The Trump Effect, Crude Oil Prices Fall Across the Board

Oil prices rise as looming Norway strike adds to disruptions

Oil prices rise as looming Norway strike adds to disruptions

US crude fell $1.29 to $72.82 a barrel by 10:53 a.m. ET while Brent crude dropped $1.92 to $76.94 a barrel. USA crude CLc1 fell $3.73, or 5 percent, to $70.38 a barrel.

At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests the U.S. crude oil price may continue to fall.

Oil prices fell along with stock markets and other commodities after the Trump administration threatened tariffs on another $200 billion in Chinese goods.

"The trade concerns have bitten today and the reason is that this is above and beyond what the market was expecting", said Michael McCarthy, chief markets strategist at CMC Markets in Sydney. "If these tariffs are introduced, there will be an impact on global growth and demand".

"In 2019, EIA forecasts that the United States will average almost 12 million barrels of crude oil production per day", said Linda Capuano, Administrator of the EIA.

On Monday, Suncor Energy said its 360,000-barrel-per-day Syncrude facility would resume some production in July, earlier than expected, following an outage last month that disrupted total output and sent USA prices higher.

"Libyan relief changes the conversation about spare capacity", said John Kilduff, a partner at Again Capital Management. Venezuela's production has collapsed due to a lack of investment and Iranian exports have suffered due to U.S. sanctions.

Additionally, a report showed Saudi Arabia hiked its oil output in June to the highest level since the end of 2016, as it aims to cool the market after crude prices recently rose to 3-1/2-year highs.

Prices were further pressured after 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. While the South Asian country has said it plans to seek exemptions and is also looking at alternate payment mechanisms, the government's also asked refiners to brace for all eventualities, including zero imports.

The decline in overall inventories was partially due to a fall-off in stocks at the Cushing, Oklahoma, delivery hub USOICC=ECI for USA crude futures, which were down by 2.1 million barrels.

Sources at South Korean refining companies and a Chinese trading firm indicated that light sweet and medium sour United States crude suppliers may have to step up efforts to remain competitive in the Asian market, especially due to China's continued threats to levy a 25% tariff on American energy products.