US Crude Supply Data Offset Potential Iranian Supply Worries

Worries that the possible resumption in Iranian supply would cause a supply glut was offset by strong U.S. crude oil supply data. This led to a rise in oil on early Wednesday in Asia.

Brent and WTI futures closed the previous session at their highest level in a week. The black liquid gained more than 35% so far this year. 

By 10:13 PM ET (2:13 AM GMT), Brent oil futures added 0.10% to $68.56 and WTI futures inched up 0.03% to $66.09.

Markets are hoping that the lifting of COVID-19 restrictions in the U.S., Europe, and China will brighten the fuel demand outlook.  Moreover, investors hope the imminent beginning of the U.S. summer driving season will uplift this outlook.

In other areas, coronavirus outbreaks are being monitored as they lead to the reimposition of restrictive measures. 

On Tuesday, the June-July WTI time-spread,  traded at 20 cents a barrel. This is the prompt cash roll’s strongest level since May 2020. This means that markets are looking forward to a potential supply crunch prior to the driving season.

Talks Between the U.S. and Iran

Investors brace for the outcome of indirect negotiations between the U.S. and Iran. Additionally, talks were resuming in Vienna throughout the week. 

If the two could revive their 2015 nuclear deal, Iran could add around one to two million barrels per day to the global crude supply. The U.S. government could lift sanctions that are currently in place.

U.S. crude oil supply data from the American Petroleum Institute (API) showed a draw of 439,000 barrels for the week ending May 21. Forecasts showed a 1.279-million-barrel draw, while in the previous week, a 620,000-barrel build was recorded.

Fujitomi Co. chief analyst Kazuhiko Saito said that the API data was good. However, investors were paying more attention to the Iran talks. That’s because the impact from possible return of Iranian oil to the market is more significant, he said.

Investors will eye the crude oil supply data from the U.S. Energy Information Administration, due out later in the day.

Meanwhile, in precious metals, Gold erased this year’s losses as signs of inflationary pressures stoked growth concerns. Moreover, Federal Reserve officials assured investors on the outlook for monetary policy.

The Fed reiterated that they expect temporary price pressures from the U.S. economic rebound. This damped speculation about tightening policy. 

Declines in Treasury yields also support gains in precious metals. In eight out of the past nine sessions, the bullion was up in eight.