Brent crude, the global benchmark, fell by 6.5 per cent in July and was 1 per cent lower in NY last night at $74.25 a barrel, still 11 per cent higher since the start of the year. The September contract expires today and the more-active October contract was down 0.5 percent to $75.20, Reuters said.
He said oil prices, which Trump has been pressuring the Organization of the Petroleum Exporting Countries to bring down by raising output, will rise unless the United States grants waivers to buyers of Iranian crude.
WTI crude for September delivery traded at US$69.27 a barrel on the New York Mercantile Exchange, down 86 cents, at 2:11 p.m. London time.
A Reuters poll forecast stocks fell 2.8 million barrels.
Geopolitical tensions have roiled the crude market, sending Brent prices higher since mid-July as global supplies tighten.
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Reuters reported Monday that OPEC countries pumped 32.64 million barrels per day in July, according to a survey conducted by the publication, the highest its been in 2018 and with the Republic of Congo as a new member. Saudi Arabia suspended oil shipments through the strait last week after the Houthis attacked two Saudi oil tankers.
"The risk premium for Brent is definitely on right now given the war of words we've seen against Iran - in general, political instability", said Ashley Petersen, lead oil analyst at Stratas Advisors in NY. "Overall, I think the market is in the process of stabilizing".
Energy information company Genscape, however, said that inventories at Cushing rose almost 200,000 barrels, or nearly 1%, from Tuesday to Friday last week, according to traders. Oil markets were still pressured by the persistent risk of oversupply, as large producers are expected to increase production anticipating the impact of USA sanctions on Iran. IIR Energy reported that U.S. oil refiners are expected to shut in 482,000 bpd of capacity in the week ending July 27th, increasing available refining capacity by 391,000 bpd in the previous week.
Analysts expect a drop of about 500,000-1 million barrels per day (bpd) in Iranian output due to the sanctions.
And concern persists that there won't be enough spare OPEC capacity to make up for losses from producers like Venezuela.
"The market is facing different questions - Is global demand slowing due to weakening worldwide economic growth, will US production keep up its incredible pace, will output in Venezuela keep plummeting, what will USA sanctions do to Iranian production, and is OPEC really willing to raise output up to 1 mbpd!" "China trade wars continue to weigh on prices, while the halt in Saudi shipments through the Red Sea waterway has seemingly failed to provide a bullish fillip", said Stephen Innes, head of trading APAC at OANDA Brokerage.