An oil rig drilling a well at sunrise near Midland, Texas

INTERNATIONAL - Oil traded near $68 a barrel as traders weighed increasing US stockpiles against growing expectations of renewed sanctions on Iran's crude trading.

Futures in New York increased 0.6percent after a 1.9percent drop on Tuesday. US crude inventories rose 3.43million barrels last week, the American Petroleum Institute reported. 

That compares with a 1.23million-barrel gain in a Bloomberg poll of analysts ahead of yesterday's government data.

The oil market has priced in a more than 50percent probability that the US will sanction Iran, according to Standard Chartered.

Oil rallied to a three-year high last month ahead of the decision on Iran by President Donald Trump and as conflicts in the Middle East heat up.

While the US continues pumping record amounts of crude, Goldman Sachs Group expects only a “moderate” response to higher prices from American shale producers.

It also sees an increasing likelihood that the Organisation of Petroleum Exporting Countries (Opec) and its allies will extend their supply cuts through next year.

“The geopolitical risk forces are strong,” said Bjarne Schieldrop, chief commodities analyst at SEB in Oslo. “For the time being, the risk for the oil price is on the upside.”

West Texas Intermediate crude for June delivery rose as much as 60 cents to $67.85 a barrel on the New York Mercantile Exchange and traded at $67.68 at 10.10am in London. The contract dropped $1.32 on Tuesday. Total volume traded yesterday was about 14percent below the 100-day average.

Brent crude for July settlement rose 16 cents to $73.29 a barrel on the London-based ICE Futures Europe exchange, after slipping $1.56 on Tuesday. The global benchmark crude was at $5.78 premium to July WTI.

Futures for September delivery were 0.3% lower at 441.2 yuan per barrel on the Shanghai International Energy Exchange. 

Trading was closed on Monday and Tuesday for Chinese public holidays.

If the API’s stockpiles data is reflected in the government announcement, it would be the biggest build since early March.

 The industry body was also said to show crude inventories in the American oil-storage hub of Cushing, Oklahoma, rose by 725000 barrels last week. Petrol stocks increased by 1.6m barrels, distillates declined 4.08m.

The US decision on the Iranian nuclear deal remains in focus after Israeli Prime Minister Benjamin Netanyahu said earlier this week that his country has documents that prove Tehran had a secret nuclear weapons programme.

Iranian Foreign Minister Javad Zarif on Twitter called Netanyahu’s claims “a rehash of old allegations.” A re-imposition of sanctions could disrupt exports from Iran, which shipped a record amount of crude last month. 

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