The oil benchmarks are bullish towards the start of the London trading session, after two sessions of losses as industry data revealed an unexpected drop in the United States’ crude and fuel stocks, offsetting concerns of a possible rise in supplies from Iran.
The global benchmark, the Brent crude futures is up 0.29%, currently trading $91.04 a barrel while the United States’ benchmark, the West Texas Intermediate crude is up 0.31%, currently trading $89.64 a barrel.
What you should know
- According to market sources from the American Petroleum Institute (API), U.S. crude, gasoline and distillate stocks fell last week. Crude inventories fell 2 million barrels, versus analysts’ expectations of a 400,000-barrel increase. More data from the U.S. EIA will be available later in the day.
- Also weighing on price is the concerns about a possible Iran nuclear deal that could unleash more oil into global markets.
- Brent and WTI slid about 2% on Tuesday, down for a second straight session, as Washington resumed indirect talks with Iran to revive a nuclear deal. Such a deal could lift U.S. sanctions on Iranian oil and quickly add supplies to the market, although a number of vital issues still need to be ironed out.
- Tina Teng, an analyst at CMC Markets stated, “Undersupply is the key factor that has pumped up the oil price. With the negotiations ongoing, the oil price is likely to lose steam in the next week, despite the bump higher we’ve seen today,” adding that there has also been some profit taking among investors who have turned cautious after prices hit more than 7-year highs.
- Oil prices at near $100 a barrel could also draw more production from the United States. The Energy Information Administration expects U.S. crude output to rise 770,000 barrels per day to 11.97 million bpd in 2022.
Meanwhile, governments from the United States to Japan are looking at ways to tackle high oil prices as inflation soars.
In Europe, concerns over Ukraine eased as French President Emmanuel Macron said he believed steps could be taken to de-escalate the crisis after a meeting with Russian President Vladimir Putin and called on all sides to stay calm.
