Indian Oil signs first annual deal for USA oil

WTI Crude Oil

WTI Crude Oil

This bullish signal combined with renewed optimism coming from both the USA and China that they had made some progress in last week's trade talks.

The increased purchase from the USA -based oil companies has come within months of re-impostion of economic sanctions against Iran-India's third-biggest supplier of oil. The group of producer countries agreed late a year ago to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from swelling.

State-owned Indian Oil Corp (IOC) has signed its first annual deal to buy usa oil, paying about $1.5 billion for 60,000 barrels a day in the year to March 2020 Reuters reported yesterday quoting the company's chairman.

Further supporting crude prices have been US sanctions against oil exporters and OPEC-members Iran and Venezuela.

Daily April WTI Crude Oil
Daily April WTI Crude Oil

International Brent crude futures were at $66.66 per barrel at 0746 GMT, up 41 cents, or 0.6 percent, from their last close. HSBC Holdings warned on Tuesday that an economic slowdown in China and Britain would throw up further hurdles this year.

"The market is slowly regaining its bullish footing, subject to the perception of economic risks tied to US-China trade talks", said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas. Traders said they were cautious on taking large new positions before the outcome of the talks.

Overall Venezuelan exports fell to 1.1 million barrels a day this month, or 9.2 percent since January when Venezuelan oil shipments to the United States were called off in the wake of the sanctions. Recently, Saudi Arabia has suggested that they are going to cut production, and so far it seems to be working as far as price is concerned.

US President Donald Trump ratcheted up sanctions on January 28 which were created to undercut financial support for Venezuelan President Nicolas Maduro. "We expect lots of volume going away from Venezuela, west Africa and Iran, so it makes sense to have guaranteed term supplies from the USA, where crude production is increasing", she said.

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