After weeks of relative stability at $60 per barrel, domestic benchmark crude plunged again this week as investors fretted about a slew of global news from China, Greece and Iran that foreshadowed continued imbalances in supply and demand. Morgan Stanley analysts said up to 700,000 bpd in new Iranian exports were likely to arrive between late 2015 or early 2016, delaying the recovery in oil prices and US output by 6 to 12 months.
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Brent crude for August delivery traded on London’s ICE Futures exchange LCOQ5, +0.56% rose $0.32 to $57.17 a barrel. It had fallen on Tuesday to $50.58, its lowest since April 8. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends.
And then on Tuesday, oil prices fell another 4% before regaining some ground in late morning trade.
In Vienna, negotiators for a nuclear accord between Iran and world powers gave themselves more time as the talks stretched into a ninth day beyond their June 30 deadline. The WTI price slumped to around $51.70 (down about 1.3% for the day) shortly after the report was released.
And not all analysts are bearish in their oil price outlook.
“The global picture for commodities does not bode well”, said Bernard Aw, market strategist at IG Markets in Singapore. The speculation of slowing demand from Europe will also add pressure to crude oil prices.
China’s Shanghai Composite Index, in a free-fall for most of the week, recovered by the closing bell Thursday, up 203.7 points, or 5.79 percent.
The said inventories rose last week for crude, gasoline and distillates.
Demand for oil was also supported by the return from maintenance of a 120,000-barrels per day crude distillation unit in Japan, where machinery orders hit a 7-year high in May.
Meanwhile, analysts at Commerzbank said the protracted Iranian negotiations will delay any removal of sanctions by up to one month, meaning the Middle East nation’s plans to export more crude oil have, at the very least, been delayed.
“Besides decline in our oil import bill, we have seen fundamental shifts in the worldwide market, which has helped crude oil prices remain steady”, he said.
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Iran is seeking to restore oil exports that have dropped from 2.5-million barrels per day in 2011 to about 1-million bpd in 2014 due to Western sanctions arising from its controversial nuclear programme.
