Oil set for first weekly gain in two months on supply risks

Oil set for first weekly gain in two months on supply risks

"Prices are moving higher after the API reported a more massive draw than analysts had expected", said Stephen Innes, Head of Trading, APAC at brokerage OANDA.

U.S. West Texas Intermediate (WTI) crude futures were up 27 cents, or 0.41 percent, at $66.11 per barrel. The actual report was a build rather than a draw due to higher than normal crude oil inputs to the refineries.

Brent crude oil futures were at $74.93 per barrel at 0245 GMT, up 20 cents, or 0.3 per cent, from their last close.

Crude oil prices were in rally mode before the start of USA trading after signs of another drain on domestic oil and gasoline inventories.

In its report obtained by Vanguard, yesterday, the American Petroleum Institute stated that U.S. crude stocks fell last week by 5.2 million barrels.

The U.S. dollar index against a basket of six major currencies eased on Wednesday to 95.211 after losing 0.7 percent the previous day, weighed down by U.S. President Trump's comments on monetary policy.

USA investment bank Jefferies said on Friday there was an emerging "lack of demand" for crude oil and refined products.

The prospect of a drop in oil exports from Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, in response to new USA sanctions is also supporting the market.

Today, three months before the November deadline when the sanctions are due to take effect, Iran's outflow has already fallen by around 430,000 barrels and the nation has to rely more on its own fleet of tankers to carry oil to its customers, clearly showing that buyers are hesitant to continue purchasing Iranian oil.

Iran is the third-biggest producer in the Organization of the Petroleum Exporting Countries, supplying around 2.5 million barrels per day (bpd) of crude and condensate to markets this year, equivalent to about 2.5 percent of global consumption.

Opec has started to boost supplies following a deal with Russian Federation and other allies in June, although producers have been cautious so far.

Global markets were weaker as the ongoing trade spat between the United States and China was seen as a drag on economic growth.

United States and Chinese officials were set to resume talks on Wednesday, but Trump said he expected there will be no real progress.

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