Oil hardly changed as focus is on return of Iranian supply

Tokyo — Oil prices were steady on Wednesday as the concern a possible resumption in Iranian supply would cause a glut were offset by the hope for stronger US fuel demand after a drop in weekly inventory estimates by the American Petroleum Institute (API).

Brent crude oil futures for July gained 5c, or 0.1%, to $68.70 a barrel by 1.02am GMT, while US West Texas Intermediate (WTI) crude for July was at $66.05 a barrel, down 2c.

Both benchmarks edged higher on Tuesday, ending at their highest levels in a week, amid the hope for rising demand from the approach of the northern hemisphere’s summer driving season and lifting of coronavirus restrictions.

US crude oil and fuel inventories fell last week, according to two market sources, citing API figures on Tuesday.

Crude stocks fell by 439,000 barrels in the week ended May 21. Petrol inventories fell by 2-million barrels and distillate stocks fell by 5.1-million barrels, the data showed, according to the sources.

“The API data was good, but investors were paying more attention to the Iran talks because the impact from possible return of Iranian oil to the market is more significant,” said Kazuhiko Saito, chief analyst at commodities broker Fujitomi.

Iranian government spokesperson Ali Rabiei said on Tuesday that he was optimistic over Tehran reaching an agreement soon at talks with world powers to revive a 2015 nuclear deal, though Iran’s top negotiator cautioned that serious issues remained.

Indirect negotiations between the US and Iran have resumed in Vienna this week after Tehran and the UN nuclear agency extended a monitoring agreement on the Middle Eastern country’s atomic programme.

Iran and global powers have negotiated in Vienna since April to work out steps that Tehran and Washington must take on sanctions and nuclear activities to return to full compliance with Iran’s 2015 nuclear pact with world powers.

Analysts have said Iran could provide about 1-million to 2-million barrels a day in additional oil supply if a deal is struck and sanctions lifted.

Reuters