United States crude oil inventories increase last week: API

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Distillate stockpiles, which include diesel and heating oil, fell by 2.3 million barrels, versus expectations for a 1.9 million-barrel drop, the EIA data showed.

One of the biggest concerns for the oil market is demand. However, the effects of the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in May, the resumption of Iran sanctions and the potential response from other countries posed significant uncertainty to the forecast.

EIA also assumes that Iran's condensate production will fall as a result of the new sanctions. A sharp increase in inventories mean that the price of crude may continue to decline. There have been reports that companies in different parts of the world would defy sanctions and continue buying Iranian oil. "We do not know if we will get waiver (from U.S. sanctions) or not", he said speaking at an energy sector event here. In 2017, net oil export revenue, which includes crude oil and condensate exports, was about $55 billion.

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In the months following the full implementation of sanctions in November, the total volumes of crude oil and condensate coming off the market will become more apparent. Indian refiners prefer Iranian crude owing to better pricing and credit terms. Longs declined 7.1 percent, but shorts surged 38 percent to the highest number since November a year ago.

Key players in the market are now issuing contradictory warnings, with the International Energy Agency fearing a looming shortage as OPEC frets about a resurgent glut.

The WTI Crude Oil market had a solid day on Thursday, reaching towards the $67.50 level. It fell earlier in the day to $75.11, the lowest since August 24. So, the rise in crude oil inventories was already priced in and the market reversed back after a slight dip to $66.02.

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Saudi Crown Prince Mohammed bin Salman earlier said that in the future many oil exporting countries, including China and Russian Federation, will leave the oil market. "We dropped precipitously on the idea global demand is going to slow". Similarly, India's oil imports from Venezuela fell over 28 per cent to 1.29 MT in September and fell 14.21 per cent to 8.9 MT in the first six months.

US light crude dropped $3.03, or 4.4 per cent, to $66.33 a barrel, after earlier hitting a two-month low at $65.74.

Many investors are concerned about rising oil inventories as supply exceeds demand in some key markets, including the United States.

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The Organization of Petroleum Exporting Countries has recently been talking about preventing prices from rising too much.

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