Following three days of losses, oil prices rebounded early on Friday amid fuel demand recovery in the U.S. and Europe, but they were still set for a weekly drop of around 4 percent, which would be the steepest weekly decline since March.
As of 9:57 a.m. EDT on Friday, WTI Crude was trading up by 2.49 percent at $63.48 and Brent Crude was up 1.92 percent at $66.45, as the U.S. dollar dropped and the market welcomed encouraging data about travel and road traffic in Europe and the U.S.
Despite the early Friday rise, oil prices were still poised for a weekly loss as the possibility of an imminent return of Iranian oil hit market sentiment for most of the week. A decline in all commodities this week and concerns about inflation have also weighed on oil prices in recent days.
Global powers taking part in the indirect U.S.-Iranian talks on a return to the nuclear agreement have accepted that the U.S. sanctions on Iran, including on its oil exports, will be removed, Iranian President Hassan Rouhani was quoted as saying on Thursday.
But the latest round of talks ended on Thursday without a major announcement, and negotiators are returning for discussions next week.
“While any announcement confirming the lifting of sanctions would likely hit sentiment further, we believe that this will be short-lived, given that the supply and demand balance remains supportive,” ING strategists Warren Patterson and Wenyu Yao said on Friday.
“Oil has also been caught up in a broader commodities correction after China warned that it could introduce measures to cool spiking prices of raw materials. Brent’s prompt spread has weakened to show the lowest backwardation this year, an indication market tightness is easing,” Saxo Bank said early on Friday.
“With Iran potentially coming back and OPEC+ already adding barrels, Brent is likely to remain stuck in a $65 to $70 range, with the s/t risk skewed to the downside until the demand picture improves,” the bank’s strategy team said.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Russia Is Making A Mad Dash To Outrun Peak Oil Demand
OPEC’s Oil Exports Are Surging By 1 Million Bpd In May
Is This One Of The Best Ways To Play The Electric Vehicle Boom?
Read this article on OilPrice.com