Oil steady propped by demand optimism despite Iranian supply worries

On Wednesday, Oil prices had remained steady as it traded in a narrow range that is propped by optimism that the U.S. fuel demand and weak dollar would improved. Only, this comes with the prospect of a return of Iranian oil to markets that effectively puts pressure on prices.

At 0839 GMT, Brent climbed 0.2% higher, settling at $68.79 per barrel. Meanwhile, the U.S. West Texas Intermediate (WTI) crude went up 1 cent ending with a price of $66.08 per barrel. Regarding the matter, ING Analyst Warren Patterson in an interview was quoted saying:

“Physical demand has been improving in both Europe and the United States as a slowdown in new Covid cases has been pushing up mobility,”

With summer in the cards for the northern hemisphere and COVID-19 restrctions eased, demand have been pushed up. This resulted into the U.S. Crude Oil and Fuel inventories to fall in the past week according to certain sources that had looked to figures from the American Petroleum Institute.

In the week ended May 21st, Crude Stocks had fallen by 439,000 barrels. Meanwhile, Gasoline inventories all fell by 2 Million barrels alongside distillate stocks that plummeted to 5.1 million barrels.

The dollar had grown weak near multi-month lows after a dovish monteary policy stance had been reaffirmed by Federal Reserve officials, thus reassuring inevstors who are wary of the rising inflation.

The Iran-U.S. nuclear talks are also being intently monitored by Market Players as this could highly likely lift sanctions on the Iranian Energy Sector and could espouse the return of Iranian barrels to the market.

Ali Rabiei, Spokesperson for the Iranian government expressed optimism over te Tehran agreement whilst a top negotiator warned against the serious issues that persisted.

Global powers and Iran have been in talks in Vienna since April to compel Tehran and Washington to take on sanctions and nuclear activities to resume compliance with the 2015 nuclear pact with world powers.

Iran could possibly provide about 1 to 2 million barrels per day, a considerable additional oil supply, should a deal be reached and the sanctions consequently lifted.

Commerzbank Analyst, Eugen Weinberg had this to say:

“In our view, the fundamental situation on the oil market remains balanced…Thanks to the good sentiment on the financial markets, the price momentum suggests that Brent will make a renewed bid for the $70 per barrel mark in the next few days.”