Oil slips as US crude stockpiles show surprise build

Oil slips as US crude stockpiles show surprise build

Oil futures were mixed Thursday after U.S. President Donald Trump again tweeted demands that major producers open their spigots to keep prices in check. Analysts however say that he cannot have both; the White House can either drive Iran's oil exports to zero, or it can have moderate United States gasoline prices, but it probably cannot have both.

Japan, which reduced Iranian oil imports significantly during the previous Western sanctions on Tehran that were lifted in 2016, is also seeking an exemption from the latest United States sanctions on Iran.

On Wednesday he tweeted that OPEC is "doing little to help", adding that, "if anything, they are driving prices higher". Trump wants greater supply from countries like Iran and Venezuela, even while he imposes greater sanctions on their economies.

In his bid to halt the flow of Iranian oil without raising prices, Trump has urged Saudi Arabia and other OPEC members to increase their output.

Oil was mixed on Friday, with short-covering pushing up USA crude futures while Brent slipped on global trade tensions and increased Saudi production.

USA tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday and Beijing has vowed to respond immediately in kind, setting the two world's biggest economies on a path toward a full-blown trade conflict.

"You can find a fairly strong inverse relationship in national presidential election years between the gasoline price and presidential approval", said Kevin Book, managing director at Clearview.

The trade war has yet to have a direct impact on oil markets, but China has indicated it could place tariffs on USA crude imports.

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Volatility in the Middle East and US foreign policy can have a major impact on oil prices.

Even so, renewed USA sanctions on Iran against its oil exports look set to tighten supply further.

"Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction (sic) in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference..."

"Because it's driving season, you expect a lot of crude to go through refineries right now - so that's why we were looking for a draw", said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

An imminent shift in global oil trade flows was also affecting prices.

According to Commerzbank, OPEC now has just enough oil to meet global demands without Iran's supply. Although there is some general nervousness over the U.S.

An International Energy Agency scenario projects oil production falling by around 1.5 million bpd due to the loss of Iranian and Venezuelan oil.

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