to sell as much oil as it can in face of U.S. sanctions

Iran vows to sell as much oil as it can in face of U.S. sanctions
FILE PHOTO: Iranian Vice President Jahangiri speaks during a news conference after a meeting with Iraq's top Shi'ite cleric in Najaf

LONDON (Reuters) - Iran's vice president acknowledged on Tuesday that U.S. sanctions would hurt the economy, but promised to "sell as much oil as we can" and protect banking.

Eshaq Jahangiri said Washington was trying to stop Iran's petrochemical, steel and copper exports. "America seeks to reduce Iran's oil sales, our vital source of income, to zero," he said, according to Fars news agency.

"It would be a mistake to think the U.S. economic war against Iran will have no impact," Jahangiri added.

President Donald Trump said in May he would pull the United States out of an international accord under which Tehran had agreed to limit its nuclear development in exchange for sanctions relief.

Trump said he would reintroduce sanctions and Washington later told countries they must stop buying Iran’s oil from Nov. 4 or face financial consequences.

On Tuesday, the U.S. ambassador to Germany also called on Berlin to block an Iranian bid to withdraw large sums of cash from bank accounts in Germany.

Jahangiri said Iran’s foreign ministry and the central bank have taken measures to facilitate Iran’s banking operations despite the U.S. sanctions. He did not elaborate.

European powers which still support the nuclear deal say they will do more to encourage their businesses to remain engaged with Iran - though a number of firms have already said they plan to pull out.

Foreign ministers from the five remaining signatory countries to the nuclear deal — Britain, France, Germany, China and Russia — offered a package of economic measures to Iran on Friday but Tehran said they did not go far enough.

"We think the Europeans will act in a way to meet the Iranian demands, but we should wait and see," Jahangiri said.

He added that the U.S. pressure on Iran came as the United States launched an "economic war with China and even its allies", referring to trade tensions between Washington and many of its main trading partners.

He also accused Washington of trying to use the economic pressure to provoke street protests in Iran.

A wave of anti-government demonstrations against economic hardship and alleged corruption engulfed cities across the country in late December and early January.

Brent leads crude prices higher as Norway oil workers get ready to strike

Brent leads crude prices higher as Norway oil workers get ready to strike
FILE PHOTO: An oil pump jack at sunset near Midland Texas

By Aaron Sheldrick

TOKYO (Reuters) - Oil prices rose on Tuesday on escalating concerns over potential supply shortages, with Brent crude leading the way as hundreds of oil workers in Norway were set to strike later in the day.

Brent crude (LCOc1) had added 32 cents, or 0.4 percent, to $78.39 per barrel by around 0303 GMT, following a 1.2-percent climb on Monday.

U.S. light crude futures were up 17 cents, or 0.2 percent, at $74.02. They gained 5 cents to settle at $73.85 a barrel the session before.

Hundreds of workers on Norwegian oil and gas offshore rigs are due to strike on Tuesday after rejecting a proposed wage deal, a move which will likely affect the production of at least one field, Shell's Knarr.

That potentially adds to disruptions in other oil producers amid tensions in the Middle East.

The United States says it wants to reduce oil exports from Iran, the world's fifth-biggest producer, to zero by November, which would oblige other big producers to pump more.

Saudi Arabia, fellow members of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia agreed last month to increase output to dampen price gains and offset global production losses in countries including Libya.

The market has grown concerned that if the Saudis offset the losses from Iran, that will use up global spare capacity and leave markets more vulnerable to further or unexpected production declines.

"The bottom line becomes the available spare capacity within OPEC ... and the markets have started to focus on that," said Victor Shum, vice-president for energy at IHS markets in Singapore.

"It is likely that concern will support prices all through the summer, while demand continues to be strong during the summer peak," he said.

Libya's national oil production fell to 527,000 barrels per day from a high of 1.28 million bpd in February following recent oil port closures, the head of the National Oil Corporation said in a statement on Monday.

In Canada, an outage at the 360,000-barrel per day (bpd) Syncrude oil sands facility reduced flows into Cushing, Oklahoma, the delivery point for U.S. futures.

