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Oil rallies as IEA warns of output capacity limits

12 July 2018

Economists are anxious that escalating trade tensions between the United States and China will hurt the global economy, lowering demand.

International Olympic Committee added 5.83 per cent to Rs 164.20.

"The scope of today's sell-off is unequivocally a speculative washout", said Saucer.

"For WTI (U.S. light crude) there is tightness at Cushing, which will be supportive over July and August", said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.

The IEA welcomed in its July report last month's agreement between the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation to open the taps in order to bring prices down from multi-year highs. A stronger dollar can weaken dollar-denominated commodities, like crude. "If these tariffs are introduced, there will be an impact on global growth and demand".

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The sharp drop in crude prices was triggered on reports that Libya's National Oil Corp that would reopen four export terminals, which were closed since June, hurting the oil supplies.

"U.S. crude output has remained above the 10-million-barrel a day mark since February".

"Libyan relief changes the conversation about spare capacity", said John Kilduff, a partner at Again Capital Management.

"Rising production from Middle East Gulf countries and Russian Federation, welcome though it is, comes at the expense of the world's spare capacity cushion, which might be stretched to the limit", the Paris-based agency said in its monthly report.

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.

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Shares of oil marketing companies rallied up to 6 per cent in Thursday's trade following a sharp fall in global crude prices on Wednesday.

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

Saudi Arabia might have to draw harder than ever before on its spare production capacity as a spiraling economic crisis in Venezuela, renewed US sanctions on Iran and disruptions in Libya strain global markets, the agency predicted.

During the session, CME Group said a technical issue impacted connectivity for some customers.

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Oil rallies as IEA warns of output capacity limits