4 Key Drivers Currently Affecting Oil Prices
Ellen Wald, PhD | Jul 04, 2018 18:01
U.S. equity markets are closed for today's 4th of July holiday, and trade, including in the oil markets, may be slow on lower volume for the remainder of the week. Nevertheless, oil prices have been on the move. Though the commodity is trading lower at the time of writing, oil hit $75 yesterday, for the first time since November, 2014.
Because of the holiday, the EIA inventory information will be released on Thursday instead of Wednesday. The forecasts all predict that the EIA crude numbers will show a draw in crude oil inventories. The question is how significant—TankerTrankers.com forecasts a draw of 9.8 million barrels.
The API expects a draw of 4.5 million barrels. However, the decrease in U.S. crude oil stocks is not the only issue affecting oil prices this week, a number of fundamental drivers are currently propelling crude prices.
h2 1. U.S. Policy Toward Iran/h2Last week, the State Department announced that unlike during the Obama administration—which offered waivers to Asian importers of Iranian oil—the Trump administration would not be offering any such deals. Oil prices increased last week on the news that as much as 2.5 million barrels per day of Iranian oil could come off the market by November.
This past Tuesday, however, the approach and said that though its goal is still to reduce Iranian oil revenues to zero, it would be willing to “work with countries that are reducing their imports on a case-by-case basis.” Even though the media portrayed this as a significant policy shift, in practice it may be that the United States will only relax sanctions for China in exchange for concessions in the ongoing trade negotiations between the two countries.
India, the second largest importer of Iranian crude, does not seem to expect any special treatment and says it already has immediately issued a counter statement indicating it had made no such pledge.
Later, the
Canada does not expect that Syncrude’s 360,000 barrels per day will return until the end of July.
Wishing all my American readers a happy Independence Day!
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