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United States oil inventories increase in week ending July 13

21 July 2018

Oil prices rose today after Saudi Arabia " s oil cartel OPEC governor Adeeb Al-Aama said the kingdom " s crude exports will fall by about 100,000 barrels per day (bpd) in August, over-shadowing market pressure from a rising dollar and record high United States crude production.

Meanwhile, West Texas Intermediate crude prices for August delivery soared 0.13 per cent to trade at Dollars 68.33 a barrel while Brent crude was up 0.28 per cent at USD 72.78 on the New York Mercantile Exchange.

Until May this year when the USA announced that it would withdraw from the Iran nuclear deal and renew trade sanctions, Korean companies imported cumulative 44.51 million barrels of crude oil, accounting for 9.7 percent of the total.

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

"Saudi Arabia and Russian Federation talking about supplying the markets, that would certainly have the potential to weigh on market sentiments", Lipow said.

Trade tensions continued to weigh on the market, providing a ceiling for any gains, traders said.

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Even higher USA production is likely, Rystad Energy said. They rose 5.8 million barrels last week, compared to a forecast for a decline of 3.6 million barrels.

Along with falling refinery utilisation rates, shrinking crude exports, which had dropped last week to the lowest level since April, also contributed to the inventory build.

Goldman Sachs has been bullish on crude oil this year.

The price of U.S. crude oil is dropping still further as oversupply in the market continues to dominate trading.

Adeeb al-Aama said in a statement on Thursday that the kingdom's July crude oil exports will be roughly in line with last month's total, which stood at almost 500,000 barrels per day (bpd).

OPEC and non-OPEC producers cut oil output in June by 20% more than agreed levels, compared with 47% in May, the Reuters newsagency reported Wednesday.

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There was some support for prices based on comments from Saudi Arabia, the world's biggest oil exporter, that it would cut crude shipments. Prices yesterday dropped 32 cents to US$72.58.

"That's the takeaway from Wood Mackenzie's latest long-term outlook for global oil supply", reports OilPrice.com, an industry site.

Looking at other news, OPEC and non-OPEC compliance with recent supply restrictions is now running at 120% according to anonymous sources who spoke to Reuters.

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.

Prices had gained earlier after the Energy Information Administration reported gasoline held in U.S. storage tanks dropped last week by the most since May on the back of strong fuel demand, countering a surprise gain in nationwide crude inventories.

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United States oil inventories increase in week ending July 13