China's oil futures post mysterious gains

Oil rallies as Iran sanctions kick in

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for September delivery traded down about 2% at around $68.00 a barrel and dropped further to around $67.57 (down about 2.3%) shortly after the report's release.

Dmitry Peskov, a spokesman for Russian President Vladimir Putin, said the U.S. decision was counter-productive given the show of friendship between Putin and U.S. President Donald Trump in Helsinki last month.

This time around, some of Iran's former creative methods in trade with Asian customers, including a barter system which avoids sanctionable transfers to the nation, may also work with the Europeans. West Texas Intermediate, the US benchmark for the price of oil, was up 0.06 percent to $66.89 per barrel. "That said, the sanctions may heighten geopolitical tensions in the Middle East, which are likely to weigh on local financial markets", they said.

"This tender is the first step toward future imports of USA crude oil through term contracts", Sharma said in a phone interview on August 8.

Markets remained supported by the introduction on Tuesday of new US sanctions against Iran, which initially target Iran's purchases of USA dollars - in which oil is traded - as well as metals trading, coal, industrial software and its auto sector.

Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries.

US crude oil production in 2018 was expected to grow at a slower rate than previously forecast amid lower crude prices according to a monthly USA government report on Tuesday.

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USA crude stocks fell last week, while gasoline and distillate inventories rose, the Energy Information Administration said on Wednesday. "They are battling with poorer margins due to government tax interventions and higher oil prices", Commerzbank said in a note.

Brent crude futures were at $74.61 per barrel, down 4 cents from their last close.

Currently, the company, as well as other state-owned oil firms, buy crude oil from the USA on a spot or current tender basis which comprises one shipload of oil.

After two consecutive daily advances, WTI has now eroded those gains and retreated to the area of multi-day lows at shouting distance from the $68.00 mark per barrel.

"If worst comes to worst and 1.5-2 million bpd (barrels per day) of Iranian disappears from the market. calculations will go out of the window and oil bears will have to brace themselves for a very rough ride", PVM Oil Associates analyst Tamas Varga said.

To recap this week's events, on Tuesday, the USA renewed sanctions against Iran that are expected to eventually remove about 1 million barrels per day of crude oil from the market.

Gasoline stocks notched a surprise rise of 2.9 million barrels, not the 1.7 million-barrel drop analysts had predicted in a Reuters poll.

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