Brent crude oil rises for a sixth day as supplies tighten amid strong demand

Brent crude oil futures climbed to as high as $75.20 a barrel in early trading on Tuesday, the highest since Nov. 27, 2014. (Reuters)
Updated 24 April 2018
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Brent crude oil rises for a sixth day as supplies tighten amid strong demand

  • US West Texas Intermediate crude futures were at $68.98 a barrel, up 34 cents
  • The potential of renewed US sanctions against Iran is pushing prices higher

SINGAPORE: Brent crude oil rose for sixth day on Tuesday, passing $75 a barrel, on expectations that supplies will tighten because fuel is rising at the same time the US may impose sanctions against Iran and OPEC-led output cuts remain in place.
Brent crude oil futures climbed to as high as $75.20 a barrel in early trading on Tuesday, the highest since Nov. 27, 2014. Brent was still at $75 a barrel at 0311 GMT up 29 cents, or 0.4 percent, from its last close.
Brent’s six-day rising streak is the most since a similar string of gains in December and it is up by more than 20 percent from its 2018 low in February.
US West Texas Intermediate (WTI) crude futures were at $68.98 a barrel, up 34 cents, or 0.5 percent from their last settlement. On Thursday, WTI rose to as high as $69.56, the most since Nov. 28, 2014.
Markets have been lifted by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) which were introduced in 2017 with the aim of propping up the market.
The potential of renewed US sanctions against Iran is also pushing prices higher.
Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA said new sanctions against Tehran “could push oil prices up as much as $5 per barrel.”
The US has until May 12 to decide whether it will leave the Iran nuclear deal and re-impose sanctions against OPEC’s third-largest producer, which would further tighten global supplies.
“Crude prices are now sitting at the highest levels in three years, reflecting ongoing concerns around geopolitical tensions in the Middle East, which is the source of nearly half of the world’s oil supply,” ANZ bank said.
“Oil strength is coming from Saudi Arabia’s recent commitment to get oil back up to between $70 to $80 per barrel as well as inventory levels that are back in the normal range,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
OPEC’s supply curtailments and the threat of new sanctions are occurring just as demand in Asia, the world’s biggest oil consuming region, has risen to a record as new and expanded refineries start up from China to Vietnam.
One of the few factors that has limited oil prices from surging even more is US production, which has shot up by more than a quarter since mid-2016 to over 10.54 million barrels per day (bpd), taking it past Saudi Arabia’s output of around 10 million bpd.
As a result of its rising output, US crude is increasingly appearing on global markets, from Europe to Asia, undermining OPEC’s efforts to tighten the market.


Trump administration weighs slapping tariffs on auto imports

Updated 2 min 58 sec ago
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Trump administration weighs slapping tariffs on auto imports

WASHINGTON: The US Commerce Department said Wednesday it launched an inquiry that could allow the Trump administration to impose tariffs on auto imports over national security concerns.
Commerce Secretary Wilbur Ross announced he initiated a so-called Section 232 investigation on auto trade — which would provide the legal basis to impose tariffs, if his department finds imports threaten US national security — after speaking with Donald Trump on the matter.
“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Ross said.
“The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.”
In a separate statement released by the White House, Trump said he had “instructed” Ross to “consider” kicking off the probe.
“Core industries such as automobiles and automotive parts are critical to our strength as a nation,” Trump’s statement said.
The Trump administration had used the same justification to slap steep tariffs on steel and aluminum, raising the specter of a trade war.
A similar move in the auto industry would open yet another front in the Republican president’s confrontational rows over trade that have drawn global outcry from allies and partners.
The latest announcement comes as negotiations with Canada and Mexico over revamping the continent-wide North American Free Trade Agreement (NAFTA) have stalled over auto demands.
Earlier Thursday, Trump had blamed the US neighbors to the north and south for being “difficult” in talks to renegotiate the pact.
The Wall Street Journal reported earlier Wednesday that Trump was asking for vehicle import tariffs as high as 25 percent.
Trump has frequently lambasted China’s high import duties on foreign cars.
During recent negotiations, President Xi Jinping offered to cut the rate to 15 percent from 25 percent.
The Journal, citing sources in the auto industry, said US moves to retaliate likely would face significant opposition from trading partners and auto dealers that sell imports.
Japan was quick to lash out, with its trade minister Hiroshige Seko saying on Thursday that such a move would “plunge the world market into confusion” and be “extremely regrettable.”
Passenger cars make up around 30 percent of Japan’s total exports to the US and Tokyo has already threatened Washington with retaliation at the World Trade Organization for the steel tariffs.
In its statement announcing the inquiry, the Commerce Department cited figures showing that US employment in automobile manufacturing had dropped by 22 percent from 1990 to 2017.
Trump appeared to tease Wednesday’s announcement with earlier tweets, saying: “There will be big news coming soon for our great American autoworkers.”
“After many decades of losing your jobs to other countries, you have waited long enough!”
In another missive referring to trade talks with China, he said that, while the discussions were proceeding nicely, “in the end we will probably have to use a different structure.”
Trump — whose protectionist platform helped launch him to the White House — has repeatedly floated the notion of steep tariffs that would shield the US auto industry.
He has specifically targeted Germany, and argued that American cars are slapped with higher tariffs than those imposed on European autos.
US cars sold in the EU are hit with 10 percent duties, while the US imposes just 2.5 percent on cars from the EU.
But Washington imposes 25 percent tariffs on European pick-ups and trucks — which the EU taxes at a much lower 14 percent on average.