Oil falls as U.S. crude inventories jump unexpectedly

Oil falls as U.S. crude inventories jump unexpectedly

WTI (oil futures on NYMEX) came under renewed selling pressure in the European session, as the bears regained poise amid negative sentiment on the European equities, with Turkey fears still weighing on the risk assets.

"Everything is weakening, but from a pretty elevated level", said Jeff Brown, president of energy consultancy FGE.

Iran is the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC).

On the bearish side, the escalating trade war could "lead to slower economic growth, and in turn lower oil demand".

Oil prices were steady on Monday as trade tensions and troubled emerging markets dented the outlook for fuel demand, although USA sanctions against Iran pointed towards tighter supply ahead.

More news: From England: Manchester United eye Monchi

Gasoline futures fell 1.2 percent to settle at $2.0147 a gallon. "But the impact on investment mood is starting to show", Brown said.

World trade volume growth also peaked in January at almost 5.7 percent year-on-year, but nearly halved to less than 3 percent by May, according to the Netherlands Bureau for Economic Policy Analysis.

Meanwhile, the USA dollar climbed to a 13-month high against a basket of six major currencies on Monday, amid renewed financial turmoil in Turkey. Some oil bulls are preparing for oil prices of US$150 and even US$200, Reuters reported yesterday, citing prominent hedge fund manager Pierre Andurand and Jean-Louis Mee, chief executive of Westbeck Capital.

Georgi Slavov, of commodities trader Marex Spectron, said demand from oil refineries is expected to fall as profit margins tighten and the global economy appears to be producing the same output with less energy input.

For the moment the IEA did not change its forecast for global demand for oil to increase by 1.4 mbd.

More news: Turkey doubles tariffs on some U.S. goods amid rising tensions

Analysts expect a 1.7 million-barrel drop in crude stocks for the week ended August 10. Iran has also started to offer cargo insurance to India, after another company named Hindustan Petroleum allegedly cancelled a crude oil shipment after the insurance for the cargo was denied by the insurer.

Although that's slightly above June, it's below the figures for April and May.

Brent, meanwhile suffered its fifth week of declines in six, as investors anxious that global trade disputes, most notably between the US and China, could slow economic growth and hurt demand for energy.

"It feels like self-harm at the moment in the oil market", Paul Hickin, EMEA oil analyst at S&P Global Platts, told CNBC's "Squawk Box Europe" on Monday.

More news: Nicki Minaj drops Tracy Chapman sample track from album

Related Articles