Americas News
Third Straight Weekly Loss for Crude as Concerns of Oversupply Continue
Crude ended the week with more modest gains on Friday, but those seeking relief from recent high prices - such as U.S. motorists and countries with evolving but fragile economies like India - took solace in the fact that the commodity still posted its third straight weekly loss.
A weakening dollar and the anticipation of lower August oil exports from Saudi Arabia caused West Texas Intermediate to climb $1 to $70.46, while Brent rose 47 cents to $73.05 per barrel; conversely, growing concerns about oversupply and the ongoing tensions between the U.S. and China were the reasons for crude achieving another weekly drop.
Presumably, these factors will continue to influence traders in the days and weeks to come, as U.S. president Donald Trump maneuvers to impose tariffs on all $500 billion of imported goods from China.
Olaf van den Heuvel, chief investment officer at Aegon Asset Management, noted, "The impact on world economic growth of a levy of this magnitude will be severe and will likely have a strong negative impact on markets."
Tariq Zahir, analyst at Tyche Capital Advisors, added that "You're having supply come back on to the markets, so it's not surprising to see a little bit of weakness," referring to signs of Russia and the Saudis increasing output, despite the latter's temporary abatement in August to ease oversupply concerns.
Meanwhile, yet another example of one country's ability to compensate for interruption of crude production in another came on Friday in the form of news that Italy's imports of U.S. crude shot up to a record in June, after attacks by militants closed two major oil ports in Libya and cut off most deliveries from that country.
According to Kpler, a record 4.93 million barrels of oil, or about 165,000 barrels per day (bpd), was transported to Italy from the U.S. Gulf coast for June, up from 3.3 million barrels in May and 1.9 million barrels in April.
This caused Jim Krane, fellow for energy studies at Rice University's Baker Institute for Public Policy, to remark, "The U.S. is turning into a stable supplier of light, sweet crude that can go to market when others can't."
It's no surprise that the U.S. is at the forefront of global production and consistently proving wrong the hordes of critics who until very recently were convinced that outages in Libya and plummeting production in Venezuela would cause a calamitous crude tightening.
The American industry is also well supported by Canada (which will soon resume full production at the Alberta oil sands); Norway (where a major worker strike ended earlier this week; and Russia, which reportedly used stocks to help boost crude production in June - a surprising sign of flexibility in a country where adjustment in supply was thought to be hard to enact.
