Oil prices steady on falling US crude stocks and Iran sanctions
Oil prices steady on falling US crude stocks and Iran sanctions
China Stringer Network Reuters
08 August, 2018, 21:02
Traders are also positioning themselves ahead of an anticipated announcement from Washington due later on Monday detailing renewed USA sanctions against major oil exporter Iran.
So-called "snapback" sanctions are due to be reinstated at 12:01 a.m. EDT on Tuesday, according to a U.S. Treasury official. The sanctions did not include Iran's oil exports.
U.S. sanctions on Iran's oil customers snap back November 4 and could remove up to 1 million b/d of oil from the global market. The United States also plans to re-introduce sanctions on Iranian oil in November, which could dent the OPEC member's output. On November 5th, the United States will resume sanctions against Iran's energy-related financial transactions. That is fast changing as Iran seeks to maintain deliveries to Turkey amid USA sanctions.
West Texas Intermediate rose 52 cents to $69.01 and Brent climbed 54 cents to settle at $73.75 per barrel, on the strength of two sources at the Organization of the Petroleum Exporting Countries (OPEC) telling media that the Saudis pumped about 10.29 million bpd of crude last month, down 200,000 bpd from June.
The sanctions that went into effect yesterday target Iran's trade in USA dollars, which includes oil, metals, coal, and cars.
Indian refiners' interest in USA crude will be welcome news to shale producers looking for buyers outside of China, which is likely to scale back imports as the trade dispute between the administration of President Donald Trump and Beijing escalates. Many European countries, China and India, oppose the sanctions and may face the wrath of the U.S.in doing so.
Today's re-imposition of USA sanctions on Iran remains the key event driving the upside momentum.
"The US seems hell-bent on regime change in Iran", said Greg McKenna, chief market strategist at futures brokerage AxiTrader. "The reports that Saudi Arabia's production actually dropped in July continue to provide support for the market".
On Friday, crude oil futures ended down $0.47, or 0.70%, at $68.49 a barrel, after data showed oil output in Russian Federation to have increased sharply by 150,000 barrels per day in July, compared to a month earlier.
Oil is being supported this week after Saudi crude production unexpectedly fell in July and US drilling appeared to slow.
EIA also reported on Wednesday that US oil production declined to 10.9 million barrels per day during the week ending July 27, dropping from its record high level of 11 million barrels per day. Nationwide crude inventories as well as supplies stored in the key hub of Cushing, Oklahoma, slipped last week, the American Petroleum Institute was said to report.
US crude stockpiles were expected to have dropped 3.3 million barrels last week. US Eastern time (0401 GMT) on Tuesday.
Analysts also warned that a global heatwave could affect oil demand.
Much of the northern hemisphere has been gripped by extreme heat this summer, pushing up demand for industrial and residential cooling. China has proposed to impose retaliatory tariffs on $60 billion worth of US goods, including Liquefied Natural Gas (LNG), fueling speculation that it could also impose tariffs on oil.
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