Oil prices looking for support as WTI tests back below $68

Oil prices looking for support as WTI tests back below $68

Traders said prices rallied early when industry information provider Genscape reported that crude inventories at the Cushing, Oklahoma, delivery hub for USA crude, dropped 1.1 million barrels since Friday, July 27.

The West Texas Intermediate (WTI) for September delivery lost 1.10 USA dollars to settle at 67.66 dollars a barrel on the New York Mercantile Exchange, while Brent crude for October delivery erased 1.82 dollars to close at 72.39 dollars a barrel on the London ICE Futures Exchange.

According to two officials, the USA hasn't been able to persuade China to reduce Iranian oil purchases, but Beijing has reportedly agreed not to increase its oil imports from Iran, Bloomberg reports. US crude ended the week down 0.4 percent, while Brent has fallen 1.5 percent in the week so far.

According to the Weekly Petroleum Status Report, U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve (SPR), increased by 3.8 million barrels last week.

Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production to help to compensate for an anticipated shortfall in Iranian crude supplies once USA sanctions take effect. The American Petroleum Institute (API) recently noted that crude oil barrel counts in the United States are back on the rise, expanding last week by over 5 million barrels, erasing several weeks of expectations for steady declines in reserve supplies.

Total motor gasoline inventories decreased by 2.5 million barrels last week, but still about 1.4 percent above the levels of the same week past year.

"It was surprising to see the build in crude, but it was a little bit offset by the bigger-than-expected draw in gasoline and the draw in Cushing", said Tariq Zahir, managing member at Tyche Capital Advisors.

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China has said it plans to impose tariffs on liquefied natural gas, raising concerns that it could also impose tariffs on oil, said John Kilduff, partner at Again Capital Management in NY.

For oil prices, EIA expects Brent Crude spot prices to average $73 a barrel in the second half of 2018 and $69 per barrel in 2019, with WTI Crude averaging $6 a barrel lower than Brent prices in the second half of 2018 and $7 per barrel lower in 2019.

Trump has turned up pressure on China for trade concessions by proposing a higher 25% tariff on $200 billion of Chinese imports and China has said it will retaliate. Last month, Novak had said that Russian Federation may surpass the 200,000 bpd level of increases if there is a need for it. The country has been pumping more following "joint efforts of OPEC and non-OPEC countries aimed at stabilizing the oil market", he said.

While the Saudis and their Gulf allies said they would increase production to make up for countries unable to, Iran argues that they're violating individual country targets and ultimately betraying the organisation.

At the moment the barrel of WTI is losing 0.04% at $69.25 facing the next down barrier at $68.33 (low Aug.1) followed by $68.12 (100-day sma) and then $67.08 (low Jul.18).

This story has not been edited by Firstpost staff and is generated by auto-feed.

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