Oil edges lower as supply concerns return

Dwayne Harmon
August 6, 2018

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.

"There are certainly worries about protectionism and its potential economic impact, but we also have to remember that the stimulus from tax cuts dwarfs the tax hit from higher tariffs", he said in a Friday report.

The weekly estimates for May all point to more than 10.7 million bpd of crude oil production, but the more accurate-albeit lagged-data, based on survey of producers, shows that USA oil output had trailed projections by around 300,000 bpd. US Crude oil exports have fallen right off the table from last week's 2.7 million barrels per day to only 1.3 million barrels per day while clocking the slowest reading since April.

U.S. West Texas Intermediate (WTI) crude CLc1 futures increased by 6 cents, or 0.1 percent, to $67.72 a barrel.

The kingdom's oil production grew by 230,000 barrels a day in July, to 10.65 million barrels per day.

Futures reversed course after trading lower on concerns about oversupply early in the session.

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A mixed U.S.jobs report and data showing total OPEC production were offsetting supply-side strains and left the price of oil searching for direction early Friday.

On Friday, the U.S. Department of Labor reported total non-farm payrolls increased 157,000 in July, lower than the net average gain of 203,000 over the last 12 months.

A survey showed that the Organisation of Petroleum Exporting Countries (OPEC's) crude output increased last month as Saudi Arabia pumped near-record volumes to make good on a pledge to consumers that demand would be met. Additionally, he said, USA monthly figures for production fell in May, suggesting output may be curbed later in the year.

The United States believes Iran is preparing to carry out a major exercise in the Gulf in coming days, apparently moving up the timing of annual drills amid heightened tensions with Washington, U.S. officials told Reuters on Wednesday. Iranian officials have warned the country would not easily yield to a renewed US campaign to strangle Iran's vital oil exports.

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. After Trump called for a 15 percent increase in tariffs on Chinese goods earlier this week, Beijing on Friday announced it was targeting $60 billion worth of US goods in response.

Oil prices could soon rally above $90 a barrel amid growing concerns over the prospect of steep declines in Iranian crude, according to industry analysts.

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