Tehran could bring up to 1 million barrels more of daily supply to the global market
Oil prices bounced from February lows earlier in the week, but failed to challenge the $100 psychological level that turned into resistance following the recent plunge. Brent crude is back under pressure on Wednesday, holding below $96 a barrel as buyers were spooked by fresh industry data.
The American Petroleum Institute figures showed that US crude stockpiles rose by about 2.2 million barrels for the week ended August 5 versus the expected drop of 400,000. Now, traders await the official report from the EIA due later today. Should the data point at a solid build in crude inventories, the downside pressure may intensify during the North American session.
Meanwhile, some oil exports had been suspended on the Russia-to-Europe Druzhba pipeline that transits Ukraine. However, the market failed to capitalize on the news amid reports of further progress in Iran nuclear talks. If Tehran manages to free itself from sanctions, it could bring around 500,000-1,000,000 barrels more of daily supply to the global market.
That news was, however, offset by reports of fresh developments in Iran nuclear talks that could bring as much as 500,000 to one million barrels more of daily supply to the market if Tehran manages to free itself from sanctions placed on its oil over suspected atomic bomb building.
Now that Brent has settled around $95 a barrel, the $100 figure represents the key near-term target for bulls. A failure to regain this level in the coming days threatens a deeper retreat towards the $90 mark last seen in February. In the immediate term, a potentially stronger dollar could cap recovery attempts in the oil market.