Huge drop in stockpiles spurs oil prices higher

Huge drop in stockpiles spurs oil prices higher

Huge drop in stockpiles spurs oil prices higher

Oil markets rose on Wednesday on a drop in USA crude inventories and a weaker dollar, while concerns about a potential shortfall in Iranian supply from November due to US sanctions also buoyed prices, Reuters reported.

An oil pump jack of Canadian group Vermilion Energy is pictured in Parentis-en-Born, France, October 13, 2017.

Brent crude oil futures were at $72.83 per barrel early on Wednesday, up 20 cents, or 0.3%, from their last close. US West Texas Intermediate (WTI) crude futures were at $68.08 per barrel, up 25 cents, or 0.3 per cent.

US crude oil exports averaged 1.15 million barrels per day last week, down by 437,000 barrels per day from the previous week.

"Both crude markers are on track to end a steady run of weekly declines".

Despite the logistics changes, China, the largest Iranian oil buyer, has said it won't halt purchases as requested by the U.S. India, the second biggest purchaser of Iranian crude, has also adapted to the changes, contracting NITC to carry and deliver its supplies.

Still, a trade standoff between the USA and China that could imperil global economic growth and weaken energy demand continues to weigh on crude prices after negotiations in Washington this week failed to progress.

Singaporean bank said on Friday that Chinese data showed a "steady decline in activities" and that "the economy is facing added headwinds due to rising trade tensions with the U.S". A dispute over opening up the oil and gas sector is weighing on the talks, Bloomberg reported, citing two people familiar with negotiations.

A trade standoff between the USA and China continues to weigh on crude prices.

President Donald Trumppulled the USA out of a 2015 global agreement to curb Iran's nuclear program in May, setting the stage for the reimposition of economic sanctions on the Islamic Republic.

"Third-party reports indicate that Iranian tanker loadings are already down by around 700,000 bpd in the first half of August relative to July, which if it holds will exceed most expectations", USA investment bank Jefferies said on Friday.

He also pointed out something that has tended to be overlooked in the incessant focus on the geopolitical tensions involving countries such as China and Iran: alluding to the recent bigger than expected draw in USA stockpiles, he said, "There's a better fundamental picture than a year ago".

Energy consultancy FGE says it expects Iran's crude and condensate exports to drop below 1 million bpd by mid-2019.

In options activity, December 2018 puts for oil at $50 a barrel traded, though the volume was thin with just a few hundred contracts exchanged, said Bob Yawger, director of futures at Mizuho in NY.

A weaker dollar makes oil less expensive for buyers using other currencies.

"There's a better fundamental picture than a year ago", he said.

“This week's report was bullish for crude, ” said Societe Generale oil analyst Michael Wittner.

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