Oil rises towards $58, heads for weekly gain as Iran supports

Brent crude was up $1.16 at $57.73 a barrel by 1348 GMT, remaining on track for its third weekly gain in four weeks

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Oil rose towards $58 a barrel on Friday, heading for a weekly gain, supported by an easing of concerns that the interim accord over Iran’s nuclear work will lead to a rapid rise in Iranian oil supplies.

Evidence this week of ample global supplies, including the biggest jump in U.S. inventories since 2001, a glut of unsold Nigerian crude and Saudi Arabian output reaching a record high, limited the rally.

Brent crude was up $1.16 at $57.73 a barrel by 1348 GMT, remaining on track for its third weekly gain in four weeks. U.S. crude rose 50 cents to $51.29.

“The latest agreement with Iran does not open the floodgates for a significant return of Iranian oil on the market as many had feared,” said Harry Tchilinguirian, head of commodity markets strategy and oil strategy at BNP Paribas.

World powers and Iran announced the interim accord last week. But on Thursday, Iranian supreme leader Ayatollah Ali Khamenei demanded all sanctions on Iran be lifted on the same day as any final agreement, while the United States maintains that sanctions would be lifted gradually.

Crude was also supported by expectations of stronger demand after data this week from the United States and Germany bolstered the view that world growth is slowly perking up. Oil’s rally came despite a stronger U.S. dollar, which tends to weigh on commodities priced in the U.S. currency.

The price of Brent has halved from $115 hit last June, a drop that deepened after OPEC in November decided not to cut output, choosing to defend market share instead. Top exporter Saudi Arabia was the driving force behind the policy shift.

“Most of the fundamental factors are still pointing to lower prices,” said Eugen Weinberg, analyst at Commerzbank. “At the moment, we have an oversupply of more than 1 million barrels per day.”

While some OPEC members are urging output cuts to boost prices, Saudi Arabia has shown no sign of a rethink. Oil Minister Ali al-Naimi told reporters on Tuesday that Riyadh had boosted its crude production to 10.3 million barrels per day, the highest rate on record.

Further pressuring prices, a U.S. government report on Wednesday said domestic crude stocks surged by nearly 11 million barrels last week, the biggest gain in 14 years.