Crude prices were little changed in morning trade in Europe today, following a slide over the previous two sessions. The weekly oil report from the US on Wednesday appeared to stoke bears as the international agreement reached with Iran went before congress for ratification.
The ramifications of the deal with Iran have already been considered in current oil values, according to some analysts.
“The Iran situation has already been priced in,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “There will be no immediate increase in exports.”
There were fears that the deal between Tehran and the six world powers agreed on Tuesday could unleash a surge of Iranian oil to the already oversupplied markets.
A consensus has emerged, however, while it is inevitable that Iran will contribute to the current level of oversupply in the oil market, it will take upwards of six months for Iran to increase output by some 300,000 to 500,000 bpd, as compared with earlier boasts by officials that as much as 1m bpd could be floated within months.
The US Energy Information Administration (EIA) reported on Wednesday that crude inventories had shrunk by 4.3 million barrels in the week through July 10, beating the consensus estimate of about 1.2 million decline. Total stocks remain more than 23 percent higher on an annual basis at 461.4 million.
Production also remained near record highs at 9.6 million bpd, while stocks at Cushing, Oklahoma, the biggest storage complex in the US and the delivery point for the WTI NYMEX contracts, rose to 57.1 million, more than 55 percent higher on an annual basis.
“This is the third consecutive week that we saw a build at Cushing, and it’s a bearish number,” Tariq Zahir, commodity fund manager at Tyche Capital Advisors, said as quoted by Bloomberg. “We had a crude draw. But overall we still have a lot of supplies here.”
WTI for August delivery on the New York Mercantile Exchange was unchanged at $50.91 per barrel as of 07:13 BST today, down some 16 percent on a monthly basis. September Brent on the ICE in London was up 0.04 percent at $57.00. The global benchmark has shed some 10 percent from a month ago.