Oil prices traded slightly higher on Thursday, reversing course after a report suggested crude stockpiles at the US storage hub at Cushing, Oklahoma fell in the latest week. Thursday's data suggests last week's increase might have been an anomaly, traders said.
US crude stocks rose last week as imports jumped, while gasoline stocks decreased and distillate inventories rose, the Energy Information Administration said on Wednesday.
Low U.S. stockpiles were still providing a floor for prices, with overall U.S. crude inventories below the five-year average of around 420 million barrels. Phil Flynn, a market analyst at the PRICE Futures Group in Chicago, said in a daily emailed market report that was supporting the spike in prices on Thursday.
Smith noted while it's highly unlikely India will absorb China's share of USA crude, "we could see other East Asian destinations, such as Taiwan and South Korea, also picking up some of the slack".
Crude oil futures for September ended down $1.10, or 1.6%, at $67.66 a barrel on the New York Mercantile Exchange.
"Trade volume is pretty low in futures today".
A mixed U.S.jobs report and data showing total OPEC production were offsetting supply-side strains and left the price of oil searching for direction early Friday.
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Crude oil costs experienced their worst monthly decline in over two years in July as a multi-year high in barrel prices broke away amidst plans by OPEC and Russian Federation to boost production limits.
The country has been pumping more following "joint efforts of OPEC and non-OPEC countries aimed at stabilizing the oil market", he said. "A lot of this is the risk premium priced in for Iran and when do we start seeing an impact on supply there", ING commodities strategist Warren Patterson said. OPEC has responded with boosting supply, but we are yet to see how much Iranian supply would be choked off, Croft said, adding that "it's going to be very significant".
On Monday, August 6, the first set of USA sanctions on Iran will snap back, so we will be probably looking at tougher actions over August and September, Croft said.
US President Donald Trump's decision to pull out of an worldwide nuclear deal and reimpose sanctions on Iran has angered Tehran.
The combination of crumbling Venezuelan oil production and the aggressive USA efforts to curtail Iranian exports is going to tighten the market.
China said it would hit back if the United States takes further steps hindering trade, as the Trump administration considers slapping a 25 per cent tariff on US$200 billion worth of Chinese goods.