However, potential supply cuts caused by US sanctions on Iran, the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC), are providing some support for oil prices.
Brent crude oil was up 70 cents a barrel at $78.79 by 1345 GMT.
The Organization of Petroleum Exporting Countries is concerned by threats to crude supply from large producers such as Iran, the group's top official said.
Refineries in the U.S. consumed about 17.7-million barrels a day of crude oil last week while China's refiners used about 11.8-million barrels a day in August, according to government data from the countries, the most among the world's countries.
OPEC Secretary-General Mohammed Barkindo speaks with the media during the International Energy Forum in New Delhi, India, April 11, 2018.
NSD Logo The Organization of the Petroleum Exporting Countries, OPEC today said, Iran remains a very important member of the oil cartel as Tehran braces for a new round of USA sanctions, partially targeting its crude exports.
USA crude stocks increased by 1.2 million barrels according to the American Petroleum Institute (API), sharply reversing the market forecast of -2.7 million barrels, raising prospects for a widening premium in the Brent versus WTI with crude runs worsening in Europe and Asia.
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Cementing that arrangement would be one of the topics of discussion as OPEC meets this Sunday in Algeria, he added.
He didn't however address how the global oil industry immediately can replace Iranian crude supplies in an already-tight market.
Bloomberg reported that while Saudi Arabia had no desire to push prices higher than US$80, it may no longer be possible to avoid it.
But supporting crude futures were potential supply cuts from US sanctions on Iran.
Sanctions affecting Iran's petroleum sector will come into force from November 4.
Moreover, analytical wisdom holds that these three countries may have the production clout to offset the crude shortages resulting from the Iran sanctions and economic chaos in Venezuela; and on that score, some good news was delivered Monday by the Energy Information Administration, which reported that output from seven major shale formations in the U.S.is expected to rise by 79,000 barrels per day (bpd) to 7.6 million bpd in October.
"The U.S. -China trade tension restricts oil from rising further, while optimism over Saudi and Russian Federation making up for Iran's losses is keeping prices from falling lower", Ahn Yea Ha, a commodities analyst at Kiwoom Securities Co., said by phone from Seoul.