Oil steady as concern over Iran sanctions offset weak Chinese imports

A man pumps gas into his car at a gas station in Caracas

A man pumps gas into his car at a gas station in Caracas Venezuela

Following the announcement by EIA, the WTI lost 2.78 percent to 67.25 us dollars, while Brent decreased 2.55 percent to 72.75 dollars.

At 1500 GMT, October ICE Brent was trading $1.81 lower at $72.84/b, while September NYMEX crude was down $1.87 at $67.30/b.

The markets are trying to stabilize after yesterday's steep 3 percent sell-off.

The action, followed by another set of sanctions scheduled for November, will bring USA sanctions against Iran to the level on par with those prior to a major multilateral nuclear deal reached in 2015. Overall though, I think this far too much in the way of instability to think that the oil markets are going to be susceptible to headlines. China's Unipec has suspended United States oil imports due to a growing trade spat between Washington and Beijing. Traders are trying to establish a new balance point in the market. The trading price ranged between US$76.11 per barrel, and US$69.71 per barrel.

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Not just China but Russian Federation too is determined to continue oil and gas trade with Iran. Currently, the market is testing the weak side of this zone. Its retracement zone at $72.33 to $70.67 is now being tested.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories dropped by 6 million barrels in the week ending August 3.

"If we get below $66 here, you're arguably violating the long-term uptrend channel", he said, referring to USA crude's upward trajectory this year.

Rosneft's oil-output plans for late 2018 "will depend on what happens on the OPEC front", said Eric Liron, the company's top executive in charge of production, "Be it OPEC, OPEC plus, OPEC plus plus, OPEC minus, minus minus". It has also ushered in new confidence for global LNG producers and talk of pushing ahead more greenfield LNG projects to meet this demand, a possibility unheard of just a year ago.

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Meanwhile, U.S. crude production, which has climbed dramatically fuelled largely by increased output from shale formations, may now rise more slowly as prices drop, according to the U.S. Energy Information Administration's monthly report.

Prior to this deal, International Olympic Committee had struck deals for importing 10 million barrels from six cargoes in the spot market. The global benchmark crude traded at a $5.82 premium to WTI for the same month. The major support levels are $71.34 and $70.67.

Exports to Asia fell to 1.76 million b/d in July from 1.85 million b/d in June as demand from South Korea and Taiwan dissipated as the former turned to other countries for condensates.

Iraq cut its official selling price for September cargoes of Basra Light crude for its Asian customers on Thursday.

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Watch oil trade in real time here. Shanghai Composite Index jumped 1.3 percent to 2,781.06. If more oil leaves the market than expected then the bulls will win the supply/demand battle.

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