Money managers raised their bullish bets on U.S. crude in the week to July 3, the U.S. Commodity Trading Commission said on Monday.
July 09, 2018

Oil prices edge up, U.S.-China trade war in focus

Oil prices edge up, U.S.-China trade war in focus
FILE PHOTO: An oil pump jack at sunset near Midland Texas

TOKYO (Reuters) - Oil prices inched up in early Asian trading on Monday, with many investors focused on any fallout from the U.S. imposition of tariffs on Chinese goods at the end of last week, which prompted immediate retaliation from China.

Global benchmark Brent was up 14 cents, or 0.2 percent, at 77.25 a barrel by 0113 GMT (9.13 p.m. ET). On Friday, the contract slipped 28 cents to settle at $77.11 a barrel.

U.S. crude futures added 8 cents, or 0.1 percent, to $73.88 after trading slightly lower earlier in the morning. They gained 86 cents, or 1.2 percent, to settle at $73.80 a barrel on Friday.

Oil prices are likely to be weighed down by the trade conflict as investors are concerned about the impact of the tariffs and counter tariffs on global economic growth, analysts said.

"(Nonetheless) supply disruptions in Libya and Canada may put upward pressure on prices in the near-term," ANZ said in a morning note, adding that recent data showed "an increase in the net-long positioning of hedge funds on Brent crude".

The United States and China exchanged the first salvos in what could become a protracted trade war on Friday, slapping tariffs on $34 billion worth of each others' goods and giving no sign of willingness to start talks aimed at a reaching a truce.

Supply disruptions are giving some support, with an outage at a major Canadian oil sands facility cutting regional supply. The stoppage at the 360,000 barrels per day (bpd) Syncrude facility in Canada has contributed to a sharp reduction in the discount for U.S. crude versus Brent crude over the past month.

U.S. producers are continuing to bring more rigs into oilfields already producing at record levels. The U.S. rig count, an early indicator of future output, was up by five in the week to July 6, according to General Electric (NYSE:GE) Co's Baker Hughes energy services firm. [RIG/U]

That brings the total count to 863, up 100 from last year.
July 08, 2018

South Africa mines minister delays finalization of draft mining charter

South Africa mines minister delays finalization of draft mining charter
FILE PHOTO: ANC Secretary General Gwede Mantashe gestures during a media briefing at Luthuli house, the ANC headquarters in Johannesburg

JOHANNESBURG (Reuters) - South Africa's mines minister Gwede Mantashe said on Sunday he will extend by a month a period for public comment on a mining industry charter which lays out requirements for black ownership levels and other targets.

Uncertainty around the charter has deterred investment into a sector that accounts for 8 percent of gross domestic product in the world's top platinum producer.

Mantashe said he will extend the period for public comment until the end of August.

"It gives people a chance to engage more and comment more," Mantashe said during his closing speech at an industry summit to discuss the charter.

A draft of the charter published last month extends to five years from one year the time that existing mining permit holders will have to raise black ownership levels to 30 percent from 26 percent.

It also proposes a requirement that 10 percent (a third of the 30 percent black ownership target) for new mining right applicants be granted free to communities and qualifying employees, dubbed "free carry", which industry body The Minerals Council South Africa has opposed.

The charter, published for public comment before entering into law, is part of South African affirmative action rules aimed at reversing decades of exclusion under apartheid.

The government and miners had been at loggerheads over a previous version of the charter, which the Chamber of Mines industry body, now the Minerals Council, criticized as confusing and a threat to South Africa's image with investors.
July 06, 2018

Metal Markets Are Preparing for a New World Disorder

Metal Markets Are Preparing for a New World Disorder
© Bloomberg. FILE: An employee welds the joint inside a steel pipe at the SAW Pipe Mills, operated by Liberty Commodities Ltd., in Hartlepool, U.K., on Thursday, June 14, 2018. European Union leaders vowed an unwavering response to President Donald Trump’s protectionism and imposed tariffs on aluminum and steel imported from the European Union, Canada, and Mexico, a move condemned by the U.S.'s closest allies. The U.S. duties of 25 percent on steel and 10 percent on aluminum “cannot be justified on the grounds of national security,” the 28 leaders said in a statement on Friday at a meeting in Brussels “The EU must respond to all actions of a clear protectionist nature.” Our editors select archive images from countries hit by the U.S. tariffs. Photographer: Chris Ratcliffe/Bloomberg

Donald Trump’s attempts to re-balance global trade have already sent the metals world into a tizzy. As countries respond to U.S. tariffs and sanctions, the disarray is set to increase.

