Oil stagnates below $90 on forward-looking Iran deal to ease tight market
(Bloomberg) – Oil remained below $90 a barrel for a second day as the possibility that a nuclear deal with Iran could bring relief to a tight market overshadowed a sharp drop in U.S. crude inventories .
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Futures in New York dwindled gains as a flurry of diplomacy in Vienna sparked renewed optimism about a breakthrough in nuclear talks. Earlier Wednesday, prices rose 1.4% after a government report showed U.S. crude inventories fell to the lowest level since 2018 amid record demand.
“Rising demand often goes hand in hand with upward moves in price, but a long-awaited supply relief could be imminent, helping to reduce the imbalance and calm market sentiment,” said Louise Dickson. , Senior Oil Markets Analyst at Rystad Energy.
Oil’s recovery came to a halt this week after a string of seven weekly gains that propelled prices to their highest since 2014. The possibility of more Iranian oil comes as global supply tightens. no longer able to keep up with growing demand from economies emerging from the pandemic. OPEC+ is struggling to deliver on promises to boost production, in part because of outages in Libya, as traders look to see how much the US shale patch will boost output this year. Meanwhile, French President Emmanuel Macron has suggested political tension around Ukraine may ease.
U.S. crude inventories fell 4.76 million barrels, according to a report from the Energy Information Administration. Additionally, the four-week average of U.S. petroleum products supplied, an indicator of demand, rose last week to a record high.
The combined supply of refined products and crude oil in the United States has not been this weak since 2015, with inventories steadily depleted since the summer of 2020 as demand rebounded from the depths of pandemic-induced lockdowns . Crude futures, along with other commodities, are being reversed, a structure indicating that traders are paying a premium for deliveries at earlier dates as inventories continue to tighten.
Meanwhile in Washington, White House economic adviser Jared Bernstein said in a CNN interview that releasing more crude reserves is an “option that can be put on the table if necessary” to help fight against gasoline prices. That tactic, however, has had little impact so far, with auto fuel hitting its highest level in more than seven years.
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