USA oil inventories increase in week ending July 13

China may boost Iranian oil purchases once US sanctions step into force- Report

Oil prices reversed early losses Wednesday after the market digested government data that showed a surprise build in US crude inventories, but also indicated bullish demand for gasoline. West Texas Intermediate (WTI) crude futures declined 7 cents, or 0.1 per cent, to $68.69.

Brent oil fell 78 cents to $72.12 per barrel by 1:04 p.m. EDT (1704 GMT), previously reaching a session high of $73.79.

Signs of Russian Federation and Saudi Arabia increasing oil production, as well as last week's surprise build in USA crude stocks, have also weighed on prices, said Tariq Zahir, analyst at Tyche Capital Advisors.

He also said concerns that Saudi Arabia and its partners are moving to substantially oversupply the market are "without basis".

Meantime, Saudi Arabia is offering extra oil on top of its contractual volumes to at least two customers in Asia, and one of those buyers agreed to take them.

Lower crude oil demand in the US and China caused by an economic slowdown from their trade war would have a tremendous impact on the crude oil market.

Trade tensions between the US and China have stoked fears of damage to their economies and commodities demand.

Kansas City Federal Reserve Bank President Esther George said on Tuesday uncertainty over USA trade policy could slow the economy, even if recently imposed tariffs are too small to have a big impact.

Futures in NY were little changed on Thursday after rebounding 1% in the previous session from a 1.5% drop.

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Data from Energy Information Administration on Wednesday showed a larger than expected 5.8 million barrels jump in USA crude inventories in the week ended July 13.

As per Goldman Sachs, unpredictable policy from the US government is increasing volatility in the oil and fuel markets. US crude prices had reached a session high of $70.17 earlier in the session before paring gains.

USA petrol inventories dropped by 3.2-million barrels last week, while distillate stockpiles, which include diesel and heating oil, declined by 371,000 barrels, the Energy Information Administration said.

U.S. President Donald Trump's administration has demanded nations cut all their imports of Iranian oil from November as it reimposes sanctions over Tehran's nuclear programme.

"Even though the overall crude number was bearish, the gasoline numbers and distillate numbers were pretty bullish", said Phil Flynn, an analyst at Price Futures Group in Chicago, Reuters reported.

U.S. crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels.

Adeeb Al-Aama said in a statement that Saudi Arabia's crude oil exports in July would be roughly equal to June levels.

"It was not long ago that the Saudis said they would make sure that there is adequate oil supply in the market, and now they are trying to reassure those who think they could oversupply the market", ING analysts said in a morning note. In June, production of crude oil hit 10.7 million bpd and production of natural gas liquids hit 4.2 million bpd.

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