Steel prices and aluminum premiums are shooting up in the U.S. thanks to tariffs, threatening to wreak havoc on manufacturers. Everywhere else metal prices are on a roller-coaster ride, with copper and zinc retreating on fears of slowing demand. If equity investors have stayed sanguine so far, metal investors are voting with their feet.

The next steps may be more dramatic as the U.S. and China engage in trade-war brinkmanship that may involve hundreds of billions in tariffs on everything from cars to soybeans.

For AKE International analyst Maximilian Hess, the standoff is part of an uptick in geo-economics, a mix of policy and economics, that will squeeze or aid certain metals companies and commodities. Here are some thoughts on casualties and beneficiaries.

Friendly Fire

Trump tariffs have helped make U.S. steel prices among the highest in the world. That swells the bottom line of domestic producers such as Nucor Corp (NYSE:NUE). and U.S. Steel Corp. as well as benefiting the U.S. plants of foreign companies like ArcelorMittal. And while Canadian and Mexican producers are subject to tariffs, Brazilian rivals aren’t. That’s helped push up shares in Sao Paulo-based Gerdau SA by 22 percent this year.

While sky-high U.S. metal prices are great for local producers, manufacturers have to pick up the bill, undermining their competitiveness. CRU Group’s principal steel analyst Josh Spoores put it bluntly: “We’re going to see a lot more offshoring.”

So successful have tariffs been in pushing up American steel that foreign metal is becoming more appealing. And Phil Gibbs, a steel analyst at KeyBanc Capital Markets, says demand destruction is a real concern, with consumers potentially reconsidering orders.

Substitution Possibilities

Tariffs look set to squeeze margins for automakers, which may encourage them to shift operations and even materials, says CRU aluminum analyst Doug Hilderhoff. One possibility is that car makers reconsider plans to increase their use of aluminum and stay with steel.

Hilderhoff also says original equipment manufacturers could move to Mexico or Canada, where they can import aluminum without a tariff and turn it into finished goods that can be shipped into the U.S. without being taxed.

Wither Investments?

Few industrial metals have been left unscathed by tariffs, sanctions and the uncertainty of how long they will last. A month ago, copper was flying near four-year highs as investors looked toward a tightening market.

But as fears grow that tariffs will erode global growth, copper and other metals capitulated. The pullback has come just as producers were starting to move forward on expansions after emerging from a painful downturn. As prices retreat, the industry may start to question its newfound largess and batten down the hatches once again.

EV Constraint

Trade conflicts between the U.S., its allies and China, and threats of tariffs on U.S. auto imports, have thrown a wrench into metals used in rechargeable batteries.

“In the medium or longer term, it may constrain the industry as automakers are not committing to new production lines,” Gavin Montgomery, director of metals markets research at Wood Mackenzie, said in an email. “There is so much uncertainty in terms of where they might source parts and what their export markets might be.”

Eye of the Storm

Few epitomize how quickly the sands are shifting more than Glencore (LON:GLEN) Plc. One of the most adept companies at navigating tough environments, the giant trader and producer is now dealing with tariffs in various forms, as well as a long list of supply shocks, including sanctions and resource nationalism.

In April, CEO Ivan Glasenberg had to quit the board of one of Glencore’s biggest aluminum suppliers, United Co. Rusal, after it was hit with U.S. sanctions. Glencore also has taken steps to get around U.S. sanctions in the Democratic Republic of Congo while fighting a new mining code there. This week, U.S. authorities demanded documents relating to possible corruption and money laundering.

Unintended Consequences

While China is the main focus of Trump’s trade push, other countries are moving to prevent dumping. The European Union said it will impose curbs on foreign steel to prevent being flooded with shipments diverted away from the U.S. Canada is said to be making similar plans.

The tariffs also are forcing Asian nations to erect barriers. That means fewer markets for surplus steel from China where demand will continue to soften, according to Bloomberg Intelligence metals analyst Andrew Cosgrove. While that suggests tariffs will succeed in addressing Chinese oversupply, it also means prices in other countries will be higher, hurting manufacturers, he said.

The Rusal sanctions, combined with disruptions in Brazil, sent prices of alumina -- the main ingredient in aluminum -- to record highs. For smelters that buy alumina, high prices blunt some of the tariff benefits. For those that make their own, it presents a different dilemma. Alcoa (NYSE:AA) Corp. has left the door open to selling more alumina and feeding less to its own smelters -- not what Trump would want to hear as he tries to revive idled U.S. plants.

