Oil edges up on Iran sanctions, but US-China row mutes trading

Oil Prices Gain on Falling U.S. Inventories

"Prices are moving higher after the API reported a more massive draw than analysts had expected", said Stephen Innes, Head of Trading, APAC at brokerage OANDA.

USA inventory data has been volatile in recent weeks, with the EIA last week reporting a 6.8 million barrel increase in crude stocks for the week prior.

Oil prices rose 3%, with Brent crude futures hitting a three-week high. "Crude stocks drew due to sharply lower crude imports and near-record refinery crude runs".

West Texas Intermediate settled down 3 cents at $67.83, and Brent settled down 5 cents at $74.73 per barrel - modest declines, but notable considering both contracts had climbed by over $2 per barrel 24 hours earlier after the US government reported a bigger-than-anticipated drop in crude stockpiles, which played into traders' fears that the market may be tightening.

EIA data showed distillate stockpiles, which include diesel and heating oil, jumped by 1.8 million barrels, versus expectations for a 1.5-million-barrel increase.

In its report obtained by Vanguard, yesterday, the American Petroleum Institute stated that United States crude stocks fell last week by 5.2 million barrels. “For the USA trade restrictions will trim off about one quarter of a percentage point from real GDP growth to 2.3 percent in 2019.”.

India's crude oil imports declined amid fear of sanctions from the USA as back in June the USA has also asked all countries including India, to stop oil imports from Iran by November or else face sanctions from the US.

A key index of the dollar versus a basket of other currencies.DXY fell on Friday, boosting the price of oil and other dollar denominated commodities.

European oil companies have started to cut back on Iranian purchases, although Chinese buyers are shifting their cargoes to Iranian-owned vessels to keep supplies flowing.

"Iranian crude exports were still near two million barrels per day in July and will likely begin to fall dramatically in August with financial sanctions taking effect".

Still, a trade standoff between the United States 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.

Official data from the US Energy Information Administration is due 2:30pm GMT on Wednesday.

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