Oil strives to recover from multi-week lows

Oil prices reversed higher in American trade after earlier losses in Europe, with US crude marking seven-week lows, while Brent plumbed a three-week trough earlier today. 

Prices are attempting a recovery as US production declines and Iran sanctions go into effect, with the gains curbed by growing concerns over weakening global demand as the US-China trade dispute deteriorates, while the dollar rallies against major rivals. 

As of 12:58 GMT, US crude rose to $67.15 a barrel, after marking June 22 lows at $66.13, while Brent climbed to $72.35 a barrel, after plumbing July 18 lows at $71.35. 

US crude futures due in September lost 0.1% yesterday, while Brent October futures slipped 0.3% on global trade concerns. 

The Energy Information Administration reported a drop of 100 thousand bpd in US output in the week ending August 3 to a total of 10.80 million bpd, off record 11 million highs scaled recently. 

The EIA also reported a 1.4 million barrels drop in commercial inventories to 407.3 million barrels, while analysts expected a 2.8M decline. 

On the Iran front, the US has reimposed blanket sanctions to restrict Iran's access to dollars, gold, and precious metals, with plans to enforce an oil embargo next November. 

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

US-China Trade War 

The Sino-US trade war took another turn to the worse this week, with China slapping $16 billion worth of US imports with 25% additional tariffs in response to similar tariffs by the US. 

Otherwise, the dollar index rose 0.6% on Friday for the second session in a row, marking a 13-month peak at 96.02 and heaping pressure on dollar-denominated commodity futures such as oil contracts. 

Also steep declines in currencies of emerging economies such as India, Turkey, and Yuan have made oil imports more expensive, potentially hurting demand.