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Due to higher US oil production, however, higher prices are not necessarily a net loss for the USA economy.
"Escalating trade tensions between the United States and China has prompted risk aversion in today's trading session, which is evident in oil prices", said Abhishek Kumar, senior energy analyst at Interfax Energy in London.
India is an obvious possibility-its imports and demand are surging, and it may be willing to replace at least part of its Iranian oil imports out of fear that its companies and the sovereign could lose access to the US financial system should it continue to buy Iran's oil. So the Pompeo announcement came as a surprise for those holding long futures contracts.
That suggests Wednesday's tumble on news that Libya is reopening four oil export terminals was overdone.
Economists expect the Brent crude oil price to average between $72 (R963) and $80 per barrel for the remainder of the year, due to geopolitical risk factors.
Additionally, a report showed Saudi Arabia hiked its oil output in June to the highest level since the end of 2016, as it aims to cool the market after crude prices recently rose to 3-1/2-year highs.
Futures in NY fell as much as 1.3 percent after the Trump administration unveiled a list of $200 billion in Chinese goods that could face 10-percent tariffs after public consultations end on August 30. "If these tariffs are introduced, there will be an impact on global growth and demand".
Secondly, the recent rally was being supported partly from a drop in Libyan output.
On Monday, Suncor Energy said its 360,000-barrel-per-day Syncrude facility would resume some production in July, earlier than expected, following an outage last month that disrupted total output and sent USA prices higher. If Libyan production can get back to its high then this will take care of some of the spare capacity concerns.
He said that with growing concerns of supply disruptions boosting investor attraction towards the commodity, prices were likely to remain buoyed in the near-term.
"In spite of the extraordinary draw in crude oil inventories, the market is under pressure after refiners produced a record amount of gasoline this week and in conjunction with a greater than expected build in distillate inventories", said Andrew Lipow, president at Lipow Oil Associates in Houston.
According to the September WTI chart, the trend is down according to the daily chart, putting the market in a position to test $67.99 to $66.81. At the heart of the problem for buyers is a United States threat to cut off access to the American banking system for foreign financial institutions that settle trades with the Middle East nation's central bank.