US cuts 2018 crude oil production growth forecast

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

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning, showing that U.S. commercial crude inventories decreased by 1.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 407.4 million barrels. Analysts polled by Reuters had forecast a 1.7 million-barrel draw in gasoline stocks USOILG=ECI.

The U.S. sanctions targeting the Iranian oil industry will be effective on November 5, but Stratas believes "South Korea remains a potentially significant opportunity for American crude exports".

"Of course, such decisions being taken by the USA side are absolutely unfriendly and can hardly be associated with the. constructive atmosphere achieved at the latest meeting of the two presidents", he was quoted by Russian news agency Tass as saying.

On the 4 hour chart, crude oil is crossing above a solid resistance level of $69.45.

Front-month Brent crude oil futures were at $74.85 a barrel at 9.51am GMT, up 20c, or 0.25%, from their last close.

On Monday, WTI for September delivery increased by 1.62 percent and settled at 70.13 dollars a barrel on the New York Mercantile Exchange.

Asian stock markets were mixed on Thursday with Chinese stocks outperforming the region, as investors watched the latest developments on trade. Tuesday's sanctions primarily hit Iran's ability to function in global financial markets. Both countries placed tariffs on $34 billion in imports earlier this month, and they have threatened much larger tariffs to come.

Beyond the sanctions, the oil market was focusing on the USA market, where the American Petroleum Institute said on Tuesday that crude inventories fell by 6 million barrels in the week to August 3 to 407.2 million.

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Gas flares burn near an oil well on the outskirts of Masjed Soleiman, some 725 kilometres southwest of the Iranian capital, Tehran.

The heightened fear of a looming supply shock prompted Amrita Sen, chief oil analyst at Energy Aspects, to tell CNBC, "As we go more towards (the fourth quarter) ... that's when we really see the risk of prices going well into the $80s and potentially even into the $90s, but very critical is how much Iranian production we lose".

On top of the impact on the broader global economy, there is growing worry in the crude oil market about Chinese demand.

India first imported USA crude oil in October a year ago and has since then oil firms have been buying oil from that country on a tender basis.

Iran ranks as the third largest oil producer among its peers in the Organization of Petroleum Exporting countries, or OPEC, having shipped out almost 3 million barrels per day of crude in September.

"You can not order 2 million barrels like ordering a coffee somewhere", Beat Wittmann, a partner at financial consultancy Porta Advisors, told CNBC recently.

Europe-which as a whole has been Iran's third-biggest single customer-saw imports drop to 465,450 bpd last month from 485,768 bpd in June, with demand from France, Spain, and Turkey down and purchases from Italy and Greece steadily up.

Refinery crude runs rose by 118,000 barrels per day, EIA data showed.

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