Oil prices dip sharply on USA inventories

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Oil prices dip sharply on USA inventories

Crude futures pulled back on Friday, giving up gains from the previous session as trade concerns weighed on the market and fueled concerns about demand.

Futures fell for the third day in NY, losing as much as 1.1 per cent to hit their lowest level since June 22, but USA government's data showed a surprise gain in nationwide stockpiles on Wednesday.

Brent crude futures LCOc1 settled up $1.06, or 1.5 percent at $73.45 a barrel.

Crude fell to the lowest in more than five weeks as a surprise rise in US crude inventories and increases in production from OPEC and Russian Federation has investors anxious that global supply levels are on the upswing.

US crude oil production is growing, but at a slower pace than predicted.

Stocks at the key Cushing storage hub in Oklahoma fell by 1.3-million barrels, the lowest level since October 2014, according to data from the Energy Information Administration (EIA).

U.S. West Texas Intermediate (WTI) crude futures CLc1 settled down 47 cents at $68.49 a barrel.

"Oil is holding up reasonably well".

Analysts said the outlook beyond the short-term was turning bearish.

Additionally, Russia appears to have increased its production in line with OPEC's decision in late June to increase its output, with its crude and condensate production increasing 1.4% last month to 11.215 million b/d, the energy ministry said yesterday. "A lot of this is the risk premium priced in for Iran and when do we start seeing an impact on supply there", Patterson said.

"It's a jittery feel here, as long as we have Iranian sanctions uncertainty and tariff uncertainty, and it doesn't take much to spark a significant swing one way or the other", said Jim Ritterbusch, an analyst in Galena, Illinois.

Oil prices are also being pressured by concern that global trade tensions could crimp economic growth.

United States crude inventories rose 3.8 million barrels last week, according to data from the Energy Information Administration.

The price jump earlier this summer had come about in large part because of President Donald Trump 's decision to pull the US 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", Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney, said.

"It is nearly certain that China will impose additional duties on oil and refined products imported from the USA if the Trump administration implements additional tariffs on the next tranche of Chinese goods". Senior Iranian officials have warned the country would not easily yield to a renewed USA campaign to strangle Iran's vital oil exports. The market expected 1.3 million barrels of gasoline draw.

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