Connect with us

How To

Oil jumps but set for weekly loss on Iran nuclear talks

Oil edges up but set for weekly fall on Iran crude talks

By Ahmad Ghaddar

LONDON (Reuters) -Oil prices rose sharply on Friday after three days of losses, but were on track for a weekly fall as investors braced for the return of Iranian crude supplies after officials said Iran and world powers made progress a nuclear deal.

Brent crude futures rose $1.25, or 1.9%, to $66.36 a barrel by 1351 GMT, while U.S. West Texas Intermediate was at $63.39 a barrel, up $1.45, or 2.3%.

The two contracts are on track to fall about 3% on the week – their biggest loss since March – after Iran’s president said the United States was ready to lift sanctions on his country’s oil, banking and shipping sectors.

Iran and world powers have been in talks since April on reviving the 2015 deal and the European Union official leading the discussions said on Wednesday he was confident a deal would be reached.

Still, investors remain upbeat about fuel demand recovery this summer as vaccination programmes in Europe and the United States would allow more people to travel, although rising cases across parts of Asia are raising concerns.

Option bets on oil prices rising above $100 for the December 2021 Brent contract have jumped after last week’s surprisingly strong U.S. inflation data, with open interest on calls nearly tripling in May, JPMorgan analysts said. The bank’s forecast is for Brent to end 2021 at $74.

To reach $100, demand would need to average above 102.6 million bpd in the third quarter and grow to 103.6 million bpd in the fourth quarter, JPMorgan said, in the absence of any additional OPEC+ supply response.

It expects Iranian crude and condensate production to rise to 3.2 million barrels per day in December, from around 2.8 million bpd in the first quarter.

Barclays expects Brent and WTI oil prices to average $66 a barrel and $62 a barrel, respectively, this year.

It cut demand estimates for the Emerging Markets Asia (ex-China) region, flagging the risk of further downside if the recent surge in infections persisted.

“Extended mobility restrictions in the region might slow the demand recovery somewhat, but seem unlikely to stall it for a sustained period, given largely positive results of vaccination programs worldwide,” it said.

(Additional reporting by Florence Tan in Singapore; Editing by Elaine Hardcastle, David Evans and Louise Heavens)

Editorial & Advertiser disclosure
Our website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.
Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Recommended

Newsletters with Secrets & Analysis. Subscribe Now