"A drawdown in crude oil inventories isn't very comforting when you're going to lose a lot of Iranian crude in a couple of weeks", said Phil Flynn, an analyst at Price Futures Group.
Oil prices rose more than 2 percent on Tuesday as US sanctions squeezed Iranian crude exports and after USA crude oil production in 2019 was forecast to grow at a slower rate than previously expected, prompting supply concerns. Furthermore, Iranian oil exports continued to decline before the USA sanctions go into effect in November to provide an additional boost to oil. Yesterday's close above the key resistance line paves the way for a test of the $80 barrel mark, before a retest of the YTD high. Eyes will be on Iranian oil import data from China and India who typically import around 500-700k barrels.
"Crude oil output increased mostly in Libya, Iraq, Nigeria and Saudi Arabia, while production declined in Iran, Venezuela and Algeria", the 15-member oil cartel said. South Korea says that it continues talks with the United States to see if it can obtain waiver.
Brent crude, the global benchmark for oil, has been trading between $70 and $80 since April, only briefly rising above $80 in May and this week.
The International Energy Agency said on Thursday that although the oil market was tightening at the moment and world oil demand would soon reach 100 million barrels per day (bpd), global economic risks were mounting.
The Wall Street Journal said OPEC's total oil production climbed last month, in a sign the oil cartel is sticking with a decision to begin pumping out more barrels of crude this summer after more than a year of holding back output.
S&P global Platts said OPEC, in a report, indicated demand for the organization's own crude oil in September will be nearly 1 million bpd more than the level produced in August.
Although the shipment hiatus is unlikely to signal that China has been purposefully scaling back purchases to comply with US pressure to have Iranian oil sales at zero, it could mean that Chinese refiners were looking for better terms for Iranian oil purchases, according to Bloomberg.
"Things are tightening up", the agency that advises Western governments on energy policy said in its monthly report.
"World demand will average 98.82 million bpd in 2018, a demand growth of 1.62 million bpd", said S&P.
Combined output by these three producers has risen by 3.8 million bpd since September 2014, more than the peak 3 million bpd Iran has managed during the last three years.