Oil falls below $70 as supply risks assessed against Opec salvo

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US crude stocks fell by 8.6 million barrels in the week to September 7 to 395.9 million, the American Petroleum Institute (API) said on Tuesday.

Light, sweet crude for October delivery dropped $1.78, or 2.5%, to $68.59 a barrel on the New York Mercantile Exchange, its worst day since August 15 after it closed at its highest level since July 20 a session earlier.

U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $1.12 to settle at $70.37 a barrel, a one-week high.

"Things are tightening up", the agency said in its monthly report, but added: "As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the USA dollar raising the cost of imported energy".

Oil production in Iran, a founding member of the Organization of the Petroleum Exporting Countries, fell by 150,000 barrels a day in August, OPEC said, citing secondary sources.

One slight upside for Iran is that oil prices are already rising due to the squeeze caused by the looming U.S. sanctions.

Tehran faces the loss of the majority of its export markets for energy as Washington prepares to place sanctions on its sale of oil beginning November 4 after it pulled out of the nuclear deal with Iran last May.

"We are dealing with two issues separately and our stand has been communicated to the USA", added the official on being questioned to whether higher American oil imports could mean replacing Iranian crude.

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Crude oil storage tanks are seen from above at the oil hub in Cushing, Oklahoma, March 24, 2016.

The Paris-based IEA maintained its forecast of strong growth in global oil demand this year of 1.4 million bpd and another 1.5 million bpd in 2019, unchanged from its previous projection.

Rising oil prices are another incentive for producers to turn on the spigot - Brent futures, the global benchmark for the price of crude oil, were hovering near $80 a barrel Wednesday.

Crude prices were also pushed up by Hurricane Florence offshore the United States amid surging demand for gasoline and diesel.

Each of those countries usually imports between 500 to 700,000 barrels of Iranian oil per month, a number which may be reduced even though they aren't expected to completely cut ties with Iran.

The group said OPEC has another 2.7 million barrels a day of spare production that it could tap, 60 per cent of it in Saudi Arabia.

"But we are clear that these are commercial decisions-dependent on how competitively oil is priced and on the requirements of our refineries", said the official.

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