Oil Prices Set for Weekly Gain after Steep Drop

Oil Prices Set for Weekly Gain after Steep Drop

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Oil prices were broadly flat on Friday with the market exposed to bullish and bearish sentiments as it clawed back some territory after falling by the most in a month in the previous session.

Brent crude was up 3 cents at $78.21 a barrel at 1327 GMT. The global benchmark fell 2 percent on Thursday after rising on Wednesday to its highest since May 22 at $80.13.

U.S. West Texas Intermediate (WTI) futures were up 16 cents at $68.75 a barrel after dropping 2.5 percent on Thursday.

Brent was set for a 1.8 percent weekly rise and WTI 1.5 percent.

“The price action of yesterday confirms $80.00 a barrel as a strong resistance line in Brent,” Petromatrix said in a research note.

“There has been a lot of speculative interest searching for Brent above $80.00 a barrel on the back of the U.S. sanctions on buyers of Iranian crude oil, but so far this year any buying of Brent above $79.00 barrel did not have a long shelf life.”

Price rises were capped after U.S. Energy Secretary Rick Perry said Saudi Arabia, other members of OPEC and Russia were to be admired for trying to prevent a spike in global oil prices.

The United States is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers.

Washington reimposed some of the financial sanctions from Aug. 6, while those affecting Iran’s petroleum sector will come into force from Nov. 4.

Indian refiners, traditionally major buyers of Iranian crude, will cut their monthly crude loadings from Iran for September and October by nearly half from earlier this year.

But Iran’s OPEC governor Hossein Kazempour Ardebili, said in comments to Reuters that a “supply shortage” meant that the United States would not be able to meet its zero export target.

Supply concerns were stoked by data showing U.S. crude production fell by 100,000 barrels per day (bpd) to 10.9 million bpd last week as the industry faced pipeline capacity constraints.

Meanwhile, the International Energy Agency (IEA) on Thursday warned that although the oil market was tightening and world oil demand would reach 100 million bpd in the next three months, global economic risks were also mounting.

China will not buckle to U.S. demands in any trade negotiations, the major state-run China Daily newspaper said, while U.S. President Trump said on Twitter he felt no pressure to strike a deal with China.

Following Chinese President Xi Jinping’s call for a boost to national energy security amid trade tensions, the country’s crude oil output rose in August for the first time in nearly three years.

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