Oil Prices Firm on Rising US Crude

Oil prices steadied on Wednesday with rising US crude and Iran sanctions in place.

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Oil prices were steady on Wednesday, buoyed by a report of rising US crude inventories as well as the re-imposition of sanctions against Iran. 

US West Texas Intermediate crude futures for front-month delivery were at $69.28 per barrel, higher 11 cents from their last settlement.

Brent crude oil futures were at $74.61 per barrel, lower 4 cents from their previous close.

Both the US WTI and Brent crude have risen in the past couple of sessions.

“Crude oil prices rose as the reality of US sanctions on Iran weighed on sentiment.  News from key buyers suggests the market is already adjusting to the new regime,” said ANZ bank said in a note.

The US government brought a string of new sanctions against Iran on Tuesday, aiming at Iran’s purchases of US dollars – in which oil has always been traded – metals trading, industrial software, coal, and its automobile industry.

Starting in November, the US will also target Iran’s petroleum sector.

Iran ranks as the third largest oil producer among its peers in the Organization of Petroleum Exporting countries, or OPEC, having shipped out nearly 3 million barrels per day of crude in September.  That figure is roughly equivalent to 3 percent of the world’s oil demand.

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Later on Wednesday, the Energy Information Administration, or EIA, is set to release official US fuel storage data. 

For the production expectations, the EIA on Tuesday slightly lowered its 2018 expectation for average 2018 US crude output to 10.69 million barrels per day.  Its previous estimate was at 10.79 million barrels per day.

 For the demand, China’s crude oil imports for July slightly recovered after they fell in May and June.  However, they were still among the lowest this year because of a drop-off in demand from the country’s smaller independent, so-called “teapot” refineries.

The oil shipments into the world’s biggest importer of crude came in at 36.02 million tons last month, or nearly 8.48 million barrels per day, higher from 8.18 million barrels per day a year ago, and just over June’s 8.36 million barrels per day, according to the data from the General Administration of Customs.

As for the gold commodity, the precious metal perked up on Wednesday with the dollar slumping.

Gold futures for delivery in December on the Comex division of the New York Mercantile Exchange went up $3.5, or 0.29 percent, to $1,221.7 per troy ounce.

The US dollar index, which measures the greenback’s strength against a basket of other currencies, was lower 0.2 percent at 94.87 on Wednesday.

A slump in the greenback’s value makes dollar-denominated gold less expensive for owners of other currencies.

“Gold is consolidating here for the moment.  The dips on the dollar still seem to be bought so I am skeptical to call a bottom on gold,” said Philip Ho, who is a trader based in Hong Kong.

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