U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are in a position to close higher for the week. Most of the gains occurred early in the week when prices spiked higher on worries over tightening conditions. A larger than expected draw on U.S. crude also helped underpin prices.
The markets hit their highs of the week after concerns were raised over future demand due to issues with emerging currencies, and the economic impact of a prolonged trade war between the United States and China.
At the start of the week, the catalysts for higher prices were worries about tighter supply conditions once Washington’s sanctions against Iran’s crude oil exports kick in beginning in November, and stable U.S. production due to a flattening of the rig count last week.
Firstly, there are new signs that several major Iran customers like India, Japan and South Korea were already scaling back on purchases of Iran crude. These countries are complying with the U.S. mandate to stop all Iran oil purchases or face severe financial penalties.
Secondly, according to energy services firm Baker Hughes, U.S. energy companies cut two oil rigs last week, bringing the total count to 860. Furthermore, there is evidence that the U.S. rig count has been flattening for nearly four months, after mounting a huge recovery since 2016.
Prices continued to soar at mid-week on the back of a private industry report showing declines…