Crude Oil Struggles for Direction as Trade Tensions Linger

Investing.com – Crude oil prices were slightly higher on Monday, as Iranian sanctions outweighed trade tensions between the U.S. and China.

West Texas struggled for direction, falling 0.03%% to $73.78 a barrel as of 11:13 AM ET (15:13 GMT). Meanwhile futures, the benchmark for oil prices outside the U.S., rose 1.36% to $78.16.

The U.S. imposed tariffs on $34 billion of Chinese goods on Friday, with China imposing its own set of tariffs. U.S. President Donald Trump said another $16 billion could go into effect in two weeks, and that he is considering to impose additional tariffs on $500 billion in Chinese goods if Beijing retaliates.

Supply disruptions in Libya, Venezuela and Iran have increased crude prices in recent weeks, with the U.S. wanting to reduce its oil exports from Iran.

Meanwhile U.S. oil output is increasing but is unlikely to be enough to counter a supply gap if the sanctions against Iran go into effect. Last week the number of rigs drilling for oil in the U.S. increased by five to 863, up 100 year-on-year, reported on Friday. The oil rig count is an indicator of future output.

But while output is increasing, the U.S. oil market is tightening, data shows. Crude inventories at Cushing, Oklahoma fell to a three-and-a-half year low last week.

Elsewhere the Organization of the Petroleum Exporting Countries agreed in June to raise output at a nominal increase of 1 million barrels a day (bpd) amid pressure from the U.S. to decrease prices. While OPEC members will add around 700,000 barrels a day, non-OPEC oil suppliers led by Russia would add the rest. 

In other energy trading, increased 1.78% at $2.1475 a gallon, while rose 1.64% to $2.2040 a gallon. were down 0.91% to $2.832 per million British thermal units.

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