China's tariffs on US oil to put pressure on exports, Gulf Coast prices: traders

HOUSTON (Reuters) – China risks cutting US tariffs on oil imports by 5 percent in the United States. Demand for physical crude oil on platforms along the US Gulf Coast has already declined, traders say.

Last week's PADD 3 stocks reached their highest level in a month, at 225.1 million barrels, or 12.4 million more than the same week last year, according to state government data. -United. Supplies increased with the opening of two new pipelines carrying American shale from the Permian Basin last week, pushing the main coastal qualities to the lowest level in a year.

On Friday, China proposed for the first time to remove 5% of US tariffs on 75 million US dollars, including oil, in response to President Donald Trump's plan to impose 10% tariffs on Chinese-made consumer goods on December 1 and 15.

Tariffs on oil imports "would block US flows into China," leaving exporters selling a rising tide of shale oil to South Korea and Japan, said John Coleman, an oil analyst at Wood Mackenzie, consultant.

US exports of crude oil to China had stagnated in the past year due to rising trade tensions between the United States and China. Chinese imports of US crude fell to just 3 percent of total US crude exports this year, compared with 22 percent for the nine months ended June 2018, according to the American Petroleum Institute.

Mars Sour crude, widely exported, was traded in the UK at a premium of 1.05 USD this week, before retreating slightly. Light Louisiana Sweet has also bid around $ 2.50, its lowest level in a year. Prices will have to drop sharply so that shippers can profitably route US crude to foreign buyers, traders said.

"They have yet to fall," said an American crude trader. "The arb needs to expand for American oil to find markets."

Magellan East Houston's West Texas Intermediate crude, also known as MEH, was trading at $ 2 a barrel versus US crude earlier this week, the lowest since last August. He was quoted at $ 2.45 on WTI on Friday.

"The pressure relief valve of everyone is Asia for those excess barrels," said an American trader.