Oil near US$74 amid Trump tweets, forecast drop in USA stockpile

Iran's OPEC governor Hossein Kazempour Ardebili

US crude futures were down 58 cents at $73.56 per barrel by 12:00 p.m. EDT (1600 GMT), still in sight of Tuesday's 3-1/2-year high above $75.

US West Texas Intermediate (WTI) crude futures CLc1 were down 16 cents, or 0.2 percent, at $73.98 per barrel.

"Trump's order to OPEC members to increase production is a great insult to those governments and nations, and destabilises the market". Of course, the policies coming from Washington always had an impact on where oil prices were headed, but it's a brand-new thing to have the White House's twitter feed as a regular source of risk for positions in oil and oil stocks.

The recent strength in oil prices has in part been spurred by a US announcement that it plans to reintroduce sanctions against Iran, OPEC's third-largest producer, from November, targeting oil exports. Although Saudi Arabia has pledged the organisation will boost supplies, Goldman Sachs Group Inc. said that losses in some members - notably Venezuela and Iran - will lead to a new rally.

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"The more that Saudi Arabia adds to the market, the less of a supply cushion we have - that's a bullish twist to a bearish development", said Yawger at Mizuho.

Saudi Arabia has wanted to sell shares in Aramco to bring in foreign investment to diversify its economy, but legal concerns about listing in places like London or NY have presented complications.

In his latest tweet on the subject on Wednesday, Trump said that the "OPEC Monopoly must remember that gas prices are up & they are doing little to help".

United States crude inventories probably declined by 5 million barrels last week, according to a Bloomberg survey.

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"This must be a two way street", he wrote, adding in block capitals, "REDUCE PRICING NOW!"

The potential trade war between the United States and China comes amid a tight oil market. Brent crude lost 38 cents to $77.84 a barrel.

Oil prices dropped Thursday after weekly government data showed a surprise rise in USA crude stockpiles last week as refineries cut output, while gasoline stocks decreased and distillate fuel inventories rose.

Iran will stop oil exports from the Strait of Hormuz, the world's most important oil chokepoint, if the U.S. succeeds in halting crude sales from the Persian Gulf nation, according to a Revolutionary Guards official.

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US tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday and Beijing has vowed to respond in kind.

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