Crude oil slightly lower as United States inventories rise

Virginia Carson
July 21, 2018

The country expects exports to drop by roughly 100,000 barrels per day in August as it works to ensure it does not push oil into the market beyond customers' needs, the kingdom's OPEC Governor Adeeb Al-Aama said.

West Texas Intermediate (WTI) crude futures rose 68 cents, or one percent, to settle at $68.76 a barrel.

N Crude has retreated by about 6 per cent this month as the prospect of a tit-for-tat trade war between the U.S. and China rattled global financial markets.

Figures showing refineries processing plenty of crude and stockpiles dropping at the Cushing, Oklahoma, delivery hub also supported the market, said John Kilduff, founding partner at energy hedge fund Again Capital.

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After the US pulled back from the 2015 Iran Nuclear Deal, US warned other nations including Japan to cease oil imports from Iran. In recent history, OPEC supply restrictions are having a more limited impact on the commodity thanks to increasing supply from Saudi Arabia, Russia and Libya.

The suspension also comes amid the prospect that transaction settlements will be made hard because such major banks as MUFJ Bank and Mizuho Bank are considering halting Iran-linked businesses following the US decision to reinstate sanctions against Tehran.

Data from the Energy Information Administration showed that gasoline inventories fell by 3.2 million barrels last week while stockpiles of distillates, such as diesel and heating oil, dropped by 371,000 barrels.

Furthermore, if any cartellike actions by the US were to hike oil prices, American consumers would suffer since the country remains a net oil importer.

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Despite the jump, inventories at the US oil delivery hub for WTI in Cushing, Oklahoma were forecast to have fallen 1.8 million barrels, or 6.2 percent, through Tuesday, traders said, citing energy information provider Genscape.

President Trump took to Twitter in late June, when oil prices were on the rise as many feared tightening oil supplies.

Japan's major oil distributors are considering halting oil imports from Iran in response to USA demands, sources familiar with the plan said Thursday.

Crude oil futures were edging between gains and losses on Friday morning in Europe, as the market searched for direction amid comments from Saudi Arabia that the producer will not flood the market with oil as production cuts ease and the end of the Norwegian oil field workers strike. The U.S. has added almost 1 million bpd in production since November, thanks to rapid increases in shale drilling.

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The incumbent U.S. administration has lobbied Saudi Arabia to increase output in order to offset the impact of its sanctions on the oil industries of Iran and Venezuela - two of the world's main crude oil producers.

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