Oil was mixed on Friday, with short-covering pushing up USA crude futures while Brent slipped on global trade tensions and increased Saudi production.
Before the EIA report, benchmark West Texas Intermediate (WTI) crude for August delivery traded down about 0.8%, at around $74.01 a barrel, and fell to around $73.25 (down about 1.8%) shortly after the report's release.
The clash over OPEC policy and the resumption of USA sanctions on Iran has been amplified this week as Trump continues to target the group which he blames for rising prices.
Iran's representative to OPEC called on US President Donald Trump to "please stop" tweeting about oil, adding that "with your frequent and indecent tweets oil prices have gone up 10 dollars". Some members should remember that the United States is defending them for little reciprocal benefits, he added. That may reduce the pressure on Saudi Arabia to keep oil prices high, said John Kilduff, partner at energy hedge fund Again Capital LLC in NY.
USA crude oil stockpiles unexpectedly rose last week, as imports grew and refineries cut output while gasoline inventories decreased almost double forecasts, the Energy Information Administration said on Thursday.
OPEC together with a group of non-OPEC producers led by Russian Federation started to withhold output in 2017 to prop up prices.
"An unexpected build in the USA commercial crude inventory has prompted profit-taking", said Abhishek Kumar, senior energy analyst at Interfax Energy in London. Last month, in an interview with Reuters, he said that "you (Trump) can not place sanctions on two OPEC founder members and still blame OPEC for oil price volatility". Your tweets have driven the prices up by at least $10 per barrel.
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Outside North America, looming USA sanctions against major oil exporter Iran were the focus of attention.
At their meeting in Vienna last month, OPEC countries and key ally Russian Federation said they will raise production by a million barrels per day, but analysts are concerned it may not be enough for oil prices to spiral out of control, at least until new US shale production comes on stream. The reaction in the oil price to the latest shots in the US-China trade war has also been limited, suggesting the market's underlying strength remains intact.
Anthony Cordesman, a scholar at CSIS, wrote the week before the handshake that Saudi Arabia is the "most important single security partner" for the United States in the Middle East.
Top Photo | Workers at an oil facility near Riyadh, Saudi Arabia.
The US President used his usual American foreign policy card, threatening to withdraw American support from "those countries" that are "manipulating" oil prices.
Hossein Kazempour Ardebili, Iran's ambassador to the Organization of the Petroleum Exporting Countries (OPEC), was quoted by media as saying that the world - and specifically American consumers - would eventually consider Trump blameworthy for runaway oil prices in global markets.
Iran exported more than 2.4 million barrels a day in May, according to the IEA.
Oil surged in the past two weeks as the US pushes allies to end imports of Iranian crude, disruptions persist in places like Libya and American crude inventories shrink. Further, rising trade war concerns in USA and China too dragged oil prices down, hitting a low of 76.60 levels as of 15:58 hours IST.