Summary
- Trump says US could conclude Iran deal over the next month
- Venezuelan oil supply expected to ramp up, says analyst
- IEA lowers global oil demand forecasts for this year
- Kremlin says next Ukraine peace talks set for next week
(Reuters) – Oil prices edged higher on Friday but were on track for a second weekly decline as concerns receded over the risks of a U.S.-Iran conflict that could affect supply.
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Brent crude futures gained 27 cents, or 0.4%, to $67.79 a barrel by 1110 GMT after falling 2.7% in the previous session. U.S. West Texas Intermediate (WTI) crude rose 21 cents, or 0.3%, to $63.05 after a 2.8% decline the previous day.
Both benchmarks were poised to register weekly declines, with Brent and WTI set to drop by 0.3% and 0.7% respectively.
Prices had strengthened earlier in the week on concerns that the U.S. could attack Middle Eastern oil producer Iran over its nuclear programme. But comments on Thursday from U.S. President Donald Trump that the U.S. could make a deal with Iran over the next month drove down prices on Thursday.
Late on Thursday, however, U.S. media outlets reported that the U.S. was sending a second aircraft carrier to the Middle East.
The steadying of oil prices on Friday was “an adjustment to the larger correction yesterday” after Trump’s comments on Iran, said UBS oil analyst Giovanni Staunovo. “But with another U.S. aircraft carrier heading to the Middle East, oil prices are trading moderately higher,” he added.
Away from the Middle East, the Kremlin said on Friday that the next round of peace talks on Ukraine will take place next week.
Kremlin spokesman Dmitry Peskov confirmed that Moscow and Washington have been discussing bilateral trade and economic cooperation. He said Moscow hoped that dialogue would continue, but said it was unlikely such discussions would move beyond talk before the conflict in Ukraine was settled.
Price pressure has also come from the International Energy Agency’s latest forecasts, saying in its monthly report that global oil demand growth this year will be weaker than previously expected, with overall supply set to exceed demand.
“The fact that prices did not extend significantly lower in the face of bearish headlines is noteworthy, suggesting that downside momentum is slowing in the near term,” said XS.com analyst Linh Tran.
Thursday’s price falls were amplified by U.S. data showing a massive build in crude stockpiles and growing expectations that increased Venezuelan supply could soon hit the market, IG analyst Tony Sycamore said in a note.
“There is an expectation that Venezuelan oil supply will return to pre-blockade levels in the months ahead,” he said, adding that supply is expected to rise from 880,000 barrels per day to about 1.2 million bpd.
The U.S. Treasury will issue more allowances easing sanctions on Venezuelan energy this week, a White House energy official said on Thursday.
U.S. Secretary of Energy Chris Wright said on Thursday that U.S.-controlled oil sales from Venezuela have totalled more than $1 billion since the capture of President Nicolas Maduro in January and will bring in a further $5 billion in the next few months.
Reporting by Stephanie Kelly, Sam Li, Lewis Jackson and Sudarshan Varadhan Editing by David Goodman
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