IEA says calm in oil markets could be short-lived

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Oil prices had been edging higher prior to the announcement.

United States crude inventories fell 6.02 million barrels last week, the API was said to report. "The reality is that in August, we do start to see a wind down in gas consumption, and petroleum in general, is seasonally weak".

President Donald Trump has threatened to impose tariffs on almost all Chinese imports to the US.

Additionally, an executive from China's Dongming Petrochemical Group said at the time that he expected Beijing to soon impose the tariff on USA oil imports.

"Of course, such decisions being taken by the US side are absolutely unfriendly and can hardly be associated with the. constructive atmosphere achieved at the latest meeting of the two presidents", he was quoted by Russian news agency Tass as saying.

"Oil has barely made its way above $69 and is struggling to gain further, trading in a tight range, as both the upward and downward elements co-exist, pulling prices from opposite directions", Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone from Seoul. -China trade relations continue to deteriorate; U.S. WTI -3.7% at $66.56/bbl, Brent -3.6% at $71.93/bbl. US West Texas Intermediate (WTI) crude futures were at $69.35 a barrel, up 18c. There is the concern of global trade slowing down, but there's also a lot of geopolitical noise out there as well. Earlier today, crude oil sold off after it was announced that Saudi Arabia has resumed oil shipments through the Red Sea shipping line of Bab al-Mandeb over the weekend.

"Many investors were watching oil prices after the U.S. reimposed sanctions on Iran", said Hussein Sayed, chief market strategist at FXTM. The sanctions, which would come into force from November 4, are likely to block current payment routes used to pay for Iranian imports.

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Iran's oil industry is expected to be hit in the next round of economic penalties against the country, set to take effect in November.

On top of the impact on the broader global economy, there is growing worry in the crude oil market about Chinese demand.

"We think India will continue to buy United States oil given the strength in USA production and the Indian market can emerge as a reliable buyer of U.S. oil", said Sri Paravaikkarasu, head of East of Suez Oil at consultancy FGE.

All the Persian Gulf oil exporters such as Saudi Arabia, Iran, Iraq, Kuwait, Qatar, the UAE, and Bahrain, ship their crude oil to the worldwide market through the Strait of Hormuz. Official US fuel storage data is due later on Wednesday from the Energy Information Administration (EIA).

Under the arrangement, Iran's oil payments were deposited into accounts in oil-importing countries and used by Tehran to buy goods.

Some analysts had expected a larger draw, of more than 3 million barrels.

Saudi Arabia is producing around 10.4 million bpd and could in theory raise output to above 12 million bpd.