Oil turns positive as US inventories seen lower

Oil turns positive as US inventories seen lower

Oil turns positive as US inventories seen lower

Crude oil production from the Organisation of Petroleum Exporting Countries increased last month as Saudi Arabia pumped near-record volumes to make good on a pledge to consumers that demand would be met.

Even with last week's rise, overall US crude inventories are below the 5-year average of around 420 million barrels.

SEOUL/SINGAPORE, Aug 2 (Reuters) - South Korean imports of US crude oil are set to hit all-time highs in September and October as refiners snap up supplies to replace Middle East grades, four sources with knowledge of the matter said.

Crude inventories at Cushing dropped 1.1 million barrels since Friday, July 27, traders said, citing a report issued by energy information provider Genscape. West Texas Intermediate, the US benchmark for the price of oil, was down 0.1 percent to $68.89 per barrel. He also noted US monthly production figures fell in May.

Brent for October settlement rose 44 cents to $72.83 a barrel on the London-based ICE Futures Europe exchange.

OPEC's July output climbed as Saudi Arabia pumped near-record volumes, while Russian Federation boosted production to unprecedented levels since it joined the cartel in a coordinated cut in January 2017.

There were also factors holding oil markets in check.


"Venezuela's ticking time bomb together with the return of Iran's oil industry to the sanctions era has all the makings for a major supply shock", Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note published Friday.

The weekly estimates for May all point to more than 10.7 million bpd of crude oil production, but the more accurate-albeit lagged-data, based on survey of producers, shows that US oil output had trailed projections by around 300,000 bpd. "This primary USA oil hub's inventory now sits at the lowest levels since 2014", he said.

U.S. President Donald Trump's decision to pull out of an worldwide nuclear deal and reimpose sanctions on Iran has angered Tehran.

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.

"There are a lot of escalation points that could occur very quickly and that worries me", Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney, said.

U.S. President Donald Trump has sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports.

With WTI crude barrels falling back beneath 68.00, buyers will be looking to halt any further declines into the last swing low at the 67.00 level in hopes of propping prices back over last week's high of 70.40 with eyes on the year's current highs of 75.35, while bears will be looking to drive the action further down into mid-June's lows at 63.50.

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