"Shale crude is not an alternative to Iranian crude", Sandy Fielden, director of research for commodities and energy at Morningstar, told Bloomberg.
The price of crude fell amid concern over resurgent Libyan supply and the U.S.
India may raise its US oil imports, but it would hardly be able to replace all the American oil that a Chinese tariff could possibly cut off. The prospect of a worsening trade war has raised fears of slower global growth that could clip demand for oil.
West Texas Intermediate (WTI) crude for August delivery slid as much as 94 cents to $73.17 a barrel on the New York Mercantile Exchange and traded at $73.83 by 3:47 p.m.in Tokyo.
"Markets in Asia are a lot more settled today", said Greg McKenna, chief market strategist at AxiTrader in Sydney. "If the U.S. implements this additional tax on $200 billion of imported Chinese goods, it will be hard for China not to impose greater taxes on commodities imported from the U.S.", Olivier Jakob, head of energy consultancy Petromatrix, told the Wall Street Journal.
The dip was triggered by Libya's state oil company saying yesterday it plans to increase supply to match rising demand through the reopening of four export terminals that had been closed since late last month.
"Breaking $72 on the chart is big", said John Kilduff, founding partner at energy hedge fund Again Capital, CNBC reported.
Following recent port closures, Libyan production fell to 527K barrels per day from 1.28M barrels per day in February 2018. Concerns about a lack of spare capacity had led crude to rally.
China has also threatened to tax USA crude imports.
The American Petroleum Institute announced that crude inventories dropped by 6.8 million barrels in the week ending July 6 vs. Reuters' estimate for a decrease of 4.5 million barrels.
Prospects of USA sanctions on crude exports from Iran, the world's fifth-biggest oil producer, has helped push oil prices up in recent weeks, with both crude contracts trading near 3-1/2-year highs until Wednesday.
The bearish mood was also fueled by news the United States would consider requests for waivers from sanctions due to snap back into place on Iranian crude exports.
India is an obvious possibility-its imports and demand are surging, and it may be willing to replace at least part of its Iranian oil imports out of fear that its companies and the sovereign could lose access to the USA financial system should it continue to buy Iran's oil. This will bring additional crude to the market.
During the session, CME Group said a technical issue impacted connectivity for some customers.
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