Oil was steady on Wednesday, trading in a narrow range, supported by optimism about improving US fuel demand and a weak dollar, but with the prospect of a return of Iranian oil to markets putting pressure on prices.
Brent rose 13 cents, or 0.2 percent, to $68.78 a barrel by 0928 GMT, and US West Texas Intermediate (WTI) crude was down 5 cents, or 0.1 percent, at $66.02 a barrel.
“Physical demand has been improving in both Europe and the United States as a slowdown in new COVID-19 cases has been pushing up mobility,” said ING analyst Warren Patterson.
The northern hemisphere’s summer driving season and a lifting of coronavirus curbs have pushed up the demand. As a result, US crude oil and fuel inventories fell last week, said two market sources, citing American Petroleum Institute figures.
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, according to the sources.
The US dollar languished near multi-month lows after Federal Reserve officials reaffirmed a dovish monetary policy stance, reassuring investors worried about the prospect of rising inflation.
Market players are also closely watching developments in Iran-US nuclear talks which could lead to the lifting of sanctions on the Iranian energy sector and the return of Iranian barrels to market.
Iran’s government spokesman Ali Rabiei said he was optimistic over Tehran reaching an agreement soon, although Iran’s top negotiator cautioned that serious issues remained.
Iran and global powers have negotiated in Vienna since April to work out steps that Tehran and Washington must take on sanctions and nuclear activities to return to full compliance with the 2015 nuclear pact with world powers.
Russia’s deputy prime minister Alexander Novak said the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, should take into account a possible increase in oil production by Iran when considering its further steps.
Analysts have said Iran could provide about 1 million to 2 million barrels per day (bpd) in additional oil supply if a deal is struck and sanctions lifted.
“In our view, the fundamental situation on the oil market remains balanced,” said Commerzbank analyst Eugen Weinberg.
“Thanks to the good sentiment on the financial markets, the price momentum suggests that Brent will make a renewed bid for the $70 per barrel mark in the next few days.”
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