Published: Mon, August 06, 2018
Business | By Eloise Houston

Oil Falls 2% On Rising Supply, Concern About Trade Tensions

Oil Falls 2% On Rising Supply, Concern About Trade Tensions

Overall US crude oil inventories actually rose by 3.8-million barrels last week to 408.74-million barrels, the EIA data showed.

On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.3% at $69.16 a barrel.

The increase in American oil shipments follows the world's fifth-largest oil importer halting Iran crude loadings from July, ahead of US sanctions, while its refiners are also seeking cheaper alternatives to Iraq's Basra crude.

In addition, inventories at Cushing shrunk by 1.338 million barrels, adding to last week's 1.127 million barrels drop.

USA crude loadings for South Korea have been rising since July and arrivals are expected to reach 6 million barrels in each of September and October, the highest ever, according to the sources and trade flow data on Thomson Reuters Eikon. The actual record was a build that surprised the market.

Gasoline futures fell 1.7 percent to settle at $2.0451 a gallon.

Oil last month posted the worst loss in two years on concern a trade war between the United States and China could curb economic growth and limit energy demand.

Crude oil prices started the trading day Thursday in negative territory, but quickly shifted into rally mode on signs that USA crude oil stocks at the key storage hub in Cushing, Okla., were drying up. The return of sanctions on Iran was one of the reasons why the experts raised again-for a tenth consecutive month-their oil price forecasts for WTI Crude and Brent Crude prices, which are now expected to average $67.32 a barrel and $72.87 a barrel this year, respectively.

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.

His comments indicate that Russian Federation was producing above the level announced by Moscow after the OPEC+ meeting. The country has been pumping more following "joint efforts of OPEC and non-OPEC countries aimed at stabilizing the oil market", he said.

OPEC+ may discuss whether a bigger production increase is needed when they meet in September, Novak said last month.

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.

When OPEC met in June, it agreed it had been cutting supplies excessively and should restore output to 100 percent of a target set in late 2016.

On Monday, a Reuters survey found that OPEC production reached a 2018 high in July.

That's equivalent to about 11.21 million barrels a day, a jump of 140,000 from a month earlier, according to Bloomberg calculations based on the ministry's data.

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

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