Oil price leaps to $74 per barrel as USA inventory drops

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The strength of the greenback has an inverse relationship to the price of crude oil.

Concerns that an escalating trade war between China and the US could slow economic growth and weigh on crude purchases eased slightly after sources told Reuters that China's Unipec will resume purchases of USA crude oil in October, after a two-month halt due to the fight.

Negative pressure on the price of oil could emerge from decisions by the office of the U.S. Trade Representative, which has scheduled hearings this week on additional trade pressure on China.

In May, the difference between crude oil exports and imports increased even further, to 470,000 barrels per day.

European oil companies have started to cut back on Iranian purchases, although Chinese buyers are shifting their cargoes to Iranian-owned vessels to keep supplies flowing.

Chinese ship owners are no longer accepting Iranian oil and its using its own tankers to supply oil to top United States customers as the impending American sanctions are expected to disrupt worldwide trade.

China's main producers have received instructions from Chinese President Xi Jinping to increase domestic oil production in order to safeguard the country's energy security.

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Even though the outlook has been adjusted to lower numbers, we haven't reached the peak of the Hurricane Season. Also, subtropical storms are cold-core weather systems, while tropical storms and hurricanes are warm-core.

U.S. West Texas Intermediate (WTI) crude futures were up 27 cents, or 0.41 percent, at $66.11 per barrel. "Crude stocks drew due to sharply lower crude imports and near-record refinery crude runs".

Demand for oil this year is projected to remain robust, supported by global GDP growth.

The US directive came after withdrawing from the Iran Nuclear Deal in May and reimposing sanctions on Iranian oil exports.

The market's expectation was draw of 1.5 million barrels in crude oil.

In the USA, the nationwide crude stockpile decreased by more than 10 million barrels, while production remained flat at around 10.5 million barrels per day.

That means the world's three top producers, Russia, the United States and Saudi Arabia, now all churn out around 11 million bpd, meeting a third of global demand.

It is interesting to note that the U.S. oil rig count (an indicator of future oil production) has been flat in the past two months. And while the move by the government comes at a time when the sanctions against Iran have been renewed, the amount released is too small to compensate for the loss of oil from Iran.