Oil pares gains, market supported by Iran worries

Wednesday, 2 May 2018 00:00 - - {{hitsCtrl.values.hits}}

TOKYO (Reuters): Oil prices held steady on Tuesday as the dollar remained near a four-month high, with crude supported by worries that US President Donald Trump may pull out of the Iran nuclear deal.

US West Texas Intermediate crude for June delivery CLc1 was up 2 cents at $68.59 a barrel by 0649 GMT, after settling up 47 cents on Monday.

London Brent crude for new July delivery was up 1 cent at $74.70. The June contract expired on Monday, settling up 53 cents at $75.17.

Oil prices rose on Monday after Israeli Prime Minister Benjamin Netanyahu stepped up pressure on the United States to pull out of the 2015 nuclear deal with Iran, presenting what he called evidence of a secret Iranian nuclear weapons program. Tehran has denied ever seeking nuclear weapons. Trade was quiet in Asia as many markets including China, India and Singapore were closed for public holidays.

Trump has given Britain, France and Germany a 12 May deadline to fix what he views as the deal’s flaws or he will reimpose sanctions.

“There are worries that Iran’s oil exports could fall by about 1 million barrels per day from current levels,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.

“If that happened, Brent prices could jump to near $90 (a barrel).”

Oil prices stood within $1 of a more than three-year high hit in late April. Analysts said the market is extremely sensitive to any developments on the nuclear deal and sanctions.

Oil was also supported as a Reuters survey showed OPEC oil output fell to a one-year low in April due to declining production in Venezuela and lower shipments from African producers.

Elsewhere, US crude production jumped 260,000 barrels per day (bpd) to a record high of 10.26 million bpd in February, the Energy Information Administration said on Monday.

US crude inventories likely rose by 1.3 million barrels last week, while gasoline and distillate stockpiles fell, a preliminary Reuters poll showed on Monday ahead of data by the Industry group the American Petroleum Institute later in the day.

Brazil’s Petrobras expects oil production to start by the end of June at its Tartaruga Verde e Mestica offshore platform, which would allow the firm to add up to 500,000 barrels per day of new oil output next year, a senior official said.