Oil prices down despite reported draw of U.S. crude inventory

Fredrick Soto
August 10, 2018

Front-month Brent crude oil futures were at $74.85 a barrel at 9.51am GMT, up 20c, or 0.25%, from their last close. "Refiner demand for crude oil remains high, however, as does consumer demand for gasoline".

"Gasoline demand has been one of the main bullish stories in the oil market and if that demand is slipping off a little bit, maybe we're seeing reluctance to higher prices", says Phil Flynn of Price Futures Group. A second tranche coming into effect on November 5 will cover Iran's oil sector.

Saudi Arabia's crude production dropped about 200,000 bpd last month, two sources at the Organization of the Petroleum Exporting Countries said on Friday, despite a pledge by the Saudis and top producer Russian Federation to raise output from July, with Saudi Arabia promising a "measurable" supply boost.

Oil prices were steady on Wednesday, buoyed by a report of rising USA crude inventories as well as the re-imposition of sanctions against Iran.

Crude oil prices extended gains Tuesday as the Trump administration's sanctions against Tehran kicked in, setting the stage for a drop-off in production from the world's fifth-largest producer. Brent crude, the standard for worldwide oil prices, rose 7 cents to $72.35 per barrel in London.

The heightened fear of a looming supply shock prompted Amrita Sen, chief oil analyst at Energy Aspects, to tell CNBC, "As we go more towards (the fourth quarter) ... that's when we really see the risk of prices going well into the $80s and potentially even into the $90s, but very critical is how much Iranian production we lose".

Crude prices settled slightly lower on Thursday, extending the previous session's losses as the escalating China-U.S. trade dispute casts doubt over the outlook for oil demand.

Oil has declined about 7 percent from the highs of June as trade tensions between the United States and China imperil economic growth and energy demand. WTI was trading at $69.10/Bbl, up $0.09 or 0.13%, Kallanish Energy notes.

WALL STREET: U.S. stock markets finished lower on Wednesday, ending a four-day winning streak.

The U.S. has restored sanctions against Iran as as President Donald Trump reaffirmed plans to impose more penalties on the country's oil sales in November.

However, many European countries, China and India, oppose the sanctions, but the United States government said it wants as many countries as possible to stop buying Iranian oil.

Analysts expect the US sanctions to take between 500,000 bpd and 1 million bpd of Iranian crude oil off the market when full sanctions return in early November, and some experts think that the figure will be closer to 1 million bpd. The Nasdaq composite rose 4.66 points, or 0.1 percent, to 7,888.33.

International Olympic Committee will buy 2 million barrels of Mars oil in November, a combination cargo containing 1 million barrels each of Eagle Ford and Mars in December and 2 million barrels of Louisiana Light Sweet (LLS) in January, Sharma said.

Other reports by

Discuss This Article

FOLLOW OUR NEWSPAPER