Published: Sun, August 05, 2018
Markets | By Otis Pena

Crude palm oil futures slide on low demand

Crude palm oil futures slide on low demand

U.S. West Texas Intermediate (WTI) crude futures increased by 26 cents, or 0.4 percent, to $67.92 a barrel.

Market participants await the next fundamental development to drive prices, which is likely to be news of who stopped buying Iranian barrels for August.

Meanwhile, Opec's July output climbed as Saudi Arabia pumped near-record volumes and Russian Federation boosted production to levels not seen since it joined the cartel in a coordinated cut two years ago. Brent crude, the global benchmark, shed 2.2 per cent to $72.

Saudi Arabia's production increase shows it's delivering on promises to prevent prices from damaging the global economy after Brent crude reached a three-year high above $80 a barrel earlier this summer.

U.S. crude inventories rose 3.8 million barrels last week as imports jumped, the government's Energy Information Administration said. They fell 1.6 percent in the previous session. While the commodity moved up yesterday, trading volumes were fairly average - this is a sign that traders are not buying crude oil with conviction. In the previous week, total USA inventories rose 3.8 million barrels, while supplies at Cushing fell 1.3 million barrels.

Stocks at the key Cushing storage hub in Oklahoma fell by 1.3 million barrels, the lowest level since October 2014, according to data from the Energy Information Administration (EIA).

Meanwhile, a US decision to scale back fuel standards would lead to higher demand, though that could be balanced by trade tensions between the United States and China.

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Oil prices strengthened Thursday, with USA crude gaining almost 2 percent after traders saw an industry report suggesting domestic crude stockpiles would soon decline again after a surprise rise in the latest week.

But a complete halt to Iranian supplies looks unlikely with Bloomberg reporting on Friday that China, Iran's biggest customer, has rejected a USA request to cut imports from the OPEC member.

U.S. President Donald Trump has sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports.

Hedge funds and other money managers cut their bullish US crude bets in the latest week, as oil prices were range-bound, pinned between concerns about tight supply due to sanctions and fears that trade disputes could curb demand.

Over the past four weeks, crude oil imports averaged 8.00 million barrels per day, or 0.4 percent higher than the same four-week period a year ago.

The overhang in light, sweet crude is compounded by a surge in US exports into Europe as Washington's trade war with Beijing prompts traders to divert cargoes they once hoped to sell to China.

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