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Crude oil prices are rising on Friday along with global stocks

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Crude oil prices are rising after the US President Donald Trump increased tariffs from 10% to 25% on 200 billion USD worth of Chinese goods. In this way, the trade dispute between the two largest economies in the world escalates further.

The futures on US crude oil WTI rose by 0.63% to 62.09 USD per barrel. The Brent variety increased by 0.47% to 70.72 USD per barrel.

Oil prices, along with most risky assets, are moving almost in sync with trade-related updates. Despite the US tariff hike, the global stocks are into the green, edging higher after markets had already calculated the custom duties increase into their values.

WTI oil

The growing tensions between the two countries, the world’s largest consumer, will probably affect the demand for oil. Both countries account for 34% of world oil consumption in the first quarter of 2019, according to data from the International Energy Agency.

Data for increased supply, along with demand concerns, ultimately bring oil prices down on a weekly basis. WTI is about to report a weekly loss of 0.3% and this will be the third negative week in a row. Brent headed for a second weekly loss of 0.6%.

Moreover, the efforts of the Organization of Petroleum Exporting Countries (OPEC) to reduce supply and tighten the market ultimately support prices.

The US Energy Information Administration expects global oil demand to rise 1.4 million barrels per day this year.

US crude inventories down

The US crude oil inventories for the week ended May 3, excluding the Strategic Petroleum Reserve, decreased by 4 million barrels from the previous week, according to data from the US Energy Information Administration.

At 466.6 million barrels, the US crude oil inventories are at the 5-year average for this time of year, the report indicated.

The EIA said total motor gasoline inventories decreased by 600,000 barrels and are 2% below the 5-year range for this time of year. Finished gasoline inventories and blending components inventories both decreased last week. Distillate fuel inventories decreased by 200,000 barrels and are about 5% below the 5-year average for this time of year. Propane-propylene inventories increased by 1 million barrels last week and are about 17% above the 5-year average for this time of year.

The US refinery inputs averaged 16.4 million barrels per day for the week ended May 3, about 41,000 barrels per day less than the previous week’s average. Refineries operated at 88.9% of capacity.

Gasoline production increased, averaging 10.1 million barrels per day. Distillate fuel production decreased, averaging 5.1 million barrels per day.

Meanwhile, the US crude oil imports averaged 6.7 million barrels per day, down by 721,000 barrels per day from the previous week. Over the last 4 weeks, crude oil imports averaged 6.8 million barrels per day, 15.6% less than the same period last year. Total motor gasoline imports averaged 1.1 million barrels per day. Distillate fuel imports averaged 111,000 barrels per day.

Oil rigs count

The US oil and gas rigs fell by 13 to 1,071 the week ended May 8, according to the data of the S&P Global Platts Analytics, resuming what has generally been a six-month downward trend despite domestic oil prices continuing firmly above 60 USD per barrel.

The rig count drop has fluctuated up and down in recent weeks as upstream operators – many of whom have heavy early-2019 activity programs planned for the year – released a rig after finishing a program or prepared to drill new wells. Last week the rig count gained 18 to 1,084 platforms after spending much of April slipping each week.

The US rig count peaked in mid-November 2018 at 1,233 and has gradually decreased since then. It dropped below 1,100 in mid-February and since then has generally stayed around the high 1,100s.

This week’s rig count decrease was for both oil and gas. The oil-directed rigs were down by five to 852, while rigs chasing gas fell by 6 to 218.