China calls halt to Iran oil orders

China calls halt to Iran oil orders

Oil prices were mostly steady on Friday, ending the week slightly lower as trade tensions stoked by a USA move to hike tariffs on Chinese goods overshadowed tightened global supplies and expectations of rising US refining demand.

US President Donald Trump issued orders for the tariff increase, saying China "broke the deal" by reneging on previous commitments.

Still, prices were pressured by the trade war between the world's two largest economies.

USA crude oil stockpiles fell unexpectedly last week, the Energy Information Administration said on Wednesday, and strong gasoline demand could point to additional drawdowns in coming weeks as driving season approaches.

Looking ahead, all eyes remain on the US-China trade developments, with the US tariff hike looming this Friday, which may influence the risk trend and eventually impact the risk asset, oil.

Besides, a surprising decline of USA oil rigs and a regulatory block on mining more U.S. crudes over the north-eastern shores last week had contribute to the upsurge.

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Background: Ahead of the expiration of US sanction waivers in May, India's imports of Iranian oil fell to 304,500 bpd last month - a 45 percent dropoff from 552,000 bpd in April 2018.

The July Brent crude contract was trading at almost $1 a barrel above the August contract in a market structure known as backwardation. -Chinese trade row, although persistent supply worries prevented a steeper price fall. Brent crude gained 36 cents to $70.26 a barrel.

West Texas Intermediate crude for June delivery fell $0.11 to $61.59/bbl on the New York Mercantile Exchange, after gaining as much as 1.3% earlier. The global benchmark contract was trading an $8.81 premium to WTI.

The Asian nation hopes it can resolve issues with the USA through cooperation and negotiation, the country's Commerce Ministry said in a statement after the tariff hike. It remains uncertain to what extent Saudi Arabia will increase its production to fill the gap.

"Prices are finding fundamental support from the tightening supply, as also indicated by the pronounced state of backwardation in the Brent forward curve", Commerzbank AG analysts including Carsten Fritsch wrote in a report. Tight global supply is being reflected in Brent's three-month oil time-spread, which is at the widest backwardation in nearly five years. The US Energy Information Administration expects global appetite for oil to rise by 1.4 million barrels per day this year.

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