Oil dips in nervous trading as U.S.-China trade war looms

Oil dips in nervous trading as U.S.-China trade war looms
Oil dips in nervous trading as U.S.-China trade war looms

By Henning Gloystein

SINGAPORE (Reuters) - Oil prices dipped on Friday in a nervous market ahead of a raft of import tariffs expected to be imposed later in the day by the world's two biggest economies, the United States and China.

Brent crude futures (LCOc1) fell 25 cents, or 0.3 percent, to $77.14 per barrel by 0317 GMT from their last close.

U.S. West Texas Intermediate (WTI) futures (CLc1) were down 15 cents, or 0.2 percent, at $72.79.

Weighing on prices was a rise in U.S. crude inventories of 1.2 million barrels in the week to June 29, to 417.88 million barrels, the U.S. Energy Administration (EIA) said on Thursday.

Looming larger over markets is the U.S./China trade dispute.

Washington has announced tariffs on Chinese goods from 12:01 a.m. Washington D.C. time (0401 GMT) on Friday.

China says it will retaliate, and U.S. President Trump said on Thursday he may ultimately impose tariffs on more than a half-trillion dollars worth of Chinese goods.

"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.

Beijing has threatened a 25 percent tariff on U.S. crude imports, although it has not specified an introduction date.

American crude shipments to China are around 400,000 barrels per day (bpd), worth $1 billion a month at current prices.

Tariffs would make U.S. oil uncompetitive in China.

An executive from China's Dongming Petrochemical Group said he expected Beijing to soon impose the tariff on U.S. oil imports.

He added that his refinery had canceled U.S. crude imports and would switch to Middle East or West African supplies instead.

TARIFFS, SANCTIONS & DISRUPTIONS

The potential trade war between the United States and China comes amid a tight oil market.

Energy consultancy FGE on Friday issued a stark warning of looming supply shortages due to U.S. sanctions against Iran, and because of disruptions elsewhere.

"Iran's exports are some 2.7 million bpd, including condensate," it noted.

Even if the U.S. government grants some waivers to allies, FGE estimated 1.7 to 2 million bpd of crude and condensate would be cut out of markets once its sanctions are implemented.

Some are already reacting. South Korea, a major buyer of Iranian oil and condensate, will not lift any Iranian oil in July for the first time since August 2012, three sources familiar with the matter said on Friday.

Cutting Iran out from oil trading comes amid other disruptions.

"Venezuela...will lose another 400,000 bpd by year-end with production going to below 1 million bpd," FGE said, adding that another 300,000 bpd of Libyan capacity was disrupted.

Although Saudi Arabia and Russia have said they would raise output to make up for disruptions, FGE said "there simply is not enough capacity to make up for Iran's crude losses, plus Venezuela and Libya", and warned of the possibility of oil prices rising to $100 per barrel.
July 05, 2018

EU states back measures to limit steel imports after U.S. tariffs

EU states back measures to limit steel imports after U.S. tariffs
© Reuters. Steel rolls are pictured at the Renault SA car factory in Flins

By Philip Blenkinsop

BRUSSELS (Reuters) - European Union countries voted on Thursday in favor of provisional measures proposed by the European Commission to curb steel imports into the bloc, following a U.S. decision to slap tariffs on EU steel and aluminum.

The Commission has proposed a combination of a quota and a tariff to prevent a surge of steel imports that is threatened, notably after the United States imposed levies on incoming steel and aluminum. The EU fears that products no longer imported into the United States will instead flood European markets.

"This is intended to prevent the negative effects of trade diversion, but at the same time maintain traditional supply and effective competition on the EU market," a Commission spokesman said.

The quota would be a reflection of imports over recent years, with a 25 percent tariff set for volumes exceeding that amount, according to a source familiar with the proposal.

A total of 25 EU countries voted in favor of the measures but three abstained, a source close to the negotiations said.

The Commission, which oversees trade policy in the EU, has started an investigation covering 28 steel grades and products made with steel, to assess the impact of the changed market.

At the launch of that investigation, the Commission noted that imports of the products concerned rose from 18.8 million tonnes in 2013 to 30.6 million tonnes in 2017, far exceeding an increase in domestic production.

