Oil extends decline after biggest monthly slump in two years

Crude Oil Prices Supported by Strikes However Trade Wars to Cap Gains

At the Multi Commodity Exchange, crude oil for delivery in September fell by Rs 34, or 0.71 per cent, to Rs 4732 per barrel in a business turnover of 203 lots. EIA expects West Texas Intermediate (WTI) crude oil prices will average $6/b lower than Brent prices in the second half of 2018 and $7/b lower in 2019.

Oil prices extended losses in post-settlement trade, with us crude at $68.32 a barrel, after data from the American Petroleum Institute showed domestic crude inventories rose 5.6 million barrels last week.

Signs that a supply disruption in the Bab al-Mandeb Strait in the Red Sea could be resolved also weighed on prices.

According to Phil Flynn of the PRICE Futures Group in Chicago, that was a sign the market might avoid an all-out loss of Iranian oil when US sanctions kick in by November.

On Monday, WTI prices reached 69.31 dollars a barrel on the New York Mercantile Exchange but it took a steep dive due to those concerns and settled at 67.89 dollars.

Saudi Arabia agreed to try to help make up for losses from United States sanctions on Iran, the third-largest member of OPEC, but analysts question whether the unofficial OPEC leader could reach the president's implied production level of 12 million barrels per day.

Brent spot crude oil futures dropped 30 cents, or 0.4 percent, to $73.91 a barrel by 0435 GMT, adding to a 1.8 percent loss in the previous session.

USA crude stocks fell in the week of July 20th by 6.1mn barrels, while U.S. drillers added another three rigs to their oil drilling inventory.

Alhajji said, "Unlike the past, US weekly crude oil inventories have become extremely sensitive to U.S.net imports, making short term oil prices more volatile".

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The official OPEC figures for July will be published on Aug.13, in its monthly oil market report.

A volley of saber-rattling tweets had raised tensions in oil markets, which are already concerned about supplies as United States sanctions coming back into force in November aim to choke off Iranian oil exports.

Another major event on Wednesday was Yemen's Houthi's attack on the Saudi oil tanker in the Red Sea. WTI fell 1.3 percent on Friday.

The Organization of the Petroleum Exporting Countries, plus Russian Federation and other allies, decided in June to ease supply cuts that had been in place since 2017 after a glut was cleared.

OPEC hiked production by 70,000 barrels per day (bpd) to 32.64 million bpd, the most this year.

"A trade war will slow down economic growth and demand for oil but also eventually spill over into other asset classes, mostly equities, that can have an impact on oil prices through a negative market sentiment", Jette Jørgensen of Global Risk Management Ltd said.

A factor contributing to exceeding the target was the addition of 320,000 BPD of production from Congo, along with increases in Kuwait, UAE, Saudi Arabia and Nigeria.

While technology stocks continued to suffer, overall Wall Street pushed higher following a Bloomberg News report that senior USA and Chinese officials are seeking to restart negotiations to end an escalating trade war.

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