Chinese oil importers shun USA crude despite tariff reversal

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Oil prices edged lower, with Brent crude was at 72.72 dollars a barrel and USA crude was at 67.33 dollars.

West Texas Intermediate crude for September delivery slid 43 cents to settle at $67.20 a barrel on the New York Mercantile Exchange.

The US benchmark crude has declined more than 4percent this month as global trade disputes threatened to deflate energy demand growth.

Meanwhile the market is worrying about supply from Venezuela and preparing for the last round of USA sanctions against Iran, which will target its oil industry specifically.

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.

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The prospect of continued strength in the US dollar over the coming months should constitute an even greater concern to bullish oil traders than an escalating trade war between the world's two largest economies, an analyst told CNBC on Monday.

Escalating trade disputes have dimmed the outlook for economic growth and boosted the dollar, making oil more expensive for consumers using other currencies. But analysts predict Iran could still see its oil sales drop by around 700,000 barrels per day from their current level of around 2.3 million.

This is compounding worries that a deepening trade war between the United States, China and the European Union will squeeze business activity in the world's biggest economies.

In America, the number of working oil rigs rose by 10 to 869 last week, the highest level since March 2015, Baker Hughes data showed.

The International Energy Agency (IEA), in its monthly report published Friday, confirmed that Iran's output continued to fall last month, reaffirming expectations that Washington's tough stance on sanctions against Tehran were starting to curb demand for crude from the Islamic Republic.

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“The direct impact on global demand for oil is negligible, ” Fritsch said.

Oil futures fell more than $2 a barrel on Wednesday after data showed USA crude stockpiles jumped last week, compounding worries about a weaker global economic growth outlook. USA light crude CLc1 was 35 cents lower at $67.28.

Sentiment was also clouded by a darkening economic outlook which could start impacting oil demand, traders said. Yet, bullish sentiment found some support from expectations that looming USA sanctions against Iran could significantly hamper its crude exports.

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.

The main driver is expected to be upcoming United States sanctions on Iran's energy sector, which kick in come November.

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