Analyst: Iranian oil supply will not be issue before 2016; Oil higher on bullish factors

On Wednesday crude-oil futures were higher, supported by dipping U.S. inventories and hopes for a Greek bailout deal.

Nymex light, sweet crude futures for delivery in August were higher 39 cents, or 0.6%, to $61.39 a barrel.

On London’s ICE Futures exchange Brent crude for August delivery rose 36 cents, or 0.6%, to $64.82 a barrel.

Oil prices had been higher in the last trading session with gains capped due to the lack of strong demand-supply fundamentals and the coming deadline for the Iranian nuclear deal.

Mike Wittner, head of oil research at Societe Generale, said, however, that new Iranian oil supply will not be an issue for oil markets until the end of this year, but will likely impact markets in 2016. Moreover, Saudi Arabia will not trim its own supplies to give space to Iran, as Saudis fight for market share.

Yesterday the American Petroleum Institute signaled that last week had marked a 3.2 million-barrel decline in U.S. inventories, including a 2-million-barrel drop at the Cushing, Oklahoma delivery point for Nymex oil futures.

Since the initial inventory declines are sharper than expected, the data will be bullish for oil prices in case it is confirmed by the U.S. Energy Information Administration later today.

Paul Horsnell, head of commodities research at Standard Chartered, commented that Brent prices have recently struggled to maintain gains above $65 a barrel and in general, oil market sentiment remains relatively weak.

The strength of oil demand growth will be essential to the rebalancing of the oil market, especially if the Organization of the Petroleum Exporting Countries continues production above 31 million barrels a day.

Standard Chartered expects demand to keep outperforming consensus expectations, and its full-year forecast for global demand growth currently stands at a very strong 1.7 million barrels a day, Horsnell said.

In the meantime, Saudi Arabia ceased to be the largest exporter of crude oil to China, as this role had been overtaken by Russia, customs data says.

In April 2014, Angola had briefly taken the top slot, MarketWatch says. Standard Chartered now expects Saudi Arabia to regain its position as China’s top supplier in the coming months.