Oil heads for third weekly decline as equities resume slide

On Wednesday, crude oil futures closed higher by $0.39, or 0.6%, at $66.82 a barrel, after having plunged to a two-month low a session earlier.

The global benchmark has lost more than $10 a barrel since hitting a high of $86.74 on October 3. The world's second largest economy also halted purchases of U.S. crude in August for the first time since September 2016, according to U.S. Census Bureau data, as the trade spat between the nations escalated.

Oil's uptick yesterday was supported by the EIA report, which said gasoline inventories fell by 4.83 million barrels.

Financial markets have been roiled by the U.S.

Markets have been hit hard this month by a range of worries, including the Sino-U.S. trade war, a rout in emerging market currencies, rising borrowing costs and bond yields, as well as economic concerns in Italy.

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There are also signs of a slowdown in global trade, with container and bulk freight rates dropping after rising for most of 2018.

All the while, global economic growth has been strong for several quarters and oil demand continues to grow.

China's government has told at least two of its state oil companies to avoid purchasing Iranian oil as the USA prepares to impose sanctions on the Persian Gulf state, according to people with knowledge of the matter. Cushing crude stocks rose to 33 million barrels on Tuesday, up nearly 1.8 million barrels from the previous week, traders said, citing a report by market intelligence firm Genscape. "We (have) entered the stage of worrying this increase", the official said, adding any reduction in supply would go towards ensuring the stability accomplished because of the OPEC+ production-cutting pact sealed at the end of 2016.

United States efforts to isolate Iran and its crude output, as well as spiraling Venezuelan production, haven't been enough to serve as a geopolitical counterweight to the selloff, reported Bloomberg. Still, many buyers, including Iran's biggest customer, China, appear to be falling in line, forcing Tehran to store unsold oil on tankers. I think USA and Saudi due to mutual interest are interested to manage any tension with aimed of decreasing Iran's role in world oil market.

USA energy firms added oil rigs for a third straight week, keeping the rig count at its highest in over three years, General Electric Co's Baker Hughes energy services firm said.

  • Darren Santiago