London — Oil prices fell on Thursday but stayed within the tight range set this week, with optimism about the northern hemisphere summer driving season in the US and Europe offsetting concern about demand in India and a potential increase in Iranian supplies.
Brent fell 57 US cents, or 0.8%, to $68.30 a barrel by 9.34am GMT, and US West Texas Intermediate (WTI) crude fell 55c, or 0.8%, to $65.66 a barrel.
“Despite supportive inventory data from the US on Wednesday, crude oil remains stuck in a sideways environment with Brent trading between $65 to $70 per barrel,” said UBS oil analyst Giovanni Staunovo.
US crude stocks, gasoline and distillate inventories fell last week, the Energy Information Administration said, as a gradual lifting of coronavirus-related restrictions boosted road fuel demand.
“Mobility data out of Europe and the US benefiting from a fast vaccine rollout are price supportive, but I guess market participants want to get more clarity how nuclear talks in Vienna evolve, which caps prices,” Staunovo added.
Iran and global powers have negotiated in Vienna since April to work out steps that Tehran and Washington must take so the crippling sanctions on Iran, including on its energy sector, over its nuclear programme, are lifted.
That will be a big issue for the next meeting of Opec and allies, together called Opec+, on June 1, where producers will have to assess whether to change their plans for easing production curbs against the prospect of Iranian supply returning to the market.
Analysts said any increase of supply from Iran would only be gradual, with JPMorgan estimating Iran could add 500,000 barrels per day (bpd) by the end of 2021 and a further 500,000 bpd by August 2022.
Japanese refiners will need at least three months to resume Iranian oil imports even if the Iranian nuclear talks lead to an agreement and a lifting of sanctions, Tsutomu Sugimori, president of the Petroleum Association of Japan (PAJ) said.
While the market was supported by a bigger-than-expected drawdown in US oil inventories, there are still concerns about demand shrinking in India, the world’s third-largest oil consumer.
A possible extension of Covid-19 emergency measures in Japan has also fuelled concern about demand growth in the world’s fourth-biggest importer of oil.
Investors are awaiting US jobless claims data, due later in the day, which will show the pace of US economic recovery during the pandemic.