West Texas Intermediate was down 0.6% to $67.34 per barrel at 3:15 p.m. ET. Platts cFlow trade-flow software shows an increase in exports for the week ending August 10, with a big jump in crude to Canada balancing a drop off in crude exports to Asia.
Andurand expects oil to jump to US$150 a barrel as USA sanctions against Iran kick in in a couple of months and crude supply shrinks by a million bpd or more. Traders said the demand outlook for oil was dimming due to ongoing trade disputes between the United States and China, as well as economic trouble in Turkey potentially spreading across emerging markets.
Front-month Brent crude oil futures were at $72.57 per barrel at 0702 GMT, down 24 cents, or 0.3 percent, from their last close.
"Short-term credit conditions continue to deteriorate which is likely to have an outright negative impact on the demand for crude oil in the medium term".
Investors are concerned about the world economy as trade disputes between escalate between the United States and its major trading partners. "That's based on the view that the U.S. will allow a few temporary exception waivers.Ultimately, we could see losses from Iran exceed two million barrels a day", said Jean-Louis Le Mee, CEO of London-based Westbeck.
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For the moment the IEA did not change its forecast for global demand for oil to increase by 1.4 mbd.
BMI Research said oil markets would "struggle for direction, as uncertainty around both the impact on supply from the Iranian sanctions and escalating trade tensions between the US and China persists". Despite the USA rig count being at a high for this year, the "production level has stalled and that raises questions on whether or not there's capacity for the U.S.to increase production further, which is why we're seeing firmer markets".
Chinese oil importers now appear to be shying away from buying US crude oil as they fear Beijing may decide to add the commodity to its tariff list.
In spite of the cautious mood in oil markets, bullish sentiment found some support from expectations that US sanctions against Tehran would restrict Iranian crude exports, tightening global supply.
At the same time, the largest oil producer in OPEC - Saudi Arabia - has presented to the organization the data on the fact that production in the country fell by 200,000 barrels to 10.28 million barrels per day in July.
Iran is selling oil and gas at a discount to Asian customers as it prepares for the return of USA sanctions, state news agency IRNA reported on Tuesday.