Oil prices rose on Thursday, steadying after losses over the past two days from a surprise increase in US crude inventories and renewed concerns over trade friction between the USA and China, Reuters reports.
The increase in American oil shipments follows the world's fifth-largest oil importer halting Iran crude loadings from July, ahead of USA sanctions, while its refiners are also seeking cheaper alternatives to Iraq's Basra crude.
Brent crude, the global benchmark, was up 0.2% at $73.61 a barrel on London's Intercontinental Exchange.
Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production to help to compensate for an anticipated shortfall in Iranian crude supplies once planned US sanctions take effect later this year.
Russian oil production last month was on average above the level Moscow promised following the OPEC and non-OPEC meeting in June but only to maintain the market's stability, energy minister Alexander Novak indicated on Wednesday.
Initially, the OPEC+ members agreed on a combined cut of 1.8 million bpd but lower production by a number of countries in fact made the cuts deeper, raising fears of global oil shortages and a potential spike in the oil prices as a result.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 27 cents at $68.69 a barrel by 10:45 a.m. EDT (1445 GMT).More news: Congo Declares A New Ebola Outbreak
Tensions between the US and Iran are also supporting the market, Barratt said.
Phil Flynn, a market analyst at the PRICE Futures Group in Chicago, said in a daily emailed market report that was supporting the spike in prices on Thursday.
Additionally, Russia appears to have increased its production in line with OPEC's decision in late June to increase its output, with its crude and condensate production increasing 1.4% last month to 11.215 million b/d, the energy ministry said yesterday. "We could even see light sweet Nigerian barrels being displaced from India, and heading to China instead", he added.
The US believes Iran is preparing to carry out a major exercise in the Gulf in coming days, apparently moving up the timing of annual drills amid heightened tensions with Washington, US officials told Reuters on Wednesday. On Tuesday, crude oil futures for September ended down $1.37 or nearly 2%, at $68.76 a barrel.
Trump has turned up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion of Chinese imports. "This could severely dent the competitiveness of United States oil and derivatives in the Chinese market", said Abhishek Kumar, senior energy analyst at Interfax Energy.
EIA's latest Short-Term Energy Outlook (STEO) from July forecasts that USA crude oil production will average 10.8 million bpd this year, up from 9.4 million bpd in 2017. The market expected 1.3 million barrels of gasoline draw.