Oil set to fall for a third day on concern over Iran deal

London — Oil prices were poised for a third day of losses on Thursday after diplomats said progress was made towards a deal to lift sanctions on Iran, which could boost crude supply.

Brent crude was down $1.20, or 1.8%, at $65.46 a barrel by 9.05am GMT. US West Texas Intermediate (WTI) lost $1.08, or 1.7%, to $62.28 a barrel. Both contracts fell about 3% in the previous session.

European powers, the US and Iran have made progress in talks over Tehran’s nuclear programme that could result in sanctions on Iranian oil being lifted.

The EU official leading the talks said on Wednesday he was confident a deal would be reached as the negotiations adjourned.

“With global oil demand growth projected to be healthy for the balance of this year and in 2022, oil cartel and allies, Opec+, is in a relatively comfortable position to deal with increasing Iranian output without undermining the oil rebalancing,” PVM analysts said.

Concerns about the demand outlook in Asia also dragged prices down. Almost two-thirds of people tested in India show exposure to the coronavirus.

Speculation that the US Federal Reserve might, at some point, start to tighten policy weighed on the outlook for economic growth and has prompted some investors to reduce exposure to oil and other commodities.

Supporting prices in early trading, crude inventories in the US increased by 1.3-million barrels last week, against analysts’ expectations in a Reuters poll for a rise of 1.6-million barrels.

Petrol stocks were down by 2-million barrels, compared with predictions of an 886,000-barrel fall.​ Petrol product supplied, a measure of demand, rose 5% to 9.2-million barrels per day, though this included follow-on demand from the Colonial Pipeline shutdown.

“What tickles our attention is the rapid revival of US oil product demand now being very close to 2019 levels,” SEB analysts said in a note.

Swiss bank UBS said it expected oil inventories to fall to pre-pandemic levels by midyear with an oil price of $75 a barrel in the second half.

Reuters

Source: businesslive.co.za