Oil prices search for clear direction after last week's big rally

Oil prices search for clear direction after last week's big rally

Brent and WTI, in contrast, were down by that time, weighed down by concerns over a looming USA trade dispute with China.

The possibility of a full-blown trade war had weighed on the energy complex on fears that it could harm oil demand.

Oil has rallied amid geopolitical tensions and signs that USA oil stockpiles are dwindling.

Despite this, there were concerns over regulatory interference, as seen in other Chinese commodities like iron ore and coal.

"As things stand, it is a question of when, not if, the US withdraws from the agreement and fires a fresh sanctions salvo towards the OPEC nation", Stephen Brennock, an analyst at PVM Oil Associates Ltd., wrote about the Iran deal.

Last year, China became the world's biggest buyer of foreign oil, surpassing the U.S. Yuan-denominated contracts are expected to boost the use of yuan in global trade in the long run.

The current deal, under which OPEC and non-OPEC producers are cutting supply by about 1.8 million barrels per day, expires in March 2018.

Over 21 million barrels of the sulphur-rich oil were traded yesterday, reports the Wall Street Journal, meaning RMB18.3 billion ($2.9 billion) changed hands.

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Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said there was "considerable resistance" to extending the deal as current, or higher, prices could entice even more United States shale producers to come back online.

The regulators in the country hope futures will serve as a means of venture capital management for its oil companies, a reference price for industry players and a means to help open the country's financial markets.

Speculative retail and institutional investors drove much of the launch-day's liquidity, said Chen Tong, Shanghai-based senior crude analyst at First Futures.

"The recent rally in oil prices might have taken some by surprise as the underlying fundamental picture does not justify Brent being close to US$70 a barrel".

In dollar-terms, that puts Chinese crude prices significantly below Brent and only slightly above US WTI.

The jump came after Brent futures for May delivery opened above $70 per barrel for the first time since January on expectations OPEC-leader Saudi Arabia may extend supply cuts into 2019, as well as over concern that the United States may re-introduce sanctions against Iran.

Shanghai crude oil futures got a lot of investor attention during their debut on Monday, with the most-active contract jumping 3.34% to 429.9 yuan ($68.07) per barrel.

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