Oil dips on rising US supply, but looming Iran sanctions prevent bigger fall

SINGAPoRE: Oil prices have dipped, pulled down by a reported rise in US crude inventories, although falling exports from Iran ahead of US sanctions prevented the market from sinking further.

International Brent crude oil futures were at US$75.90 per barrel at 0611 GMT, down five cents from their last close.

US West Texas Intermediate (WTI) crude futures were down four cents at US$68.49 a barrel.

In the United States, crude inventories rose slightly, by 38,000 barrels, to 405.7 million barrels in the week to Aug 24, industry group the American Petroleum Institute said on Tuesday.

“The API reported surprisingly flat numbers to a market expecting a reasonable draw in crude and a build in products,” said Sukrit Vijayakar, director of oil consultancy Trifecta.

Official US fuel inventory and crude production data will be published by the Energy Information Administration (EIA).

Despite the rise in US inventories, traders said crude prices have been relatively well supported by the prospect of US sanctions against Iran, which will start to target its oil industry from November.

Bowing to pressure from Washington, many crude buyers have already reduced orders from Opec’s third biggest producer.

Although Tehran is offering steep discounts, Iran’s August crude oil and condensate loadings are estimated at 2.06 million barrels per day (bpd), versus a peak of 3.09 million bpd in April, trade flows data on Thomson Reuters Eikon showed.

Another concern is crisis-struck Opecmember Venezuela, where oil exports have dropped by half since 2016 to below 1 million bpd.

To stem tumbling output, Venezuelan state-run oil firm PDVSA said on Tuesday it had signed a US$430mil investment agreement to increase production by 640,000 bpd at 14 oil fields, valuing the investment at US$430mil. — Reuters