While the investigation is ongoing, international trade rules allow the EU to impose "provisional safeguard" tariffs for up to 200 days, if it concludes that increased imports have caused or may cause serious injury to its steel sector.

The EU has also imposed its own tariffs on 2.8 billion euros ($3.3 billion) of U.S. imports, including bourbon and motor bikes, and has launched a legal challenge at the World Trade Organization.

Trump effort to lift U.S. offshore wind sector sparks interest - from Europe

Trump effort to lift U.S. offshore wind sector sparks interest - from Europe
© Reuters. Block Island Wind farm off the coast of Rhode Island, U.S. is pictured in this handout photo

By Nichola Groom

The Trump administration wants to fire up development of the U.S. offshore wind industry by streamlining permitting and carving out vast areas off the coast for leasing - part of its 'America First' policy to boost domestic energy production and jobs.

The Europeans have taken note.

The drive to open America's offshore wind industry has attracted Europe's biggest renewable energy companies, who see the U.S. East Coast as a new frontier after years of success across the Atlantic.

Less experienced U.S. wind power companies, meanwhile, have struggled to compete in their own backyard, according to lease data and interviews with industry executives. Many are steering clear of the opportunity altogether, concerned by development costs and attracted to cheaper options on land.

The Trump administration hopes the industry will help supply power to the heavily-populated Northeast, eventually creating American jobs in manufacturing turbines, towers and other components. Its efforts are part of a broader push to relax regulations and spur development across the energy complex.

"This would be American produced energy, and American jobs," said Vincent DeVito, energy policy advisor to Interior Secretary Ryan Zinke. "It fits well with the America First agenda."

For the moment, however, Europe's renewable energy companies are the ones using the opportunity to advance their already sizable headstart in offshore wind projects.

Since 2014, European-backed companies have won all eight of the U.S. government's competitive offshore wind lease auctions with aggressive bids that have pumped up prices into the tens of millions of dollars.

(GRAPHIC: European firms dominate U.S. offshore wind leases - https://tmsnrt.rs/2No7GtL)

Bidding in an auction last year for nearly 80,000 acres off the coast of New York, for example, lasted 33 rounds with Norway's Equinor, formerly known as Statoil (OL:EQNR), eventually winning the lease for a record $42.5 million. An individual lease had never before sold for more than $5 million, according to public records.

Europeans claimed another victory in May when a partnership between Copenhagen Infrastructure Fund and Avangrid, the U.S. arm of Spain's Iberdrola (MC:IBE), won the largest ever U.S. contract for offshore wind power, in Massachusetts.

Of the federal government's 12 currently active offshore wind leases, seven are owned by European-backed companies, according to Bureau of Ocean Energy Management records. (See graphic https://tmsnrt.rs/2No7GtL)

"The U.S. is one of the most desirable global offshore wind markets," Jonathan Cole, Iberdrola's managing director of offshore wind, told Reuters.

FLYING THE FLAG

Trump's Interior Department gave the industry a boost this year when it announced major lease sales off Massachusetts, sought input on potential lease areas off New York and New Jersey, and began a study of all Atlantic coast waters for wind energy potential.

It also proposed easing permitting, including by allowing developers to get some permits before making key decisions, like what size of turbines they would use.

Such aggressive leasing and flexible permitting helped Europe become the world's largest offshore wind market, with thousands of wind turbines installed in the last two decades, and more than 9 billion euros in investment expected this year, according to trade group WindEurope.

While the U.S. East Coast has wind conditions and sea depths similar to the North Sea, it boasts just one five-turbine wind farm off the coast of Rhode Island.

That wind farm was developed by privately-held U.S. firm Deepwater Wind LLC, which is backed by hedge fund D. E. Shaw Group. Deepwater Wind's chief executive, Jeff Grybowski, called the U.S. wind industry’s hesitation to move offshore outdated.

"I'm sure that we will see more American entrants in this business as time goes on," he said. "Until then we're happy to fly the flag."

Other U.S. chief executives are less sanguine. Jim Robo, CEO of leading U.S. renewable energy company NextEra, told investors on a recent conference call that development time of 5 to 10 years and uncertainty around permitting raised serious questions about prospects offshore.

"It is a moon shot in terms of building, in terms of finding people who actually know what they're doing from a construction standpoint," Robo said.

