Oil prices stumble, but Iran sanction fears limit losses

May 02, 2018, 04:21

On the other hand, the significant number of speculators betting on rising crude oil prices makes going long the commodity a fairly risky trade. Futures for September delivery had risen 0.6% to 444.2 yuan per barrel on Friday, gaining 5.7% this month.

Oil prices slid more than 1 percent on Tuesday as the dollar remained near a four-month high, but worries that U.S. President Donald Trump will pull out of the Iran nuclear deal underpinned the market.

U.S. West Texas Intermediate futures CLc1 were up 47 cents on the day to settle at $68.57.

London Brent crude for new July delivery was up 1 cent at $74.70.

While upside risks to the forecast include constraints to US shale oil output, geopolitical risks in several producing countries, and concerns the United States may not waive sanctions against Iran, downside risks include weaker compliance with the oil producers' agreement to restrain output or outright termination of the accord, rising output from Libya and Nigeria, and a quicker-than-expected rise in shale oil output.

Oil rallied last month to the highest level in more than three years amid concern that a US withdrawal from the nuclear deal would result in fresh export curbs, as well as issues including the conflict in Syria and tensions between Saudi Arabia and Iran-backed rebels in Yemen. Analysts said the market is extremely sensitive to any developments on the nuclear deal and sanctions. The greenback strengthened 0.4 percent to $1.2036 against the euro, blunting the appeal of commodities priced in the US currency.

Crude oil futures eased 0.77 per cent to Rs 4,512 per barrel today as investors cut positions amid a weakening trend in Asian markets.

Israel shared with the USA documents on a secret Iranian nuclear-weapons program and the US has verified their authenticity, according to a person familiar with the matter.

Data showed US personal income rose just 0.3 percent in March, compared with expectations of 0.4 percent. "Since the market is already tight because of the high production outages in Venezuela and the production cuts implemented by OPEC and Russian Federation, any further reduction of supply weighs all the more heavily", the bank said.

The Federal Reserve is also due to meet this week, and while no rate hike in benchmark US interest rates is expected, investors will look for clues on the future pace of increases.

USA crude's discount to Brent hit its widest since December 28 at $6.74 a barrel.

The U.S. Energy Information Administration reported Monday that oil production rose to a record 10.264 million barrels a day in February.