Published: Thu, July 12, 2018
Money | By Ralph Mccoy

Oil plunges on Libya reopening ports, trade tensions

Oil plunges on Libya reopening ports, trade tensions

A further escalation of trade disputes could depress demand for oil from China and elsewhere.

USA crude inventories fell last week by 6.8 million barrels, according to the American Petroleum Institute, an industry group. The sell-off intensified after news of a fall in US crude oil inventories failed to reverse market sentiment.

US crude oil stocks fell by almost 13 million barrels last week, the most in almost two years, dropping overall crude stocks to their lowest point since February 2015, the Energy Information Administration said on Wednesday.

Brent crude futures were down 65 cents, or 0.8 percent, at $78.21 a barrel by 0627 GMT, having fallen to as low as $77.60.

Lower oil prices are particularly important to USA consumers in the summer months when driving reaches its heaviest. "If these tariffs are introduced there will be an impact on global growth and demand".

The price fall was aided by news Tripoli-based National Oil Corp (NOC) had lifted a force majeure on four Libyan oil ports, saying production and exports from the terminals would "return to normal levels in the next few hours".

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In addition, overall crude imports declined on the week, falling to 7.4 million barrels per day, off by 1.3 million bpd from the week-earlier period. "That's while Saudi Arabia told OPEC it pumped about 10.5 million barrels of crude a day last month as the kingdom sought to cap rallying prices by ramping up output, according to people familiar with the matter", writes Bloomberg.

U.S. Secretary of State Mike Pompeo said on Tuesday that Washington would consider requests from some countries to be exempt from sanctions due to go into effect in November to prevent Iran from exporting oil.

China was the world's biggest oil importer previous year, followed by the US.

The market shrugged off bullish USA government data showing crude stockpiles slumped by almost 13 million barrels last week, the biggest slide in almost two years.

Due to higher US oil production, however, higher prices are not necessarily a net loss for the USA economy.

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