Oil Prices Gain on Falling U.S. Inventories

Oil Prices Gain on Falling U.S. Inventories

Despite the logistics changes, China, the largest Iranian oil buyer, has said it won't halt purchases as requested by the U.S. India, the second biggest purchaser of Iranian crude, has also adapted to the changes, contracting NITC to carry and deliver its supplies.

The West Texas Intermediate (WTI) for October delivery price increased by 2.02 US dollars, or 3.07 percent, to settle at 67.86 dollars a barrel on the New York Mercantile Exchange, while Brent crude for October delivery increased by 2.15 dollars, or 2.96 percent, to settle at 74.78 dollars a barrel on the London ICE Futures Exchange. US light crude CLc1 was 10 cents lower at $67.76.

Worries that Mexico's incoming administration would not strike a bilateral agreement over NAFTA with the US also weighed on the market, traders said.

U.S. sanctions against Iranian oil exports take effect on 4 November, but the impact is already starting to show.

The U.S. government reimposed sanctions on Iran this month after withdrawing from a 2015 global nuclear deal, which Washington saw as inadequate for curbing Tehran's activities in the Middle East and denying it the means to make an atomic bomb.

On the supply side, the decision by the Organisation of the Petroleum Exporting Countries (Opec) to increase output again to compensate for production losses in Iran and Venezuela is already taking effect, with the group adding more than 300,000 barrels in the last month.

"Investors remain cautious as Wednesday's surprise gain in US stockpiles remained fresh in their minds", the bank said on Friday.

Gasoline stocks rose by 1.2 million barrels, compared with analysts' expectations for a 488,000-barrel drop.

The dollar index served as a tailwind, said Bob Yawger, director of futures at Mizuho in NY.

Stephen Brennock, analyst at PVM Oil Associates, said of traders' reaction on Thursday to the latest tariffs, "Fears are rife that economic headwinds stemming from an escalation in their trade war will ultimately hurt global oil demand". At the beginning of August, oil prices started their longest weekly losing streak in three years.

It is interesting to note that the U.S. oil rig count (an indicator of future oil production) has been flat in the past two months. The level was the lowest since the week ended June 19.

Related Articles