U.S. West Texas Intermediate crude oil futures are trading higher on Friday. The market is also in a position to post a higher close on the weekly chart, something it has done only once since the week-ending June 29.
Worries that the sanctions on Iran will cut significant volumes of crude from the market are underpinning the market today. Some traders, however, are saying gains are being limited by concerns over future demand due to the trade dispute between Washington and Beijing.
Traders are also reacting to the tight supply/demand situation which makes the market vulnerable to any supply disruption. Traders are particularly concerned about the supply side of the equation because of the looming U.S. sanctions against Iran, which will target oil exports from November.
According to early estimates, the sanctions are expected to strip about 2.5 million barrels per day (bpd) of crude and condensate this year from the market, or about 2.5 percent of global consumption. Analysts also note that Iran is already experiencing a slowdown with tanker loadings already down by around 700,000 bpd in the first half of August relative to July. This is currently ahead of expectations.
Analysts are also saying that during the fourth quarter of 2018, the market will be facing an issue with either undersupply, dwindling spare capacity or both.
While the bullish headlines are driving the price action this week, some traders are still expressing caution due to concerns…