Crude oil up slightly as commodity remains directionless

10 August, 2018, 14:46 | Author: Kevin Carter
  • Saudi Arabia Reduced Oil Production in July

"There is room for [prices in] the crude market to soften a bit more", says John Woods of JJ Woods Associates, adding that inventories could rise further as refineries head toward maintenance season after the summer driving season.

Currently, the company, as well as other state-owned oil firms, buy crude oil from the U.S. on a spot or current tender basis which comprises one shipload of oil. That figure is roughly equivalent to 3 percent of the world's oil demand. The Turkish lira fell to a new record low against the dollar amid a dispute with the USA government, while the Russian ruble also dropped after US sanctions on the country over its alleged involvement in poisonings in Britain. Indian Oil is still awaiting direction from its government on Iranian crude imports, Sharma said.

China is the biggest and the most valued customer for Iran's oil and imports more than 650,000 barrels of oil per day from Iran.

State-run refiner Indian Oil Corp., which had been buying USA crude in the spot market, signed a term tender to purchase American oil for delivery every month between November and January, according to Finance Director Arun Kumar Sharma.

Other than the four key importers, the European Union has said it will not enforce United States sanctions which are to be imposed on Iran's oil and banking sectors on November 4.

Global stock markets were mixed Thursday with European stocks trading lower after Chinese markets finished with sharp gains.

More news: Chinese Exports Accelerate As US Prepares New Tariffs In Heated Row

A first batch of United States sanctions against Iran, which shipped out nearly three million barrels per day (bpd) of crude in July, officially came into effect Tuesday.

Front-month US West Texas Intermediate crude futures were at $69.28 per barrel early on Wednesday, up 11 cents from their last settlement. From November, Washington will also target Iran's petroleum sector.

"As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging and would come at the expense of maintaining an adequate spare capacity cushion", the IEA said.

Crude oil prices edged higher on Tuesday, amid rising concerns about global crude supply after US reimposed sanctions on Iran. "The reports that Saudi Arabia's production actually dropped in July continue to provide support for the market".

International Olympic Committee and other state firms like Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) enter into annual term import deals with national oil companies of mostly Middle East countries. Nationwide inventories in the U.S. probably fell 3 million barrels last week, according to a Bloomberg survey of analysts before government data due on Wednesday. Gasoline inventories increased by 2.9 million barrels, the data show.

"You can not order 2 million barrels like ordering a coffee somewhere", Beat Wittmann, a partner at financial consultancy Porta Advisors, told CNBC recently.

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