Published: Sat, August 04, 2018
Business | By Eloise Houston

Oil prices mixed; Brent eases as trade tensions weigh

Oil prices mixed; Brent eases as trade tensions weigh

On the one hand, robust USA shale production and market concerns over the brewing U.S. The U.S. government's supply report is due on Wednesday.

Oil prices fell on Wednesday after industry data showed US stockpiles of crude unexpectedly rose, starting the new month in negative territory after the largest monthly decline in two years in July.

Iran has renewed threats to block the Strait of Hormuz since the United States announced its plan to reinstate sanctions and cut shipments from Opec's third-largest producer to zero from about 2.5 million barrels a day now.

The Reuters survey showed OPEC increased production 70,000 barrels per day (bpd) to 32.64 million bpd in July, the most this year. West Texas Intermediate, the US benchmark for the price of oil, was down 1.37 percent to $69.17 per barrel.

The initial deal, under which OPEC and non-OPEC producers are cutting supply by about 1.8 million barrels per day, had expired in March 2018.

September Brent crude futures fell 25 cents, or 0.3 percent, to $74.72 a barrel by 0654 GMT after rising almost 1 percent on Monday.

Brent lost more than 6 percent in July, while us crude futures slumped about 7 percent, the biggest monthly decline for both benchmarks since July 2016.

On Tuesday, the American Petroleum Institute (API) said crude inventories rose by 5.6-million barrels last week.

The move came after the kingdom said two tankers were attacked by Yemen's Houthi militia. WTI fell 1.3 percent on Friday.

Production also slipped in Venezuela, where the oil industry is starved of funds because of economic crisis, and in Angola due to lower exports in July against a backdrop of natural decline at oilfields.

Opec production rose in June, led by Saudi Arabia, and reached a 2018 high in July, a Reuters survey found on Monday, although declines from Iran and other producers limited the increase.

Oil prices CLc1 LCOc1 pared losses briefly after the data, but were still trading about 1 percent lower on the day.

Oil was steady near $70/bbl as supply risks from Saudi Arabia to the United Kingdom threaten to strain global markets. A strike hit production at Total's three oil fields in the North Sea, and concerns remain over Saudi Arabia's suspension of crude shipments through a key Sea transit route following attacks by Yemeni rebels.

"The market is facing different questions - Is global demand slowing due to weakening worldwide economic growth, will US production keep up its incredible pace, will output in Venezuela keep plummeting, what will USA sanctions do to Iranian production, and is OPEC really willing to raise output up to 1 mbpd!"

At the same time, representatives of U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are having private conversations as they look for ways to re-engage in negotiations in a bid to avert a full-fledged trade war, two people familiar with the effort said.

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