Oil rose from its lowest level in more than six months, following other assets higher despite the lingering threat of an increase in Iranian supplies.
Futures for West Texas Intermediate (NYSE:WTI) crude oil surpassed $87 a barrel amid a wide market rise and rumors that China may implement additional economic stimulus measures. This brought some comfort to oil futures, which had fallen more than 8% during the previous three trading days as prolonged negotiations to revive a nuclear agreement with Iran advanced.
According to Warren Patterson, head of commodities strategy at ING Groep NV in Singapore, “Sentiment in the market is still broadly negative with the prospect of an Iranian nuclear deal, while demand concerns continue to linger.”
Officials on both sides of the Atlantic are hinting that a deal may emerge after more than a year of false starts, and the Biden administration is currently considering Iran’s response to a proposal from the European Union. An agreement, however, was still deemed doubtful by Goldman Sachs Group Inc.
With the demand forecast already clouded by worries of an economic slowdown, an increase in supply could further exacerbate the downward pressure on pricing. Indicators of tightness in the crude market, such as time spreads, have reduced dramatically.
Crude Oil Still Up
Despite natural gas prices skyrocketing, crude oil is still up roughly 16% this year, and the International Energy Agency is optimistic about the future of demand growth. Sweden is the most recent nation to rely on oil-fired power in an effort to lower the price of electricity generation.
Extreme heat from China to Europe and the United States is putting a strain on electrical infrastructure and slowing the supply of commodities as rivers dry up. As regions struggle to fulfill summer demand, energy conservation advice are emerging; this could be a precursor to an energy crisis in the winter.
The American Petroleum Institute recorded a decrease of 448,000 barrels in crude supplies last week, while gasoline supplies rose by over 4 million barrels, according to a person familiar with the matter. The government will release its figures later on Wednesday.
Featured Image: Megapixl © Bulus
