Oil price edges lower with Iran nuclear talks in focus
Crude oil edged lower as this week’s trade opened as investors weighed the ramifications of a possible easing of sanctions on Iran in the coming months, with the talks’ March 30 deadline fast approaching. The possibility of Iranian oil flooding a well-oversupplied oil market pressured crude down to multi-year lows.
Brent futures for delivery in May on the ICE in London lost 0.65 percent to $54.65 per barrel as of 10:06 GMT today, with prices ranging from a one month low of $53.64 to $54.90. Last week the European benchmark lost 8.5 percent on signs of ample global supply.
Meanwhile, WTI futures for April settlement on the New York Mercantile Exchange were 0.89 percent lower at $44.44, with a daily trading range between a six year low of $43.57 and $45.00. Last week the light, sweet US crude declined 9.6 percent.
Analysts saw a real possibility of politicians reaching a workable agreement with Iran by the end of March, which would increase the country’s sanctioned oil exports.
Iran holds nearly 10 percent of the world’s crude oil reserves, according to the US Energy Information Administration (EIA). The country exported 2.5 million bbl/d in 2011, before sanctions limited them to 1.1 million in 2013.
“The prospect of an increase in Iranian oil sales as part of a new agreement in the next couple of months will only exacerbate OPEC oversupply, supporting our bearish outlook,” Barclays said in a report. “We see little likelihood of a bullish market reaction to developments in this space.”
Previously, on Wednesday the EIA said that US crude oil inventories rose by 4.5 million barrels to 448.9 million barrels in the week to March 06. It was the ninth straight week that the Washington-based agency had reported a rise in crude supplies.
Based on the two front month contracts, Brent was trading at a premium of $10.21 to WTI as of 10:08 GMT.
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