Oil prices steady but supported by Iran concerns

Oil prices steady but supported by Iran concerns

Trump will decide by May 12 whether to restore USA sanctions on Tehran, which would likely result in a reduction of its oil exports.

Weekly data on Tuesday that showed a rise in USA crude inventories also subdued the oil price somewhat.

French President Emmanuel Macron's prediction that the USA will pull out of the nuclear deal has boosted speculation over reduced shipments from Iran.

However, "the increased drilling activity in the U.S. should not pose any excessive obstacle to oil prices.especially as there are no signs of any solution to the dispute over the nuclear deal with Iran", analysts at Commerzbank said in a morning note. "We still have all the different soundbites on Iran and the 12 May deadline is coming up", Petromatrix strategist Olivier Jakob said, referring to an upcoming date by which the United States has said it will withdraw from a nuclear deal with Iran if the other signatories to the deal do not meet certain conditions. Total volume traded was about 17% below the 100-day average.

There is a price divergence between WTI and Brent crude oil that could raise concerns with some traders, but can be explained easily so I don't think it is a major issue.

Gasoline futures rose 0.1 percent to settle at $2.1292 a gallon on Monday, the highest since August.

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Trading on the Shanghai International Energy Exchange is closed for a Chinese public holiday. Dusaniwsky pointed out that bets against the sector previously hit a year-to-date high of $55.2 billion in mid-January when the benchmark topped $66 a barrel and then swiftly fell to a year-to-date low of $43.1 billion in mid-February when the price of WTI crude plummeted again.

A measure of oil market volatility climbed to the highest level in two weeks.

"It's only Trump who wants to back out of the deal, but he wants to back out of so many deals ..." "Reimposing US sanctions is not a foregone conclusion just yet". The global benchmark crude traded at a US$6.43 premium to June WTI.

On Friday, the Baker Hughes rig count in the USA showed a gain of five rigs in the week to April 27, the fourth consecutive weekly rise, bringing the total rig count to 825.

But while USA producers are accelerating shale drilling in areas in the United States, higher production has not necessarily translated into stronger refining results for some oil companies. Investors are assessing if surging US production, which has topped 10 million barrels a day every week since early February, will undermine efforts by the Organization of Petroleum Exporting Countries to balance the market via output cuts.

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