Published: Wed, August 15, 2018
Markets | By Josh Butler

Crude oil slightly lower as risk sentiment wanes

Crude oil slightly lower as risk sentiment wanes

U.S. crude supplies fell less than expected in the latest week, and data released on Friday showed U.S. energy companies this week added the most oil rigs since May.

Crude slid to the lowest in seven weeks as economic turbulence in Turkey and the strengthening greenback heightened concerns about global oil demand.

On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.2% at $66.23 a barrel.

The US benchmark crude has declined more than 4percent this month as worldwide trade disputes threatened to deflate energy demand growth.

Analyst say trade disputes between the United States and China as well as turmoil in emerging markets could curb growth and energy demand.

We have seen buying in U.S. Treasuries as well and oil is being held back from supply concerns as the dollar weighs on prices. "Ultimately, we could see losses from Iran exceed 2 million barrels a day", the Westbeck Capital chief executive said.

But soon, the Iranian imports in India will see a significant decline as some of the refiners are anxious about the adverse effects on the access to the US financial systems if the dealing with Iran in terms of crude is continued.

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Global oil demand is also rising, but not as fast as supply.

LONDON-Oil prices fell Wednesday after data showed a rise in US crude stockpiles, following days of volatile trading.

Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries behind Saudi Arabia and Iraq, pumping 3.65 million bpd in July, Reuters data show.

Oil prices dipped on Tuesday as rising trade tensions dented the outlook for fuel demand growth especially in Asia, although US sanctions against Iran still pointed towards tighter supply. Despite the USA rig count being at a high for this year, the "production level has stalled, and that raises questions on whether or not there's capacity for the USA to increase production further - which is why we're seeing firmer markets".

Hedge funds cut bets on rising prices for WTI and Brent, and total positions in both benchmarks shrank for a fifth straight week - the longest stretch of declines since 2016.Royal Dutch Shell Plc said its head of global manufacturing, a business that includes refineries and chemicals plants, will step down at the end of August. Yet, bullish sentiment found some support from expectations that looming US sanctions against Iran could significantly hamper its crude exports. This is subjected to the U.S sanctions on the oil exports from Iran, returning in the month of November.

Analysts believe a disruption to Iranian supplies of around 2.4 million bpd could deal a major blow to the market depending on how much the shipments would be affected.

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