Oil heads for 4th weekly gain as Iran disputes nuclear framework
BEN SHARPLES
NEW YORK (Bloomberg) -- Oil headed for the longest stretch of weekly gains since February 2014 as Iran disputed the framework for a nuclear deal with world powers that would allow the OPEC member to boost crude exports.
Futures were little changed in New York, and up 3.4% in its fourth weekly advance. Sanctions against Iran must be lifted as soon as an agreement is signed, the nation’s supreme leader said Thursday, contradicting U.S. and French descriptions of an accord announced on April 2. Prices are steadying amid stronger global demand, according to Ibrahim al-Muhanna, an adviser to Saudi Arabia’s oil minister.
Uncertainty over the deal is prompting speculation about the timing of increased exports from Iran, which could add to a global glut that cut prices by almost half in 2014. Oil is still down 4.8% this year amid surging U.S. crude supplies, which rose the most in 14 years last week, expanding inventories further from a record.
“The latest tremor in the Iranian negotiations has been enough to temporarily halt the downward reaction following the big build in U.S. inventories,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. “It’s going to take some months to play out but we do have the prospect of a really meaningful increase in production.”
West Texas Intermediate for May delivery traded at $50.80/bbl in electronic trading on the New York Mercantile Exchange, up 1 cent, at 1:23 p.m. Singapore time. The contract gained 37 cents to $50.79 on Thursday. The volume of all futures traded was about 79% below the 100-day average.
Supreme Leader
Brent for May settlement climbed 26 cents, or 0.5%, to $56.83/bbl on the London-based ICE Futures Europe exchange. It rose $1.02 to $56.57/bbl on Thursday. The European benchmark crude traded at a premium of $6 to WTI.
“Sanctions should be removed at once,” Iran’s Ayatollah Ali Khamenei said in his first public comment on the nuclear talks. He would have to approve whatever the Islamic Republic’s negotiators work out with the UK and U.S., China, France, Germany, and Russia before a June 30 deadline.
The U.S. position is that sanctions relief could come only after Iran fulfills its initial commitments to curb its nuclear program, probably months after a deal is signed. In addition, U.S. and French “fact sheets” summarizing the framework say sanctions would “snap back” if the Persian Gulf state were caught cheating.
Iran may be hoarding 7 MMbbl to as much as 35 MMbbl, shipbrokers and government officials estimated, which Barclays Plc and Societe Generale SA predict would be sold abroad first should a nuclear pact be reached. The nation could raise crude exports by 1 MMbopd if sanctions were lifted, Oil Minister Bijan Namdar Zanganeh said March 16.
Crude Supply
Iran tied Kuwait as the third-largest producer in the Organization of Petroleum Exporting Countries in March, according to data compiled by Bloomberg. The 12-member group supplies about 40% of the world’s crude.
The decline in oil prices is “temporary,” and crude is steadying at $55 to $60/bbl, according to Saudi Arabia’s al-Muhanna, a senior adviser to Oil Minister Ali al-Naimi. The world’s biggest oil exporter led OPEC last year in refusing to cut output in a bid to protect market share in the face of growing supply from producers outside the group.
In the U.S., stockpiles surged by 10.95 MMbbl last week to 482.4 MMbbl, according to the EIA. That’s the highest level in weekly data from the Energy Department’s statistical arm since August 1982.
WTI crude will probably decline next week, according to a Bloomberg survey. Seventeen of 38 analysts, or 45%, predicted futures will decrease through April 17, while nine forecast prices will gain.
