Saudi Arabia reins in oil production as demand forecasts waver

Oil steady as emerging market woes dim demand outlook

French energy giant Total has already said it is pulling out of its multi-billion-dollar investment project in the South Pars oil field in southern Iran as a result of the renewed sanctions.

West Texas Intermediate crude pierced the 67.00 level after settling above it in the COMEX, poised to retest its recent multi-week lows.

The barrel of West Texas Intermediate crude oil shed some additional 50 cents after the close, following the API report offering an unexpected build of USA crude oil stocks last week.

However, some analysts say trade disputes between the United States and China and turmoil in emerging markets could curb energy demand.

In terms of oil demand growth, in the worst-case scenario where trade tariffs include regions beyond the USA and China, OPEC sees demand rising by 1.53 million bpd in 2018, and by just 1.08 million bpd in 2019, compared to the current base case estimates of 1.63 million bpd growth this year and 1.43 million bpd next year.

Opec has played down concerns over the US-China trade war hitting oil demand, arguing it is unlikely to have a significant impact.

The decision came after the United States President, Donald Trump, urged the group to act in order to prevent further increases, even amid looming American sanctions on Iran, OPEC's third-largest producer.

Hedge funds and other money managers reduced their bullish positions in U.S. crude futures and options in the week ending August 7, data from the U.S. Commodity Futures Trading Commission showed on Friday.

"Maintaining global supply might be very challenging", the bank said, although it added that "the U.S.is doing its bit to increase production, with data showing drilling activity is continuing to rise".

USA energy companies last week added the most oil rigs since May, adding 10 rigs to bring the total count to 869, according to the Baker Hughes energy services firm.

"If 1 million bpd or more of Iranian exports go AWOL, the current fragile supply-demand balance will be upended, potentially sending oil prices above the May peak".

"There are lots of variables in the oil market, the most important of which is Iran", said Tamas Varga, analyst at London brokerage PVM Oil Associates.

The Organization of the Petroleum Exporting Countries forecast lower demand for its crude next year as rivals pump more and said top oil exporter Saudi Arabia, eager to avoid a return of oversupply, had cut production.

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