Oil prices down despite reported draw of United States crude inventory

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For the week, Brent is set for a near 2 percent fall, while USA light crude is heading for a drop of almost 3 percent.

For U.S. crude exporters, India is a market ripe for expansion, given the voyage from the Gulf of Mexico to India's west coast takes about three weeks, much the same as it does to China's east coast. It shipped out nearly 3 million barrels per day of crude in September, equivalent to about 3% of global demand. Trading volumes in crude oil have been particularly high on days when it has sold off.

However, July imports were still the third-lowest so far this year.

"While there's still some uncertainty about what will happen to Iranian oil, we think there probably won't be a significant impact on oil prices".

The U.S. government is pushing countries to cut Iranian oil imports to zero, but major customers such as China and India are expected to find ways to continue deals despite the sanctions.

"The market seems to be focused on fears of reduced demand from China, partially due to the effects of the trade wars between China and the United States", said William O'Loughlin, investment analyst at Australia's Rivkin Securities. Traders are trying to establish a new balance point in the market.

A first batch of USA sanctions against Iran, which shipped out nearly three million barrels per day (bpd) of crude in July, officially came into effect Tuesday.

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The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning, showing that U.S. commercial crude inventories decreased by 1.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 407.4 million barrels.

Oil prices rose on Tuesday with re-introduced US sanctions against major crude exporter Iran expected to tighten global supply. From November, Washington will also target Iran's petroleum sector.

Meanwhile, U.S. crude production, which has climbed dramatically fuelled largely by increased output from shale formations, may now rise more slowly as prices drop, according to the U.S. Energy Information Administration's monthly report.

Oil prices fell from more than $100 a barrel in 2014 to less than $30 a barrel in early 2016 amid a supply glut, but have recovered to trade above $70 a barrel since April, as output curbs by the Opec cartel of producers and other countries helped to reduce supplies. Gasoline inventories added 2.9 million barrels last week, the EIA said, against expectations for a drop of 1.7 million barrels in a Reuters poll.

Prior to this deal, International Olympic Committee had struck deals for importing 10 million barrels from six cargoes in the spot market.

But U.S. bank JPMorgan said a warmer-than-usual fourth quarter could stem from a potential El Niño weather pattern that "can cause droughts, flooding and other natural disasters across the globe, including heatwaves in the U.S. that affect commodities".