Oil gains on short-covering, nuclear talks
Summary
- Higher tariffs could hit oil demand growth, analysts say
- Brent and WTI down more than 2% this week
- Market braces for another OPEC+ output increase in July
(Reuters) – Oil prices gained on Friday as U.S. buyers covered positions ahead of the three-day Memorial Day weekend amid worries over the latest round of nuclear talks between American and Iranian negotiators.
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Brent crude futures settled at $64.78 a barrel, up 34 cents, or 0.54%. U.S. West Texas Intermediate crude futures finished at $61.53, up 33 cents, or 0.54%.
“I think there is some short-covering going into this weekend,” said Phil Flynn, senior analyst with Price Futures Group.
The Memorial Day weekend kicks off the U.S. summer driving season, the period of highest demand for motor fuels.
U.S. and Iranian negotiators met in Rome on Friday in another round of talks aimed at curtailing the Islamic Republic’s nuclear program. Traders are afraid crude supplies could be interrupted if talks fail to reach a deal, Flynn said.
“The talks are not looking good,” he said. “If these are the last talks and there’s no deal, it could give a green light to the Israelis to attack Iran.”
President Donald Trump said on Friday that he is recommending a straight 50% tariff on goods from the EU starting on June 1, saying the bloc has been hard to deal with on trade.
“The oil market has been under pressure from two things,” said Andrew Lipow, president of Lipow Oil Associates. “We await the impact of tariffs on oil demand and OPEC+ is expected to increase supply again this summer.”
OPEC+, comprising the Organization of the Petroleum Exporting Countries and allies led by Russia is holding meetings next week expected to yield another output increase of 411,000 barrels per day (bpd) for July.
Reuters reported this month that the group could unwind the rest of its 2.2 million bpd voluntary production cut by the end of October, having already raised output targets by about 1 million bpd for April, May and June.
Reporting by Erwin Seba in Houston; Additional reporting by Ahmad Ghaddar, Siyi Liu; Editing by Susan Fenton, David Goodman, Deepa Babington and Cynthia Osterman
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