Oil's Slide Continues as China Worries Add to Pressure
June 18 2018 - 2:32AM
Dow Jones News
By Biman Mukherji
Oil prices continued to weaken Monday, building on Friday's
slide as worries about increased production were amplified by the
potential of Chinese tariffs on energy imports from the U.S.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in July were down 1.8% at $63.88 a barrel in the
Globex electronic session. August Brent crude on London's ICE
Futures exchange fell 0.8% to $72.84. Both had rebounded a bit from
earlier lows.
Energy-related products have been mentioned as China plans
retaliatory tariffs against the U.S. That could mean that the
world's biggest importer of oil could eschew U.S. products at a
time when exports of crude, coal and liquefied natural gas to Asia
have been rising.
Oil prices have also been pulled lower by reports Russia and
Saudi Arabia are considering a plan to raise output by more than
1.5 million and 1 million barrels, respectively. A meeting of the
Organization of the Petroleum Exporting Countries and other major
producers starts Friday to consider raising production caps which
have been in place since the start of 2017.
With several other OPEC members, including Iran, resisting
efforts for the group to boost output because of the potential
implication for prices, whether--and how much--production might
rise remains in question, analysts say.
But Gnanasekar Thiagarajan, director at Commtrendz Risk
Management, thinks "most will fall in line because Saudi Arabia and
Russia are the largest producers." He sees WTI possibly falling to
$61 per barrel and Brent dropping below $70 in the near term.
Also a recent pressure point on oil lately has been the U.S.
dollar's ongoing strength. The WSJ Dollar Index o Friday was at its
highest late New York level in 11 months. At the same time, the
U.S. oil benchmark has fallen four straight weeks, its longest
losing streak since August.
Monday's drop in oil futures also came as other risky assets in
Asia, notably stocks, fell across the region. Meanwhile,
traditional safe havens like gold, U.S. Treasurys and the Japanese
yen rose.
Write to Biman Mukherji at biman.mukherji@wsj.com
(END) Dow Jones Newswires
June 18, 2018 02:17 ET (06:17 GMT)
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