Oil Up, U.S. Crude Supply Draw Offsets Potential Iranian Supply Glut Worries By

© Reuters.

By Gina Lee – Oil was up Wednesday morning in Asia, as concerns that the possible resumption in Iranian supply would cause a supply glut was offset by strong U.S. crude oil supply data.

inched up 0.10% to $68.56 by 10:13 PM ET (2:13 AM GMT) and inched up 0.03% to $66.09.

Both Brent and WTI futures ended the previous session at their highest level in a week, and the black liquid is up more than 35% in 2021 so far. Investors continue to hope that the lifting of COVID-19 restrictions in some countries such as the U.S. Europe and China, as well as the imminent beginning of the U.S. summer driving season, will brighten the fuel demand outlook.

However, investors also continue to monitor COVID-19 outbreaks in other areas that have led to the reimposition of restrictive measures.

The June-July WTI time-spread, or the prompt cash roll, traded at 20 cents a barrel on Tuesday, its strongest level since May 2020, an indication that investors are bracing for a potential supply crunch just ahead of the driving season.

Investors continue to await the outcome of indirect negotiations between the U.S. and Iran, with talks resuming in Vienna throughout the week. Should the pair revive their 2015 nuclear deal, and the U.S. lift sanctions that are currently in place, Iran could add around one to two million barrels per day to the global crude supply.

Although on Tuesday said he was optimistic that an agreement, Iran’s top negotiator at the talks, Abbas Araqchi, warned that serious issues remained to be negotiated.

Meanwhile, Tuesday’s showed a draw of 439,000 barrels for the week ending May 21. Forecasts prepared by had predicted a 1.279-million-barrel draw, while a 620,000-barrel build was recorded during the week before.

“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,” Fujitomi Co. chief analyst Kazuhiko Saito told Reuters.

Investors now await , due later in the day.

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