Economic turbulence hits crude oil

Economic turbulence hits crude oil

Economic turbulence hits crude oil

US light crude CLc1 was 55 cents lower at $66.49.

Yet, bullish sentiment found some support from expectations that looming USA sanctions against Iran could significantly hamper its crude exports.

The prospect of continued strength in the US dollar over the coming months should constitute an even greater concern to bullish oil traders than an escalating trade war between the world's two largest economies, an analyst told CNBC on Monday.

Brent crude futures for October delivery rose 74 cents to $73.35 a barrel by 11:00 a.m. (1500 GMT) U.S. West Texas Intermediate (WTI) crude futures rose 70 cents to $67.90 a barrel.

Turkey's financial crisis has raised the risk of contagion throughout emerging economies, dragging down South Africa's rand, Argentina and Mexico's pesos as well as the Russian rouble.

While demand is deteriorating on the back of global trade tensions, slowing economic growth as well as liquidity concerns and has led to profit booking in the energy counter; on the other hand, a strong dollar and over-supply concerns are making a further dent on prices.

That is compounding worries that a deepening trade war between the United States, China and the European Union will squeeze business activity in the world's biggest economies.

OPEC production averaged 32.32 million barrels per day (bpd) in July, 40,700 higher than June, according to the group's monthly oil market report, based on secondary source figures.

"It feels like self-harm at the moment in the oil market", Paul Hickin, EMEA oil analyst at S&P Global Platts, told CNBC's "Squawk Box Europe" on Monday.

The United States has started implementing new sanctions against Iran, which from November will also target the country's petroleum sector.

Hedge funds and other money managers reduced their bullish positions in U.S. crude futures and options in the week ending August 7, data from the U.S. Commodity Futures Trading Commission showed on Friday.

Some have predicted that Iranian output could drop to as low as 700,000 barrels per day (bpd), from 2 million bpd.

Oil prices slid Monday after inventories at a key USA crude delivery hub jumped last week, adding to demand concerns.

But then Trump's displeasure with high oil prices and influence over Saudi Arabia has led to augmented production levels.

"Oil prices are on the rebound as bulls take heart from an unexpected dip in Saudi oil output and the lingering Iranian wildcard", said Stephen Brennock, analyst at London brokerage PVM Oil Associates.

At the same time, OPEC lowered its global oil-demand growth estimate by 20,000 bpd, to 1.64 million bpd this year.

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