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US demand grew by up to 1.8 mbpd in June, say analysts.

Oil edges up on uncertainty over Iran deal

SINGAPORE, June 24, 2015

Oil prices edged higher in Asian trade on Wednesday on hopes for stronger than expected US crude demand, while doubts over the prospect of reaching an agreement next week on Iran's nuclear programme eased oversupply concerns.

Brent crude for August delivery had climbed 8 cents to $64.53 a barrel by 0317 GMT, after settling up $1.11, or 1.8 per cent, in the previous session.

US crude for August delivery gained 12 cents to $61.13 a barrel, after rising 63 cents the day before.

"US crude inventories have been at historic highs ... but the thing is crude inventories may have peaked after oil demand picked up in June," said Tony Nunan, oil risk manager at Tokyo's Mitsubishi Corporation.

"$60 a barrel is the new normal for the next several months."

Mitsubishi analysts forecast US oil demand would grow by 1.4-1.8 million barrels per day (bpd) in June from the same month last year, Nunan said.

US oil demand would rise to 19.41 million bpd this year, up from 19.03 million bpd last year, the US Energy Information Administration said in its short-term energy forecast on June 9.

The American Petroleum Institute (API) forecast on Tuesday that US commercial crude oil stocks fell by 3.2 million barrels last week, larger than analysts' expectations of a 1.5-2.1 million barrel draw and the eighth straight week of declines. The US Energy Information Administration will release official stockpile data later on Wednesday.

"Although crude inventories could cause prices to move higher, we expect to see strong resistance at $61.8 and $65 for West Texas Intermediate and Brent. Therefore, expect prices to remain unchanged," Singapore's Phillip Futures said in a note on Wednesday.

Brent-US crude spreads, which have widened to more than $3, could narrow in the short term, depending on how far US inventories fall, the note added.

Nunan said there were roadblocks to an agreement next week between Iran and six world powers on Tehran's nuclear programme that would end sanctions and allow Iran to boost oil exports.

That followed Tuesday's decision by Iran's parliament to pass a bill banning access for U.N. inspectors to its military sites and scientists.

Also on Tuesday, Iran's Supreme Leader, Ayatollah Ali Khamenei, ruled out freezing sensitive nuclear work for a long time. France and the five other world powers want Iran to halt parts of its nuclear programme for at least 10 years as part of a deal to lift sanctions.

"There's always a chance (an agreement) could be scuttled. June 30 is a self-imposed deadline, so it could be put off," Nunan said.

But gains were capped as the dollar hovered at its highest level in over a week against a basket of major currencies following reasonably strong US data on Tuesday. A strong dollar makes commodities, including oil, priced in other currencies more expensive. – Reuters




Tags: Iran | oil price | nuclear deal |

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