"This escalation of the trade war is risky for oil prices", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.
The news of the USA asking OPEC to increase oil output by 1mb/d (million barrel per day) in the second half of 2018 and rising U.S. oil production has put downward pressure on prices. The US announced it would impose fresh tariffs worth $50 billion on Chinese goods starting from July 6, to which China has threatened to impose duties on USA oil imports. In fact, he tweeted twice specifically targetting OPEC. The rise in Oil price is due to the production cut in past few years by OPEC.
Expressing his optimism over regaining balance to the worldwide oil market, Al Mazrouei said: "Looking ahead, I remain optimistic that we will fulfil our goal of delivering sustainable oil market stability, which is meant to serve the long term interests of producers, consumers and the global economy".
Crude inventories fell 3 million barrels in the week to June 15 to 430.6 million, compared with analysts' expectations for a decrease of 1.9 million barrels. Next year, the story is the same i.e. demand grows by another 1.4 mb/d, and non-OPEC supply will grow by 1.7 mb/d.
Meanwhile, Hindustan Petroleum Corporation Limited (HPCL) Chairman Mukesh K. Surana also said fuel prices may be lowered post the upcoming OPEC meeting.
Even though the 2019 oil price forecast is higher than it was in the May monthly report, EIA expects oil prices to decline in the coming months because global oil inventories are expected to rise slightly during the second half of 2018 and in 2019.According to EIA, expected inventory growth results from forecast oil supply growth outpacing forecast oil demand growth in 2019.
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For one, the confrontationist attitude shown by the USA government has rattled world currency markets. India's engagement with OPEC is important as India sources about 82% of crude oil, 75% of natural gas and 97% of LPG from OPEC member countries.During the visit Pradhan will deliver a key note speech on "Sustainable Global Energy Future". While none of these three nations has anywhere near the amount of influence over OPEC as either Saudi Arabia or Russian Federation, there will be power in numbers if other producers in the cartel reject the proposal to increase supply.
With traders fleeing to safer assets, the yen rose against the dollar, while the greenback rallied against most high-yielding currencies with the Australian dollar, South Korean won and Mexican peso all sharply down. "This could make a huge dent in the U.S. bid to export oil", he added. That modest rise marked a fourth straight weekly climb, likely signalling further gains in USA output levels. These factors could help pressure and cap the price of Oil in 2018. But the outlook for higher oil prices comes down to the severe production outages in several places, with Venezuela front and centre.
A cut in Chinese purchases of United States oil may also benefit Iran's sales, which Washington is trying to curb with new sanctions it announced in May. It said China takes around 20% of all USA crude exports.
From outside, Trump is attacking the cartel on Twitter for artificially inflating prices and lobbying hard behind the scenes for a significant production increase.
China's aggressive riposte to Trump took some in the industry by surprise. Russia, by far the largest non-member to join OPEC's cuts agreement, has said it would be happy with lower crude prices and appears keen to start up new fields. Total volume traded was about 41 per cent above the 100-day average.