Oil prices slipped to their lowest level in four weeks

Recap: Oil prices slipped to their lowest level in four weeks on Wednesday as total U.S. stockpiles of oil and fuel reached a seven-month high and trade wars between China and the U.S. heat up, giving rise to concern about demand. The build of 3.3 million barrels in total stocks hints at sluggish demand, overshadowing the reinstatement of U.S. sanctions against Iran, which has recently bolstered prices. Both blends fell as much as 4%, with September WTI reaching a low of $66.32, and October Brent bottoming at $71.65.  September WTI fell $2.23, or 3.22%, to settle at $66.94 a barrel, while October Brent lost $2.37, or 3.17%, ending the session at $72.28 a barrel. Wednesday’s trading range for oil was the widest in 3-weeks.  

Worth noting, that while the reaction by traders to Chinese tariffs on U.S. oil was immediate, looming in the background are pending sanctions against Iran and falling U.S. inventories. Both of these factors are supportive for prices.

September RBOB settled 8.45 cents, or 4%, lower at $2.0195 a gallon. The move represented the steepest drop for RBOB since July 16 and also its lowest settlement since that date. September heating oil fell 5.3 cents, or 2.5%, to settle at $2.1157 a gallon.

Fundamental News: Kuwait’s Deputy Oil Minister, Sheikh Talal Nasser Al Azabi Al-Sabah, said oil prices are expected to remain at current levels through the end of the year.  He said geopolitics and turbulence in some oil-producing countries will keep prices between $70 and $75/barrel. 

Iran’s Oil Minister, Bijan Zanganeh, said OPEC may need to hold an extraordinary meeting should OPEC fail to prevent member countries from adjusting their crude production without approval. 

Baker Hughes reported that the oil rig count in Venezuela increased for the first time this year to 27 in July, rebounding from a 15-year low.  The rig count increased by 1 on the month but was down 22 on the year. 

China and Germany defended their business ties with Iran on Wednesday in the face of US President Donald Trump’s warning that any companies trading with Iran would be barred from the US.  China’s Foreign Ministry said the country has consistently opposed unilateral sanctions and long-armed jurisdiction.  Meanwhile, Germany’s government said US sanctions against Iran that have an extra-territorial effect violate international law and Germany expects the US to consider European interests when coming up with such sanctions.  Meanwhile, in Iran, Iran’s Foreign Minister, Mohammad Javad Zarif, said that a US plan to reduce Iran’s oil exports to zero would not succeed.

China’s crude oil imports increased slightly in July after declining in the previous two months, but were still among the lowest this year due to a fall in demand from the country’s independent or teapot refineries.  China’s General Administration of Customs reported that the country’s crude shipments came in at 36.02 million tons in July or 8.48 million bpd, up from 8.18 million bpd a year ago and just up on June’s 8.36 million bpd. 

 The Azeri BTC crude oil loading plan from the Ceyhan port is set to fall to 18.85 million barrels in September from 21.4 million barrels in August. 

Indian Oil Corp bought 6 million barrels of US crude for delivery in November to January as the country seeks alternatives for Iranian oil ahead of impending US sanctions. 

Early Market Call - as of 8:45 AM EDT

WTI - Sep $67.10, up 16 cents

RBOB - Sep $2.0180, down 19 points

HO - Sep $2.1244, up 87 points