Oil prices tick lower amid mixed supply signals

Oil prices traded slightly lower during Friday’s Asian session as market participants weighed the prospect of renewed United States-Iran tensions against signs of recovering Middle Eastern supplies this week.

By 3:35 pm AEST (5:35 am GMT), Brent crude futures were down 32 cents or 0.3% at US$101.99 a barrel, while West Texas Intermediate (WTI) declined 43 cents or 0.5% to US$92.44 a barrel.

ANZ analysts commented in a note to clients:

"The prospect of renewed attacks by the US were heightened following a report in the Wall Street Journal that it was sending a third aircraft carrier strike group to the Middle East. President Trump is also said to have told aides that he expects to resume bombing of Iran.

"This comes as the US ramps up economic pressure on Iran through the continued blockade of Iran’s ports. Preliminary tanker-tracker data from Bloomberg shows that Iran didn’t load any crude onto tankers in September. This is compared with 250kbbls per day in August.

"Investors are increasingly concerned that Iran will respond to the military build-up with attacks on US assets and energy infrastructure in the region."

Oil prices settled higher in the previous session after Reuters reported that Chinese refiners had suspended oil product exports for October as Beijing sought to preserve domestic stocks.

Additionally, the Trump administration reportedly told Germany and France to draw down emergency diesel inventories to help ease soaring global fuel prices or face a potential US diesel export ban, according to three people close to the discussions.

A source told Reuters that the US had asked the EU to release 120 million barrels of diesel over the next six months. EU countries hold nearly 109 million tonnes of emergency crude and fuel stocks.