Oil supported as new hedges placed, but rising global…

06 August, 2018, 02:15 | Author: Mary Valdez
  • Oil Ticks Up to End a Volatile Week

Prices of the barrel of the West Texas Intermediate are trading on a soft note today after the EIA reported the U.S. crude oil inventories went up by 3.803 million barrels during the week ended on July 27, more than initial forecasts suggested.

The increase in American oil shipments follows the world's fifth-largest oil importer halting Iran crude loadings from July, ahead of USA sanctions, while its refiners are also seeking cheaper alternatives to Iraq's Basra crude.

Brent crude futures were last down 33 cents at $72.06 a barrel by 12:00pm GMT, while United States crude futures fell 55 cents to $67.11.

The Organisation of Petroleum Exporting Countries has said that crude oil production has gone up in July as Saudi Arabia pumped more volumes into the global market. The American Petroleum Institute (API) recently noted that crude oil barrel counts in the USA are back on the rise, expanding last week by over 5 million barrels, erasing several weeks of expectations for steady declines in reserve supplies.

The kingdom's oil production grew by 230,000 barrels a day in July, to 10.65 million barrels per day.

Analysts said the outlook beyond the short-term was turning bearish.

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The West Texas Intermediate (WTI) for September delivery lost 0.47 USA dollar to settle at 68.49 dollars a barrel on the New York Mercantile Exchange, while Brent crude for October delivery erased 0.24 dollar to close at 73.21 dollars a barrel on the London ICE Futures Exchange.

There were also factors holding oil markets in check.

The world's biggest energy exporter raised production last month to 11.215 million barrels a day, a jump of 148,000 barrels from a month earlier and just below the post-Soviet record set in October 2016, according to government data emailed Thursday. "A lot of this is the risk premium priced in for Iran and when do we start seeing an impact on supply there", Patterson said. "There continues to be a concern that we might see a widening of the sanctions against China".

"A clear definition around the macros is what the market is looking for and until we get that, it is likely to be volatile in the range", said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.

US President Donald Trump's decision to pull out of an global nuclear deal and reimpose sanctions on Iran has angered Tehran. USA crude ended the week down 0.4 percent, while Brent has fallen 1.5 percent in the week so far.

Trump has turned up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion of Chinese imports. Senior Iranian officials have warned the country would not easily yield to a renewed US campaign to strangle Iran's vital oil exports. That's compared with a forecast for a 3-million-barrel decline in a Bloomberg survey of analysts.

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