U.S. oil prices surge as inventory draw adds to supply concerns

Technical chart showing the performance of crude oil prices

Oil near flat as market weighs U.S.-China trade tensions, Iran...

However, potential supply cuts caused by US sanctions on Iran, the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC), are providing some support for oil prices.

Brent crude futures were up 16 cents at $79.19 per barrel at 0658 GMT, after rising 1.3 percent in the previous session.

US crude futures (CLc1) were down 6 cents at $69.79, after gaining 1.4 percent the day before.

The trade dispute is raising concerns about the potential for slower growth in oil consumption, offsetting supply concerns stemming from the upcoming USA sanctions on Iran.

He did not specify how crude producers would compensate for declining exports from Iran, with new United States sanctions due to hit the Islamic republic's oil industry on November 4.

In a move heavily opposed by Iran, OPEC and other oil producers including Russian Federation agreed in June to boost crude output by around a million barrels a day, reversing course after supply cuts that had cleared a global glut and boosted prices.

Reuters reported on September 5 that Saudi Arabia wants oil to stay between $70 and $80 a barrel to keep a balance between maximizing revenue and keeping a lid on prices until USA congressional elections.

Traders took the Saudi comments "as a sign that they (Saudi Arabia) won't be aggressively responding to the rise in prices with supply increases", ANZ bank said in a note.

OPEC and non-OPEC producers Russian Federation started withholding oil supplies in 2017 to end a global glut and prop up prices.

OPEC with a group of non-OPEC producers that includes Russian Federation started withholding oil supplies in 2017 to end a global glut and prop up prices.

USA crude inventories rose by 1.2 million barrels to 397.1 million in the week to September 14, according to data released on Tuesday by the American Petroleum Institute (API).

Refineries in the United States consumed about 17.7 million barrels per day (bpd) of crude oil last week while China's refiners used about 11.8 million bpd in August, according to government data from the countries, the most among the world's countries. Stockpiles of distillate fuels, which include diesel and heating oil, climbed by 1.5 million barrels, the API data showed.

US stock indexes broadly fell on Monday, weighing on oil futures, on expectations that the Trump administration would go ahead with the new tariffs and that Beijing would retaliate.

Crude oil prices peaked at a near-term high of with WTI tapping into 70.40 on Tuesday, but was unable to make a challenge of last week's high of 71.25 after USA oil inventories showed yet another surprise build-up in their barrel counts yesterday.

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