Iranian Supply Prospect Offsets Demand Optimism

Brent was higher 3 cents, or less than 0.1%, to $68.68 a barrel by 1027 GMT, and U.S. West Texas Intermediate (WTI) crude was under 11 cents, or 0.2%, at $65.96 a barrel.

Physical demand has been growing in Europe and the United States as a strike in new coronavirus cases has driven up mobility, stated ING analyst Warren Patterson.

The northern hemisphere’s summer driving season and rising COVID-19 curbs have driven up demand, driving down U.S. crude oil and fuel inventories last week, two market sources stated, quoting American Petroleum Institute figures.

Crude stocks dropped by 439,000 barrels in the week closed May 21, gasoline inventories decreased by 2 million barrels, and distillate stocks fell by 5.1 million barrels, the sources told.

After Federal Reserve officials reaffirmed a dovish monetary policy position, reassuring investors fretted about the prospect of increasing inflation.

Market players are also closely observing developments in Iranian-U.S. nuclear talks, which could raise sanctions on Iran’s energy industry and more Iranian oil on the market.

Iran’s government spokesman Ali Rabiei stated he was confident Tehran would soon enter an agreement, although Iran’s top negotiator said severe issues remained.

After April, Iran and global powers have continued talks in Vienna to work out steps Tehran must take on nuclear activities. Washington should get on sanctions to respond to full compliance with Iran’s agreement with world powers in 2015.

Russia declared the Organization of the Petroleum Exporting Countries and its partners, a group is identified as OPEC+, should hold a potential rise in Iranian output when evaluating further steps.

OPEC+ returns 2.1 million barrels per day (BPD) of oil production throughout July, reducing cuts to 5.8 million BPD. Their next conference is placed for June 1.

Analysts have stated Iran could supply around 1 million to 2 million BPD if a deal is struck.

In their view, the entire situation on the oil market continues balanced, spoke Commerzbank analyst Eugen Weinberg, continuing that Brent will make a revamped bid for the $70 per barrel mark in the following few days.