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China budge ups ANS
ANS premium to Brent jumps as China trade, economic news bolsters crude
Steve Sutherlin
Positive news on U.S./China trade talks and China's domestic economic stimulus took crude futures higher in Asian trade May 8 as Petroleum News went to press.
Alaska North Slope crude slid $1.32 May 7 to close at $64.31 per barrel, as the Federal Reserve struck a wait-and-see posture on interest rate cuts, concerned that President Trump's tariffs might stoke inflation while choking growth. West Texas Intermediate fell $1.02 to close at $58.07 on the day and Brent fell $1.03 to close at $61.12.
The U.S. dollar gained against other currencies, adding pressure on crude, because a stronger dollar makes the dollar-denominated commodity harder to afford for buyers that must convert local currencies to purchase crude.
May 7 losses came on the heels of surging crude prices May 6 as China and U.S. officials hinted that trade talks were in the works between the countries.
ANS catapulted $2.14 higher May 6 to close at $65.63, while WTI leapt $1.96 to close at $59.09 and Brent leapt $1.92 to close at $62.15.
May 5 was a down day, swooning after the Organization of the Petroleum Exporting Counties plus its petroleum exporting allied countries agreed to hike crude production for a second consecutive month despite weak prices and uncertain demand. Eight OPEC+ countries said they will boost production by 411,000 barrels per day in June.
ANS fell $1.13 May 5 to close at $63.49, as WTI fell $1.16 to close at $57.13 and Brent fell $1.06 to close at $60.23.
On May 2, ANS edged 56 cents lower to close at $64.62, WTI dropped 95 cents to close at $58.29 and Brent dropped 84 cents to close at $61.29.
In mixed trading May 1, ANS added 59 cents to close at $65.18, WTI leapt $1.03 to close at $59.24 and Brent fell 99 cents to close at $62.13.
Despite volatile price movement, from Wednesday to Wednesday ANS fell just 61 cents from its April 30 close of $64.92 to $64.31 May 7.
ANS fared much better than Brent on the week, going from a premium over Brent of $1.80 May 2 to a premium of $3.19 over Brent on May 7. ANS closed at a premium of $6.24 over WTI May 7, versus a premium of $6.71 over WTI on April 30.
Crude shakes off surprise inventory draw Crude oil fell May 7, but downward pressure was offset by bullish factors.v
Although a survey of analysts conducted by The Wall Street Journal had called for just a 1.3 million barrel decline in crude stockpiles, U.S. commercial crude oil inventories for the week ending May 2 fell 2 million barrels from the previous week to 438.4 million barrels -- 7% below the five-year average for the season, according to data released in a May 7 report by the U.S. Energy Information Administration.
Total motor gasoline inventories rose by 0.2 million barrels for the period to 225.7 million barrels -- 3% below the five-year average for the time of year, the EIA said. Distillate fuel inventories decreased by 1.1 million barrels last week to 106.7 million barrels -- 13% under the five-year average for the season.
In another bullish action May 7, the Peoples Bank of China cut interest rates and the reserve requirement ratio for banks adding support of domestic economic growth and energy demand.
China already is seeing a recovery in air travel.
China's international air transport sector notched a sustained recovery in the first quarter, with climbing flight numbers and passenger volumes, according to the Civil Aviation Administration of China, China Daily reported April 28.
Chinese and foreign airlines operated an average of 6,395 international passenger flights per week, representing 83.9% of the pre-pandemic level recorded in 2019, the administration said. Chinese airlines transported 18.93 million international traveler trips in the first quarter, up 34% year-on-year and 4.5% higher than in Q1 2019.
Also on May 7, officials confirmed U.S./China trade talks.
U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will travel to Switzerland May 8 to meet Beijing's lead economic representative, the Wall Street Journal reported May 7.
China's Foreign Ministry said He Lifeng, China's vice premier and leader Xi Jinping's economic czar, would visit Switzerland from May 9 to 12 for discussions with American officials, the journal reported. The Treasury Department in a May 6 press release confirmed Bessent's travel plans to Switzerland for the meeting.
Increased China oil demand raises prices for Pacific tanker cargoes, which can translate to higher prices in West Coast markets where most ANS is sold.
Russia feels the pain Russian is eyeing federal spending cuts as lower oil prices deplete reserves to fund the war in Ukraine, according to a May 6 Bloomberg report citing an anonymous source familiar with preliminary discussions.
Russia may revise its "budget rule" mechanism which dictates how funds from its National Wealth Fund are spent.
The NWF is tapped to offset oil and gas revenue shortfalls when Urals crude drops below $60. According to the source the threshold could be cut to $50 if low oil prices persisted, which would force reduced spending in other areas.
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