Oil prices were steady on Wednesday as concerns of a possible resumption in Iranian supply that would result in an oversupply was offset by hopes for stronger U.S. fuel demand after a drop in weekly inventory estimates by the American Petroleum Institute.
Brent crude oil futures for July gained 5 cents, or 0.1%, to $68.70 a barrel by 0102 GMT.
U.S. West Texas Intermediate (WTI) crude for July was at $66.05 a barrel, down 2 cents.
Both benchmarks edged higher on Tuesday, ending at their highest levels in a week, amid hopes for rising demand from the approach of the northern hemisphere’s summer driving season and lifting of coronavirus restrictions.
U.S. crude oil and fuel inventories fell last week, citing API figures on Tuesday. An industry report showed shrinking crude and fuel inventories ahead of the start of the U.S. summer driving season at the end of the month.
Crude stocks fell by 439,000 barrels in the week ended May 21. Gasoline inventories fell by 2 million barrels, and distillate stocks fell by 5.1 million barrels, the data showed.
“The API data was good, but investors were paying more attention to the Iran talks because the impact from possible return of Iranian oil to the market is more significant,” Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.
Talks between Iran and world powers continued to resolve issues on a nuclear deal that may pave the way for lifting sanctions on the OPEC producer. That could unleash a flood of Iranian barrels stashed on tankers at sea.
Oil is up more than 35% this year as a robust rebound from the pandemic in the U.S., China and Europe drives recovery in consumption, despite parts of Asia facing a Covid-19 comeback. A key price spread for West Texas Intermediate is signalling that traders are bracing for a potential supply crunch just ahead of the busy summer driving season that sparks a demand surge.
Meanwhile, diplomats are still wrangling over U.S. sanctions and Iran’s advanced enrichment technologies, in line with diplomatic rules. The Persian Gulf country may be holding as much as 69 million barrels of crude at sea in tankers, according to E.A. Gibson Shipbrokers Ltd.
