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Oil Prices Mixed amid Drop in US Crude Supplies, Middle East Tensions

October 18, 2017 at 16:41 by Andrew Moran

Oil futures are mixed on Wednesday following a new US government report that found domestic supplies declined. Crude oil prices have also been affected by rising tensions in the Middle East, giving the market a headache.

November West Texas Intermediate (WTI) crude futures dipped $0.01, or 0.02%, to $51.87 per barrel at 16:27 GMT on Wednesday on the New York Mercantile Exchange. US crude prices are on track to settle at their best levels since the end of September.

Brent, the international benchmark for oil prices, is posting modest gains midweek. December Brent crude futures rose $0.14, or 0.24%, to $58.02 a barrel on London’s ICE Futures exchange. Brent crude prices are also poised for their best settlement since the end of September.

According to the US Energy Information Administration (EIA), domestic crude supplies decreased by 5.7 million barrels for the week ending October 13, more than the initial forecast of 3.9 million barrels. US crude output fell to 8.4 million barrels per day (bpd), down more than one million bpd from a week ago. The EIA also reported that gasoline stockpiles climbed 900,000 barrels for the week, while distillate stockpiles jumped by 500,000 barrels.

US production has slumped over the past week because of Hurricane Nate and autumn maintenance among refinery outlets.

Investors are nervous over escalating tensions in the Middle East as the Iraqi government’s relationship with the Kurdish region has been strained, causing concerns that a conflict may arise and impact oil. Moreover, the US government will impose new sanctions on Iran, hurting the country’s oil exports, but officials have dismissed reports that American sanctions will harm its crude industry.

Traders are also paying attention the Organization of Petroleum Countries (OPEC) and the compliance rate among the oil cartel’s members.

The US dollar is weaker midweek as the greenback shed 0.07%. A weaker US dollar is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

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