Schork Group CEO Stephen Schork discusses the price of oil and what it means for the economy.
China’s refineries processed a record amount of crude oil last month, and are now looking to the US to find crude.
| Ticker | Security | Last | Change | Change% |
|---|---|---|---|---|
| OIL | BARCLAYS BANK PLC IPATH ETN (18/04/41) CRUDE | 12.58 | -0.18 | -1.45% |
China is looking to book oil tankers for August and September to ship at least 20 million tons of U.S. crude, according to Reuters. The move comes as there is increasing pressure on the Chinese to comply with their Phase One US trade sales commitments, as they have been delayed in purchasing many US goods. The move by China to increase oil purchases comes just prior to the assessment of U.S.-China trade sales, initially scheduled for Saturday, which was delayed due to schedule issues with no new date agreed.
TRUMP-PLEDGES TAX CREDITS FROM US FIRMS THAT ARE JOBS FROM CHINA
The move by China through US crude is a positive sign for the fate of global trade. However, the irony is that it can not help US oil producers immediately and make our own oil inventories very tight. It was not too long ago when American energy producers begged China to buy our abundant supply, but now not so much.
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U.S. oil inventories are starting to fall. In part, because many U.S. oil producers are out of business due to the recent coronavirus oil price, as existing companies lack the capital to increase production. Since the COVID-19 pandemic, U.S. oil production has seen a drop of well over 2 million barrels per day. That’s the most important drip since they kept records. The cuts in OPEC Plus production have also taken their toll on the US oil supply, leading to the biggest drop in three weeks on the Gulf Coast in history. That means US oil supplies have already fallen, and the large purchases of oil by China could cause a spike in US energy prices as we get closer to the winter warming season.
US SEANZURE OF IRAN FUEL BUND FOR VENEZUELA WILL BE LARGEST CONFIRMATION OF IT, EVERYWHERE CONFIRMATIONS
However, a move by the Trump administration could reduce that brief pressure after the administration successfully seized Iranian fuel from four tankers sailing to Venezuela, and increased its “maximum pressure campaign” against Tehran, a senior U.S. official confirmed to Fox News on Thursday night. Iran and Venezuela have sought to limit sanctions imposed by the US on both countries by forming an oil partnership. The confiscated charge, first reported by the Wall Street Journal on Thursday, was a direct violation of U.S. sanctions. A former official explained that the tankers were not seized, but the oil is now in US possession.
It’s probably a good thing that the US seized this oil, because we can now turn around and sell some of it to China.
That extra oil should come in handy if our supply is tighter.
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Phil Flynn is a senior energy analyst at The PRICE Futures Group and a participant in Fox Business Network. He is one of the world’s leading market analysts, providing individual investors, professional traders, and institutions with current investments and insights into risk management in global petroleum, gasoline, and energy markets. His precise and timely forecasts have been in great demand worldwide by industry and media and his impressive career spans nearly three decades, gaining attention with his brand calls and energetic personality as author of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at [email protected].
