Oil prices recover as deadlines on Greece, Iran extended; U.S. data ahead
On Wednesday oil prices saw a slight rise as deadlines on Greece and Iran were prolonged, the greenback was lower and the main focus moved to U.S. inventories data due out later in the day.
Brent crude for August delivery traded on London’s ICE Futures exchange climbed $0.32 to $57.17 a barrel.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $52.46 a barrel, up $0.12.
Last week, U.S. oil futures were lower after Baker Hughes said in a report that the number of domestic rigs drilling for oil rose by 12 to 640 last week, snapping 29 straight weeks of declines.
Negotiations on Greece’s financial crisis have been shifted to the weekend, while talks on Iran’s nuclear power plans extended past Tuesday, the second time in a week that a deadline has been crossed.
Investors who feared that a Grexit would lead to financial destabilization felt a relief, as poor economic growth across Europe would damage oil demand.
In the meantime, some analysts suggest that delayed Iranian negotiations will in turn delay any removal of sanctions by up to a month. This means pouring more oil in the market will happen later.
“Those market participants who have been betting on a rapid Iranian return to the oil market are now likely to square their positions, which should lend short-term support to prices — though they are unlikely to make any sizable leaps,” said analysts at Commerzbank.
Meanwhile, there is a speculation circulating in the market that weekly supply data due later in the day will show that U.S. crude inventories fell at a faster pace than expected last week.
Wednesday's report was expected to show that U.S. crude oil stockpiles dropped by 0.7 million barrels last week, while gasoline stockpiles were forecast to dip by 0.3 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 958,000 barrels in the week ended July 3, compared to expectations for a drop of 1.1 million.
