Analysts: Iranian deal will hardly impact market before 2016. Oil rebounds

On Monday crude-oil futures regained ground in Asian trade as markets digested last week’s disappointing U.S. jobs data and Iranian nuclear deal. 

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK5 traded at $50.05 a barrel, up $0.92, or 1.9%, in the Globex electronic session.

May Brent crude LCOK5 on London’s ICE Futures exchange rose $0.69, or $1.26, to $55.61 a barrel.

Oil prices had fallen sharply in electronic trade after markets closed Friday, as reports of a framework Iranian nuclear deal fuelled fears of more Iranian crude supply.

Oil prices have since recovered with analysts largely estimating that Iranian crude exports could take several months to enter the already overflooded oil market.

If sanctions are eased, Iran’s oil exports may grow by only 500,000-700,000 barrels a day given the underinvestment in Iran’s oil sector, while around 30 million barrels of floating storage could also come to market.

However,“Even if a final deal is reached, we do not expect any physical market impact before 2016,” Adam Longson, head of oil research at Morgan Stanley, said in a report. 

"A return of one million barrels a day of Iranian oil exports is at least a year away, but 200,000-300,000 barrels a day of slippage is possible now that the parameters of an agreement are in place,”  said Barclays analyst Michael Cohen.

Over the weekend, Saudi Arabia raised its official crude oil selling price for Asian buyers for May lifting on the back of strong refining margins in the region and a strong Dubai crude price benchmark, Singapore-based traders said.

While state-run Saudi Aramco Oil Co. raised price differentials for all its crude grades sold to Asia, it lowered most prices for the U.S., reflecting weaker Nymex crude prices and an oversupply in the U.S. market.

According to Baker Hughes, the U.S. oil-rig count fell by 11 to 802 for the seventeenth consecutive week.

Trading volumes are likely to remain thin with some markets still shut for Easter and other public holidays.

The number of rigs drilling for oil in the United States declined by 11 this week to 802, the smallest decline since December.

As US rig count has seen two weeks of thin declines, expectations have emerged that drilling activity is nearing a pivotal level that could dent production, bolster prices and coax idle rigs back to the field after a precipitous cull since October, says Reuters.