The oil price spread that'll determine the type of crude bought by Asia in the wake of US sanctions on Iran is now in favor of American supply.
Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore, told Reuters that the petro-yuan contract is "thundering into action", standing a big chance of eventually rivalling internationally-recognized crude oil benchmarks such as Brent LCOc1 and WTI CLc1.
West Texas Intermediate crude for June delivery traded at $70.89 a barrel on the New York Mercantile Exchange, down 7 cents, at 3:16 pm in Singapore.
Prices pulled back in post-settlement trade after an industry organization said US crude stockpiles built unexpectedly last week.
The strong crude import pace continued this year, and in March Chinese crude oil imports hit their second-highest level on record at that time, while refined fuel exports also jumped to an all-time high, up by 43 percent compared to March 2017.
US President Donald Trump's withdrawal from a 2015 nuclear accord with Iran has driven oil to the highest since November 2014. In January 2017, OECD inventories were 340m barrels above 5 year averages.
Iran now provides approximately 4 percent of global crude supplies and is the third-biggest manufacturer in the OPEC.
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"In these early days, there is understandable uncertainty about (the) potential impact on Iran's oil exports" from the USA move, it said.
Hedge funds and money managers slashed their bullish wagers on US crude in the latest week to the lowest level in almost five months, the US Commodity Futures Trading Commission (CFTC) said on Friday, in an indicator that many financial oil traders are doubtful of significant further price rises.
OPEC output rose by just 12,000 barrels per day to 31.93 million bpd in April, according to figures collected by OPEC from secondary sources.
"A rising oil price brings upside price risk to all commodities", Morgan Stanley said in a note to clients this week.
April crude imports from Saudi Arabia, South Korea's top crude oil supplier, fell 6.9 percent to 3.32 million tonnes, or 810,564 bpd, from previous year.
"Now that the country is making cool money from crude oil, Federal Government should start saving for us not to experience the 2016 economic downturn again".
Experts pointed out that geopolitical concerns, tightening product inventories and robust demand would continue to provide support for prices.