Published: Wed, August 15, 2018
Finance | By Cynthia Curry

Oil prices decline on rising USA stockpiles

Oil prices decline on rising USA stockpiles

"Oil prices. fell after the API inventory data showed an unexpected crude build last week", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

Prices extended losses after inventories at the Cushing, Oklahoma, delivery hub for WTI rose by about 1.7 million barrels in the week through August 10, traders said, citing data from market intelligence firm Genscape. USA light crude CLc1 fell $1.15 a barrel to a low of $65.89.

Oil prices dipped on Monday as rising trade tensions dented the outlook for fuel demand growth especially in Asia, although USA sanctions against Iran still pointed towards tighter supply.

U.S. West Texas Intermediate (WTI) crude declined $1.83 to $65.80 a barrel, a 2.7 percent loss.

Oil fell as Turkey's economic strife sparked an emerging-market sell-off, fuelling fears of broader market turmoil.

"Short-term credit conditions continue to deteriorate which is likely to have an outright negative impact on the demand for crude oil in the medium term".

Despite the gloomy outlook for trade and the potential slowdown in economic growth, oil markets are expected to remain relatively tight, particularly as US sanctions on Iran have started.

Investors are concerned about the world economy as trade disputes between escalate between the United States and its major trading partners.

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"When we publish our next report in mid-September, we will be only six weeks away from the US's deadline for Iran's customers to cease oil purchases", said the IEA. "That's based on the view that the United States will allow a few temporary exception waivers.Ultimately, we could see losses from Iran exceed two million barrels a day", said Jean-Louis Le Mee, CEO of London-based Westbeck.

"The direct impact on global demand for oil is negligible", Fritsch said.

In America, the number of working oil rigs rose by 10 to 869 last week, the highest level since March 2015, Baker Hughes data showed.

But soon, the Iranian imports in India will see a significant decline as some of the refiners are anxious about the adverse effects on the access to the US financial systems if the dealing with Iran in terms of crude is continued.

Beyond the darkening economic outlook, Phillip Futures said hedge funds had reduced bullish bets because of "rising production levels from OPEC and the United States".

Despite the cautious mood in oil markets, bullish sentiment found some support from expectations that U.S. sanctions against Tehran would restrict Iranian crude exports, tightening global supply. A first set of U.S. sanctions snapped back into place earlier this week, but in November it will seek to choke off Iranian oil exports.

Oil prices jumped on Tuesday after OPEC's top producer Saudi Arabia reported that it had cut its production in July compared to June.

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