The two major oil benchmarks, Brent crude futures and Texas Intermediate futures yesterday had opposite responses as the United States President, Donald Trump, landed in Beijing for a meeting with his Chinese counterpart, Xi Jinping.
According to Reuters, while global benchmark, Brent crude futures reduced by 15 cents, or 0.1 per cent to trade at $107.62 a barrel the US West Texas Intermediate futures rose by 91 cents, or 0.9 per cent, to trade $103.09.
It further reported that US crude inventories fell sharply with investors focused on a fragile Middle East ceasefire and a high-stakes summit in China’s capital, Beijing, between Trump and Jinping.
Trump had on Tuesday said he did not think he would need China’s help to end the war, even as prospects for a lasting peace deal weakened and Tehran tightened its grip over the strait. He is scheduled to meet Jinping today and Friday.
China is the biggest buyer of Iranian oil despite sanctions and pressure from the Trump administration. Trump is scheduled to meet Xi today and tomorrow. The US Energy Information Administration said yesterday that US crude stocks fell by 4.3 million barrels last week, compared with analysts’ expectations in a Reuters poll for a 2.1-millionbarrel draw.
“Gasoline stocks fell by 4.1 million barrels in the week, compared with analysts’ expectations in a Reuters poll for a 2.9-millionbarrel draw. Distillate stockpiles, which include diesel and heating oil, rose by 0.2 million barrels versus expectations for a 2.7-millionbarrel drop. “Brent and U.S. crude futures extended gains briefly on the data.
On Tuesday, oil prices rose more than three per cent as hopes for a lasting US-Iran ceasefire faded, dimming prospects for reopening the Strait of Hormuz, through which about a fifth of global oil and liquefied natural gas normally flows,’ Reuters reported.
Rystad analyst, Janiv Shah, said: “The length of time of the market rebalancing is somewhat in the balance depending on the latest round of negotiations, but it is unlikely to be less than a few months.”
