Oil inches down for first session in 4, with US inventories in focus

Crude oil futures fluctuated lower in a tight range during the Asian session, to see Nymex crude drops in its second session from the highest since late October, while Brent crude also bounced in its second session from is highest since November, amid the rise of the dollar index, stabilizing near the highest in twenty-two months according to the inverse relationship between them.

This comes on the verge of economic data expected today, Wednesday, by the Chinese economy, the largest consumer of energy globally, and the relese of the Energy Information Administration (EIA) report on oil inventories in the United States, the largest producer and consumer of energy globally, which may reflect a surplus of 0.9 million barrels during the week ending April 19th, compared to a deficit of 1.4 million barrels in the previous week.

As of 04:12 GMT, Nymex crude futures (June 15th delivery) fell 0.39% to trade at $65.92 per barrel compared to the opening at $66.17 a barrel. While Brent crude futures (June 15th delivery) also fell 0.35% to trade at $74.13 per barrel compared to the opening at $74.32 per barrel, amid the rise of the US dollar index by 0.06% to 97.65 compared to the opening at 97.60.

Investors are now looking for the Chinese economy, the world's second-largest economy and the second-largest industrial nation after the United States to unveil March's leading index reading, this comes hours after the People's Bank of China (CBB) That it may offer to stop the mandatory reserve reductions for the Chinese banks, explaining that the data of the first quarter support doing so and will re-evaluate the economic conditions.

On the other hand, the Minister of Foreign Affairs of Saudi Arabia, Ibrahim Abdulaziz Al-Assaf, said on Tuesday, that Saudi Arabia, the world's third largest oil producer and the largest oil producer of the Organization of Petroleum Exporting Countries (OPEC) and the world's largest oil exporter of the organization, welcomes the suspension of Iran's oil exports exemptions, saying that the US decision was aimed at pushing Iran to halt its destabilizing policies in the region.

He also said that the Iranian regime is always using the resources of the state to finance its dangerous policies in the Middle East region and that Saudi Arabia calls for continuing the international efforts to pressure Iran to comply with international law. He stressed that the Kingdom will continue its efforts to stabilize the global oil markets.

On the other hand, the Iranian Oil Minister, Bijan Namdar Zangeneh, also noted yesterday, that the United States of America is making a serious mistake in its attempts to lubricate oil, explaining that the United States is using oil as a weapon, adding that his country is seeking by all means to break the US economic sanctions against its oil exports and against countries that buy Iranian oil, whose exceptions will not be extended from the US economic sanctions by next month.

In the same context, the Chinese Foreign Ministry expressed its total and unequivocal rejection of the unilateral US economic sanctions against Iran, noting that the United States should respect China's cooperation with Iran, which serves the interests of the Chinese and Iranian sides. Adding that the Chinese government is committed to uphold the legitimate rights and interests of Chinese companies in their dealings with Iran.

The European Commission also criticized yesterday, in turn, the United States' decision to suspend exemptions from the application of Iranian sanctions, as well as imposing sanctions on Iranian oil importers. "We regret this decision and will continue to abide by the joint and comprehensive plan of action with Iran, as long as Iran is committed to the nuclear agreement" The European Commission's foreign affairs spokeswoman said.

US Secretary of State, Mike Pompeo, said that the United States had made its demands clear for Iran and that his country's discussions with its partners in the past few days had been about providing alternative offers, explaining Washington's intention to apply its economic sanctions without any exceptions to Tehran by next month. Adding that the Kingdom of Saudi Arabia and the United Arab Emirates in addition to his country will ensure stability and balance in oil supplies.

In the same context, US Secretary of State, Pompeo, noted that the United States will let Saudi Arabia and the United Arab Emirates to clarify the details of the oil supply. This came before the US President, Donald Trump, comments that Saudi Arabia and other countries in the Organization of OPEC will compensate more than the potential deficit due to US economic sanctions against Iran.

In another context, Saudi Oil Minister, Eng. Khalid Al-Falih commented on the US decision about not extending the waivers for China, India, South Korea, Japan, Turkey, Italy, Taiwan and Greece from its economic sanctions against the Iranian oil importers. That his country will be discussing with other countries and producers in the upcoming weeks to work on the balance and stability of oil markets amid work to ensure the stability of oil supplies in global markets.

The Libyan capital, Tripoli, suffered a series of air raids and bombings over the weekend, which also boosted oil prices earlier this week with concerns over the supply by one of OPEC's main oil exporters, with Libyan Military Marshal, Khalifa Hafater, directing his forces from the east of the country -which controls- to the capital, which is under the control of the government recognized by the United Nations.

We have also covered over the weekend, the disrupt of a major pipeline in Nigeria, one of the oil-exporting countries, which helped the Nymex crude to complete its gains for the eighth week in a row, the longest weekly rallies since the second quarter of 2015 and helped the Brent crude to complete its gains for the fifth consecutive week, marking its longest weekly gain streak since the last quarter of 2017.

We'd like to note that the official data we followed earlier this week by Saudi Arabia, the world's third-largest oil producer, OPEC's largest oil producer and the world's largest oil exporter and OPEC, showed that the Kingdom's exports dropped to 6.977 million barrels per day in February. Compared to 7.254 million barrels per day in January, which is also one of the factors that boosted the markets' concern about the oil supply.

According to the weekly report of "Baker Hughes", which was revealed last Thursday, due to the absence of the US market on Friday due to the "Good Friday" holiday, showed a decline of drilling rigs and platforms and oil exploration in the United States by 8 platforms to a total of 825 platforms during the week ending on April 19th, as the US oil production has recently stabilized at its peak of 12.1 million barrel per day.