Oil slips from four-month highs on economic concerns

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"Today's crude stock draw of 5.3 million barrels fell far short of the (American Petroleum Institute's) decline but was significantly larger than the normal draw of around 1 million barrels for this particular week", Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

U.S. West Texas Intermediate (WTI) crude futures were at $69.81 per barrel at 0047 GMT, up 56 cents, or 0.8 percent, from their last settlement.

"They (South Koreans and Japanese refiners) need to find replacements for their drop in Iran imports and a fair amount of that is coming from the States". WTI's discount to Brent widened to as much as $10.38 a barrel, its deepest since June 20. The US has stepped up pressure on buyers to halt Iranian energy imports from November.

State-owned Saudi Aramco has yet to respond to a request for comment.

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Japan and South Korea were among the first major Iranian clients to bow to US pressure and cut orders from Iran, the third-largest producer among the Organization of the Petroleum Exporting Countries, with South Korea importing its last cargoes in July, the trade data showed.

Oil prices rose on Wednesday after a report of falling crude inventories and the looming sanctions against Iran fuelled expectations of a tightening market.

The cartel revised world oil demand growth in 2019 slightly lower by 20,000 from the previous month's report, again due to economic revisions to Latin America and the Middle East: "World oil demand growth is now anticipated at 1.41 million bpd and total global consumption at around 100.23 million bpd", it stated, adding that the trade war between the US and China is also cause for ongoing concern.

The report, however, incorporated Wells quote saying there was no "blanket waiver or country-specific waiver" from USA sanctions on trading with or investing in Iran or buying arms from Russian Federation.

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Wells said, "With respect to Chahbahar, we have heard the Indian government's assertion for Chahbahar both as a means of route to Afghanistan, a means for delivering wheat supplies, for instance, and of opening-up trade to Central Asia".

Whether this price divergence will last is not clear. The introduction of tighter standards for shipping fuel from IMO 2020 is among the bank's major concerns to cause market disruption as is the loss of Iran's crude.

Meanwhile, U.S. prices could rise because the surge in demand may exacerbate logistical bottlenecks since the current domestic pipeline, port and storage infrastructure is not geared to handle exports on this scale.

"The worries about demand and a possible spillover from emerging markets are weighing on prices", Hans van Cleef, senior energy economist at ABN Amro Bank NV, told Bloomberg. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. It is not a solicitation to make any exchange in commodities, securities or other financial instruments.

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