Oil pares losses as focus returns to Iran sanctions

Iran's Minister of Petroleum Bijan Zangeneh addresses the 4th Iranian Petroleum and Energy Club Congress & Exhibition in Tehran Oct. 16 2018

Oil inched up amid ongoing tensions over the death of a prominent Saudi journalist, with prices steadying after a big drop overnight due to a jump in us crude stockpiles, Reuters reports.

The U.S. benchmark, November West Texas Intermediate crude for November delivery CLX8, +1.05% on the New York Mercantile Exchange, rose 47 cents, or 0.7%, to end at $69.12 a barrel.

Dalian typically receives between 1 million and 3 million barrels of Iranian oil each month, according to data that dates back to January 2015.

US crude inventories rose 6.5 million barrels last week, the Energy Information Administration said on Wednesday, the fourth straight weekly increase and nearly three times what analysts had forecast.

There have also been concerns in New Delhi following fresh U.S. sanctions on Iran, set to come into effect on November 4, since the West Asian nation is a major supplier of crude oil to India.

President Donald Trump said on Thursday he presumed that missing Saudi journalist, Jamal Khashoggi, is dead.

But Turkey has been vocally opposed to the United States sanctions on Iran, and has said it will not cut trade ties with Tehran at the behest of other countries.

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Signs that Iranian oil exports have been falling more steeply than some in the market expected amid looming USA sanctions have also underpinned the market.

The country made the decision to cut its oil imports long before U.S. sanctions against Iran take effect in November 4.

Oil traded near the lowest level in a month after a bigger-than-expected gain in American stockpiles overshadowed tensions between the US and Saudi Arabia over a missing critic of the kingdom.

"The looming Iranian supply disruption and the conflict between the USA and Saudi Arabia are pushing traders to take a cautious stance at the moment", Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone from Seoul. "But if the U.S. would tell them to stop, they will oblige and work towards achieving that", the source said. Oil prices were left unmoved by data from oil-field services firm Baker Hughes that showed the number of USA drilling rigs rose by four this week.

Indian refiners also cut imports of Iranian oil purchases last month in a sign they are preparing for November.

For example, if the U.S. were to halt or reduce production, the implications would be big because the price increase could be high.

"Despite the bullish talk, Saudi Arabia is very unlikely to pick the oil market as a means for retaliation", said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd.in Zurich. OPEC's spare capacity, production that can quickly be brought online and sustained, is just 1.4 million barrels, the lowest since December 2016, according to the US Energy Information Administration.

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