The FOMC interlude was even less of an event than expected but that belies some of the headline risk creeping back into play, as the market has been waiting for a Whitehouse press release on China tariffs which has left investors to speculate if this will confirm the overnight chatter the USA is proceeding with United States dollars 16 bln in tariffs.
US crude inventories rose 3.8 million barrels last week as imports jumped, the government's Energy Information Administration said.
Low U.S. stockpiles were still providing a floor for prices, with overall U.S. crude inventories below the five-year average of around 420 million barrels.
The speculator group cut its combined futures and options position in NY and London by 5,287 contracts to 407,001 during the week ending July 31, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. Phil Flynn, a market analyst at the PRICE Futures Group in Chicago, said in a daily emailed market report that was supporting the spike in prices on Thursday.
On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.3% at $69.16 a barrel.
Before the Genscape report sparked a rally, futures fell early on concerns about oversupply.
Despite interruptions in supply from Libya and Venezuela, it is expected that there will be excess supply in the market as Saudi Arabia and Russian Federation have spoken about increasing crude production.
"Oil is holding up reasonably well".
"It's a jittery feel here, as long as we have Iranian sanctions uncertainty and tariff uncertainty, and it doesn't take much to spark a significant swing one way or the other", said Jim Ritterbusch, an analyst in Galena, Illinois.
The kingdom has been under acute pressure from President Donald Trump to open the taps as he chokes off exports from Saudi's political rival, Iran.
Although the sanctions don't officially take effect until November, Iran is already seeing customers flee as the U.S. imposes penalties on buyers after Trump quit a nuclear accord with the country.
"A clear definition around the macros is what the market is looking for and until we get that, it is likely to be volatile in the range", said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.
Oil prices are also being pressured by concern that global trade tensions could crimp economic growth.
Senior Iranian officials have warned the country would not easily yield to a renewed USA campaign to strangle Iran's vital oil exports.
Brent prices fell more than 6 percent in June and US crude slumped about 7 percent, the biggest monthly declines for both benchmarks since July 2016. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.