The oil prices had a slight uptrend in the week ending on July 27.
The price of the West Texas Intermediate (WTI) contract prices for September and Brent contract prices for September delivery increased by 0.6 percent and 1.7 percent, respectively. At the end of the week, WTI settled at 68.69 US dollars and Brent settled at 74.29 dollars.
Oil prices started the week with slight gains due to US President Donald Trump's statements of threatening Iran with potential intervention.
However, the oil prices felt pressure due to the expectations of new supply from OPEC and slowing down of energy demand resulting from trade conflicts, between the US and China as well as other countries.
Moreover, the high level of the US dollar index, which is a measure of value of the US dollar relative to a basket of foreign currencies, strengthened the downward movement on Monday.
Oil is mostly traded in US dollars all over the world, and a stronger US dollar puts pressures on the oil demand. The US dollar index trended around 95 during the whole week, close to the highest levels in a year which is a bearish factor for oil prices.
On Monday, WTI prices reached 69.31 dollars a barrel on the New York Mercantile Exchange, but it took a steep dive due to those concerns and settled at 67.89 dollars.
Brent prices also started the week with slight gains on Monday as well and reached 74.50 dollars per barrel on ICE Futures Europe, but it could not hold at those levels and settled at 73.06 dollars that day.
Anas Alhajji, an energy economist based in Dallas, Texas, told Xinhua, "The rising dollar against other major currencies is the most important threat to growth in oil demand this summer."
On Wednesday, US Energy Information Administration (EIA) reported a surprise 6.1 million barrels of crude draw in commercial crude oil inventories. The draw was due to 8.5 million barrels of higher exports and 8.8 million barrels of higher imports for the week ending in July 20 compared with the previous weekly report levels.
US net imports, measuring the imports deducted by its exports, is a very important value for oil price movements. US net imports declined by 2.5 million barrels per day during that week.
Alhajji said, "Unlike the past, US weekly crude oil inventories have become extremely sensitive to US net imports, making short term oil prices more volatile."
EIA also reported on Wednesday that US oil production remained unchanged at 11 million barrels per day during the week ending July 20.
After the larger than expected draw, the WTI prices rose on Wednesday by 1.14 percent.
Another major event on Wednesday was Yemen's Houthi's attack on the Saudi oil tanker in the Red Sea. Saudi Energy Minister Khalid al-Falih stated that "Two our oil tankers had minor damages from the attack and we temporarily halted the oil shipments via Gulf of Aden due to safety reasons."
The halt is a major factor for oil market as it takes less than two weeks for an oil tanker that loaded in Persian Gulf to arrive at a European port via Suez Canal route, where the attack took place.
The journey would be extended by around 3 weeks if the oil tanker takes the alternative route around the African continent.
Alhajji said, "It is clear that the Saudis want a balanced market with the least political pressure possible."
On Friday, Russia's energy minister, Alexander Novak's statement put downward pressure on both WTI and Brent prices. He said in the statement, "We do not rule out an increase in oil production in excess of 1 million barrels a day."
However, the pressure on WTI prices was more intense as Baker Hughes reported on Friday that US oil rigs increased by three last week. Despite all the pipeline bottlenecks, the increase of rig counts is a negative factor for oil prices.
WTI price declined by 1.32 percent while Brent's loss was pared at 0.32 percent.
At the end of the week, the price differential between WTI and Brent was 5.60 dollars. Analysts pointed out the widening gap between WTI and Brent can support US oil exports in the future.
The higher the differentials between the two major benchmarks are, the more arbitrage opportunities for traders to pursue. As a result, more US crude oil would be shipped to the Asian market.
Matt Smith, director of Commodity Research at Clipperdata, based in Houston, in the US state of Texas, told Xinhua that "The oil market continues to be pushed and pulled by two key factors: trade war concerns and geopolitical worries. Even though trade war worries were eased between the US and EU this week, they still loom large with China, weighing on prices."
According to Smith, geopolitical tension remains a counterweight to this, as the "war of words" between Iran and the US ratcheted up this week. The US continues to affirm its desire to reduce Iran's oil exports to zero, while Iran has threatened to retaliate by closing the Strait of Hormuz.
"Both trade war concerns and geopolitical tensions are not likely to be diffused any time soon, hence they should continue to hold their influence over next week's trading," he asserted.