Oil falls on lower China refining activity, fresh US crude output record

OPEC, together with Russia, will officially meet in Vienna on June 22 to discuss production policy. (Reuters)
Updated 14 June 2018
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Oil falls on lower China refining activity, fresh US crude output record

SINGAPORE: Oil prices eased on Thursday, dragged down by rising output and a decline in China’s refining activity, although strong fuel consumption in the US and a drop in its crude inventories provided the market with some support.
Brent crude futures were at $76.55 per barrel at 0445 GMT, down 19 cents, or 0.25 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $66.62 a barrel, down 2 cents from their last settlement.
China on Thursday reported a drop in its refinery activity, from 12.06 million barrels per day (bpd) in April to 11.93 million bpd in May, although year-on-year runs were still up by 8.2 percent.
Also weighing on prices was another rise in US oil production, which hit a weekly record of 10.9 million bpd last week, according to the Energy Information Administration (EIA) on Wednesday.
US crude output has risen by almost 30 percent in the last two years, and it is now close to top global producer Russia, which produced 11.1 million bpd overall in the first two weeks of June.
But the rising output came amid strong demand, which traders said prevented crude prices from falling further.
US consumption of gasoline in the US rose to a historic high of 9.88 million bpd last week, according to the EIA.
US crude inventories fell by 4.1 million barrels in the week to June 8, to 432.4 million barrels.
Still, US output is now above that of top exporter Saudi Arabia, which currently churns out slightly above 10 million bpd.
The surge in American output puts pressure on other producers, who are losing market share.
Russian and Saudi production has been held back voluntarily since 2017, when the Organization of the Petroleum Exporting Countries (OPEC), together with some non-OPEC producers including Russia, started supply cuts aimed at propping up prices.
With Brent prices up by around 180 percent from their 2016 lows and demand strong, OPEC and Russia may soon end their voluntary supply cuts.
OPEC, together with Russia, will officially meet in Vienna on June 22 to discuss its production policy.
US bank Morgan Stanley said OPEC and its partners had “largely achieved their stated objective of rebalancing the oil market.”
With demand for oil strong, Morgan Stanley said the group’s “production is likely to creep higher.”
OPEC’s de-facto leader Saudi Arabia and Russia will also have the chance to talk before the Vienna meeting.
Russia and Saudi Arabia are set to open the football world cup, which kicks off in Russia on Thursday.
“The two producers’ ministers plan to discuss the issue during tomorrow’s World Cup game between the two countries,” ANZ bank said.


US tariffs trigger WTO spat escalation

Updated 2 min 50 sec ago
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US tariffs trigger WTO spat escalation

GENEVA: China, Russia and the European Union are among a string of countries asking the World Trade Organization to probe new US steel and aluminum tariffs, the world trade body said Friday.
Washington is meanwhile calling the WTO to investigate a number of retaliatory duties imposed by a range of countries, the agenda for the next meeting of the organization’s Dispute Settlement Body (DSB) showed.
The agenda for the DSB meeting set to be held on October 29 shows that the EU, China, Russia, Canada, Mexico, Norway and Turkey plan to ask for the creation of a panel of experts to review US President Donald Trump’s decision to hit them with tariffs of 25 percent on steel and 10 percent on aluminum.
Marking a departure from a decades-long US-led drive for free trade, Trump has justified the steep tariffs with claims that massive flows of imports to the United States threaten national security.
The tariff spat has escalated into an all-out trade war between the US and China and growing trade tensions between Washington and many of its traditional allies.
The US is meanwhile planning to request that the DSB create another set of expert panels to review the legality of retaliatory tariffs imposed by China, Canada, the EU and Mexico.
The requests, which follow rounds of failed consultations, mark and escalation in an ongoing showdown at the WTO around Trump’s controversial trade policies.
Under WTO regulations, parties in a dispute can block a first request for the creation of an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.
“Once the panel is established and composed, the EU is ready to demonstrate that the United States’ import duties are WTO-inconsistent and to obtain a ruling that condemns the US and brings relief to the EU industry,” an EU Commission spokesperson said.
The creation of a DSB panel usually triggers a long and often costly legal battle that sometimes takes years to resolve.