Oil climbs off multi-week lows, dollar scales year peak

Oil futures rose over one percent in American trade, with US crude bouncing off June 22 lows, and Brent off July 18 lows, while still heading for their second weekly losses in row.

The dollar index powered up to July 2017 highs as major rivals in Europe and Asia swooned due to various economic and political factors, and following earlier upbeat data from the US, the world's largest energy consumer. 

As of 05:17 GMT, US crude futures due in September rose 1.14% to $67.57 a barrel, while Brent October futures climbed 1.12% to $72.88 a barrel, as the dollar index spiked 0.95% to 96.41, marking 13-month highs. 

US Inflation Data

Earlier US data showed consumer prices rose 0.2% m/m in July as expected, accelerating from 0.1% in June, while core prices, excluding food and energy, rose 0.2% as expected with no change from June. 

On a yearly basis, consumer prices rose 2.9% as expected with no change as well, while core prices accelerated to 2.4% from 2.3%. 

US Inventory Drawdown 

The Energy Information Administration released its report on US crude stocks on Wednesday, showing a drawdown of 1.4 million barrels in the week ending August 3, compared to a 3.8M buildup in the previous reading, while analysts expected a 2.8 million decline, with total stocks now down to 407.4 million barrels, 1% below five-year averages for this time of year. 

Gasoline stocks rose 2.9 million barrels, making them 4% above five-year averages, while distillate stocks, including heating fuel, rose 1.2 million barrels, still 10% below averages. 

The EIA also cut forecasts for global oil demand growth by 60 thousand bpd in 2018, and by 140 thousand bpd in 2019 to 1.66 million and 1.57 million bpd respectively, while expecting US output to rise by 1.31 million bpd this year, down from 1.44 million in previous forecasts.  

IEA Releases Monthly Report 

The International Energy Agency released its monthly report, at which it noted receding worries over supply shortages as producers raise output around the world, while oil demand is expected to rise by 110 thousand bpd in 2019.  

The EIA expects oil supplies outside OPEC to rise by 100 thousand bpd in 2018 and 2019, noting nonetheless that maintaining current levels of oil supplies will be quire difficult in the future as US embargoes Iranian exports in November, while other producers face issues as well.

The US has reimposed blanket sanctions on Iran this week, targeting its access to dollars, gold, and precious metals amid a push by the American administration to isolate Iran. 

Société Générale expects the US sanctions in November to cut Iranian exports by about one million bpd. 

Iran Claims Improper Redistribution in OPEC's Output 

Iranian oil minister Bijan Zanganeh has called for an emergency OPEC meeting in case the organization failed to stop some of its members from increasing their output past the agreed-upon quota in the deal to cut global output this year, noting that Iran has already sent complaints to OPEC about observations of such acts by some members. 

US Oil Rig Count 

Banker Hughes, a US oil services company, reported an increase of 10 in the rig count to a total of 869 rigs, the first increase in three weeks.

US output is down to 10.80 million bod, still above Saudi Arabia's 10.29 million bpd levels, while below Russia's 11.21 million bpd.