Oil prices spiked on Friday afternoon as concern over Iranian supply grew, but the momentum was short lived as the US rig count rose.
Both Brent and WTI traded sideways in the early Asian session, as concerns over future oil demand appeared to keep the sanctions risk to Iranian supply in check.
The International Energy Agency said on Thursday that weakness in emerging economies and a rising risk of trade disputes threatened global oil demand.
But the anticipated fall in Iranian supply once US sanctions snap back in November also returned to the spotlight, following reports on Friday that India would cut its imports and that surplus Iranian cargoes were left floating off the coast of the UAE.
Iran’s OPEC governor hit back, saying the US could not force Iranian exports to zero because the global oil market was too tight.
In the afternoon, demand fears eased in the afternoon, amid expectations of US-China trade talks and rising stocks in emerging markets.
The crude market mounted a dramatic rally as bulls brought Brent close to $79/bbl soon before 17:00 London time, but the resistance level proved too strong and prices retraced their gains.
News that the US oil rig count rose by seven in the week to 14 September, its biggest rise in a month, compounded the bearish pressure into the close.