Oil fell on Wednesday on concerns that the withdrawal of Iranian supplies would exceed expectations for improving U.S. fuel demand, which was strengthened by the fall in weekly inventory ratings.
Brent crude oil futures for July were down 6 cents, or 0.1%, at $ 68.59 a barrel at 0434 GMT, while US dollars for July West Texas Intermediate (WTI) crude was at $ 65.92 a barrel, down 15 cents or 0.2%.
Both definitions rose on Tuesday, ending at a one-week high, amid optimism over the approach of the Northern Hemisphere summer driving season and the lifting of coronavirus barriers.
U.S. crude oil and fuel inventories fell last week, two market sources said on Tuesday, citing U.S. Petroleum Company figures.
Crude stocks fell 439,000 barrels in the week ended May 21. Petrol stocks fell by 2 million barrels and filtered stocks by 5.1 million barrels, according to reports.
“The API data was good, but investors focused more on the Iranian talks because the impact of the withdrawal of Iranian oil from the market was significant,” said Gujuhiko Saito, chief analyst at commodity broker Fujidomi Co.
Iranian government spokesman Ali Rabbi said on Tuesday that despite Iran’s top negotiator warning of serious problems, an agreement would soon be reached with world powers to renew Tehran’s 2015 nuclear deal.
Iran and the world powers have been in Vienna since April to work out sanctions and nuclear measures on Tehran and Washington to return to full compliance with the 2015 nuclear deal with world powers.
Tehran and the UN. The latest round of talks in Vienna resumed this week after the Atomic Energy Agency extended the monitoring agreement on its nuclear program in the Middle East.
“Without clarity on the fate of Iran’s nuclear negotiations, it will be difficult for investors to move up or down,” said Hiroyuki Kikukawa, general research manager at Nissan (OTC: NSANY).
“But expectations of a recovery in fuel demand in the United States and Europe, especially as jet fuel demand increases later this year, are expected to keep oil prices close to current hikes, which offset concerns over the withdrawal of Iranian goods,” he said.
Analysts say that if an agreement is reached and sanctions are lifted, Iran could supply about 1 million to 2 million barrels (BPD) of extra oil a day.
Goldman Sachs (NYSE: GS) said it expects oil prices to rise to $ 80 a barrel in the fourth quarter, arguing that even with the resumption of Iranian supply, it has underestimated market demand.
