Crude poised for monthly gain amid Iran nuclear accord prospects

02 May, 2018, 01:39 | Author: Barbara Daniel
  • Source Bureau of Safety and Environmental Enforcement via Flickr

Meanwhile, Brent prices have gained almost 6 percent this month, buoyed by expectations the United States will renew sanctions against Iran.

Israeli Prime Minister Benjamin Netanyahu said Iran had a secret plan to build nuclear weapons.

Trump has given Britain, France and Germany a May 12 deadline to fix what he views as the flaws of the 2015 nuclear deal, or he will reimpose sanctions.

Brent crude for June settlement, which expires Monday, dropped 74 cents to US$73.90 a barrel on the London-based ICE Futures Europe exchange. Trump declined to say what he'll do on the Iran deal.

Brent, against which Nigeria's crude oil is priced, stood at $75.16 per barrel as of 8:15pm Nigerian time, while the United States' marker, West Texas Intermediate, traded around $68.36 per barrel.

Oil prices poised for a second monthly advance, propelled by the prospect of a disruption in Iranian supplies and as the Organization of Petroleum Exporting Countries (Opec) closes in on its target of wiping out a global glut.

"We'll see oil fluctuating as uncertainties will persist over whether Trump will withdraw from the Iran nuclear agreement", Vincent Hwang, a commodities analyst at NH Investment & Securities Co., said by phone in Seoul.

Money managers hold record positions in Brent crude futures and options, lured in by the hefty premium of the front-month June contract over subsequent months that makes it profitable to invest in crude over the longer term.

Venezuela's plunging output and looming USA sanctions against Iran come against a backdrop of strong demand, especially in Asia, the world's biggest oil consuming region.

Prices will be pressured by rising USA production as shale drillers try to take advantage of higher prices by ramping up activity. "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. US crude production rose by 46,000 BPD the previous week, to 10.59 MMBPD.

"If that happened, Brent prices could jump to near $90 (a barrel)".

In a research note, the financial technology and analytics firm claimed that short interest in the U.S./Canadian oil and gas and consumable fuel sector has increased by 27% to $54.9 billion since WTI crude recovered from its year-to-date low of $58.98 in mid-February to reach $67.75.

USA drillers added five oil rigs in the week to April 27, bringing the total count to 825, the highest level since March 2015, General Electric's Baker Hughes energy services firm said.

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