Oil prices edged lower on Friday after strong gains the previous day, easing on persistent supply concerns as Russian Federation increased production in July and Saudi Arabia cut the price of crude for its Asian customers.
An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China July 4, 2018.
USA crude oil refinery inputs averaged 17.48 million barrels per day during last week, which was 195,000 barrels per day higher than the previous week's average.
But a complete halt to Iranian supplies looks unlikely with Bloomberg reporting on Friday that China, Iran's biggest customer, has rejected a US request to cut imports from the OPEC member. The return of sanctions on Iran was one of the reasons why the experts raised again-for a tenth consecutive month-their oil price forecasts for WTI Crude and Brent Crude prices, which are now expected to average $67.32 a barrel and $72.87 a barrel this year, respectively.
Analysts said the outlook beyond the short-term was turning bearish. West Texas Intermediate, the US benchmark for the price of oil, was down 0.1 percent to $68.89 per barrel. "Yet, we remain much more concerned about the ongoing USA sanctions on Iran", analysts at Bank of America Merrill Lynch said in a research note published last week.
Futures reversed course after falling early in the session on concerns about oversupply.
"Oil is holding up reasonably well".
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"At the moment, there is a mismatch in timing, where there is increasing OPEC supply and yet we're not seeing a significant reduction in Iranian supply", Patterson said.
The US 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, US officials told Reuters on Wednesday.
The price jump earlier this summer had come about in large part because of President Donald Trump 's decision to pull the USA out of an worldwide agreement to curb Iran's nuclear program.
There are a lot of escalation points that could occur very quickly and that worries me, Barratt said.
The United States, China and India have previously urged oil producers to release more supply to prevent an oil deficit that could undermine global economic growth. China has said it will retaliate. "This could severely dent the competitiveness of USA oil and derivatives in the Chinese market", said Abhishek Kumar, senior energy analyst at Interfax Energy.
The increase in American oil shipments follows the world's fifth-largest oil importer halting Iran crude loadings from July, ahead of USA sanctions, while its refiners are also seeking cheaper alternatives to Iraq's Basra crude.