NextEra, which owns 120 wind farms in the United States and Canada, did not respond to a request for additional comment.

Those concerns are echoed across much of the U.S. industry.

"There are so many opportunities to do onshore, at substantially lower cost," said Mike Garland, the CEO of Pattern Energy Group. "It makes more sense for us to be focused in that area."

Foreign companies are not just dominating the offshore leases. Most of the early projects, according to executives, will rely almost exclusively on imports of everything from subsea cables to turbines that are not currently made domestically - meaning much of the work will be overseas.

Components for Deepwater Wind’s five turbines off Rhode Island, for example, were shipped from Spain, Denmark and France, according to Grybowski. Their steel foundations were made in Louisiana.

If construction demand picks up, the picture could change, according to a 2017 report by consultants BVG Associates Limited.

The report said building 8 gigawatts of offshore wind

projects by 2030 would likely justify making most turbine components on U.S. soil, helping support up 16,700 full-time jobs.

The Interior Department's DeVito said he saw the possibilities first hand during a visit to an offshore wind component manufacturing site in Copenhagen. He said he was he was amazed by "the level of activity, the blades, the steel towers, the cranes swinging."

"The opportunity is to make them here," he said.

Oil falls as Trump urges OPEC to cut prices; China duty on U.S. crude looms

Oil falls as Trump urges OPEC to cut prices; China duty on U.S. crude looms
Excess gas is burnt off at a pipeline at the Zubair oilfield in Basra

By Henning Gloystein

SINGAPORE (Reuters) - Oil prices fell on Thursday after U.S. President Donald Trump sent a strident tweet demanding that OPEC cut prices for crude.

The escalating trade row between Washington and Beijing, which triggered another sell-off in Asian stocks on Thursday, was also felt in oil markets, with China warning it could introduce duties on U.S. crude imports at an as yet unspecified date.

Brent crude futures (LCOc1) were at $77.68 per barrel at 0532 GMT, down 56 cents, or 0.7 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were down 45 cents, or 0.6 percent, at $73.69 per barrel.

Trump on Wednesday accused the Organization of Petroleum Exporting Countries (OPEC) of driving up fuel prices.

"The OPEC Monopoly must remember that gas prices are up & they are doing little to help," Trump wrote on his personal Twitter account. "If anything, they are driving prices higher as the United States defends many of their members for very little $'s."

This must be a two way street," he wrote, adding in block capitals, "REDUCE PRICING NOW!"

OPEC together with a group of non-OPEC producers led by Russia started to withhold output in 2017 to prop up prices.

Recent price rises have also been spurred by a U.S. announcement that it plans to re-introduce sanctions against Iran from November, targeting oil exports.

"A key driver of the rise in prices has been the OPEC-Russia deal to cut oil output, compounded by collapsing Venezuelan production and the U.S. decision to end the Iran deal," National Australia Bank (NAB) said in its July outlook.

OPEC and Russia announced in June they were willing to raise output to address concerns of emerging supply shortages due to unplanned disruptions from Venezuela to Libya, and likely also to replace a potential fall in Iranian supplies due to U.S. sanctions.

Despite these measures to replace disrupted supplies, Goldman Sachs (NYSE:GS) said in a July 4 note to clients that "the market will remain in deficit" in the second half of the year.

The U.S. bank warned that supply threats were "threatening a sharp further rise in prices and global economic growth".

TRADE TARIFFS

Meanwhile, China's commerce ministry said on Thursday the United States is "opening fire on the entire world", warning that Washington's proposed tariffs on Chinese goods will hit international supply chains.

The comments came as Washington plans to impose tariffs on an estimated $34 billion worth of Chinese imports on Friday.

Asian stock markets on Thursday extended recent sharp losses.

China's customs agency said on its website that Chinese tariffs on U.S. goods would immediately be implemented in retaliation.

However, the Chinese government has not yet specified a date on which it may introduce duties on imports of U.S. crude. The latter have soared in the last two years to around 400,000 barrels per day in July, worth around $1 billion at current market prices.

If introduced, an import duty of 25 percent would make U.S. crude uncompetitive in China, forcing its refiners to seek alternative supplies.

"Tariffs will close the U.S. export arbitrage opportunity to China," Goldman Sachs said, although it added that finding alternative supplies would be "fairly easy" for Chinese refiners.

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