US oil started the week on bad footing on the back of China’s 5% tariff on US crude. The Chinese initiated the first round of tariffs on September 1st and plan to begin the second batch on December 15.
With the US stepping up their game on Iran with their own sanctions, affecting their production levels, crude was able to recover some of the earlier losses and reversed its course despite API’s huge build.
API Weekly Inventories Ignored
The American Petroleum Institute (API) reported a huge build in crude stocks for the week ending August 29. Analysts had expected a small build of 400 thousand barrels. However, the real results proved their projections were way off, posting 3.5 million barrels instead.
Luckily for oil bulls, headlines involving yet another seized oil tanker and OPEC-led cuts pushed sentiment for oil demand lower. That supported the prices of oil as bullish bets had already increased amid the US-Iran drama.
Huge EIA Draw Sends WTI to Fresh Monthly High
The Saudis have been looking to take action to support prices higher along with OPEC this week. Meanwhile, the French President’s attempt to relieve US pressures on Iran have failed. As a result, crude shifted further away from registering a loss for this week. The geopolitical developments drove prices up to last week’s high of $56.50 per barrel.
On Thursday, following a huge crude oil draw of 4.8 million barrels, not only were oil traders able to mask US/Sino and US/Iran related concerns, but they were also able to reach a fresh monthly high.
The prices of oil rose at $57.80 per barrel, however only momentarily, after the EIA report. Regardless of the factors affecting oil prices positively, there seems to be more focus on trade war-led forecasts, rather than OPEC policies and EIA reports.
Adding to that, gasoline and US oil production lent a heavy hand on bears, driving prices to a Thursday low of $56 per barrel.
US Oil Seems Mixed Medium-Term, Bullish in the Short-Term
Headline news indicates that the OPEC and Non-Opec partners’ approach to stabilize the market are failing. On the one hand, they are talking about production increases, on the other about production cuts. That brings on mixed messages to oil traders.
Uncertainty is likely to remain intact in the oil markets, as volatility levels turn increasingly flat, yet remain at large. With positive-influence developments taking place, WTI could head up to $61 levels, to potentially complete the 3-3-5 flat pattern.
