Oil prices plummeted as investors remained doubtful that the US and Iran could reach a nuclear deal as demand uncertainties outweighed the possibility of restricted supply from global producers. As the US enters the driving season, there is pressure on demand to increase, which is tempered by concerns about future US interest rate rises and a sluggish uptick in China’s gasoline demand. However, there is pressure on prices both up and down. Both benchmark prices were expected to lose 1% or more this week and for a second straight week.
Early Friday morning Asian trading saw a decline in oil prices as investor doubts about the probability of an agreement between the United States and Iran over its nuclear program exceeded supply worries from international suppliers.
By 00:58 GMT, Brent crude futures had been down 36 cents, or 0.5%, to $75.60 per barrel, while West Texas Intermediate crude futures had fallen 33 cents, or 0.5%, to $70.96 per barrel.
After the U.S. and Iran both refuted a Middle East Eye report that they appeared close to a nuclear deal, both benchmarks dropped by approximately one dollar on Thursday, recovering from their previous declines of more than $3.
They were on pace for losses of approximately 1% for the week and a second week of deficits. Following Saudi Arabia’s weekend commitment to significant output cutbacks, oil prices climbed early this week. However, their gains were quickly wiped out by growing U.S. gasoline supplies and disappointing Chinese export statistics.
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According to market sentiment, the U.S.-Iran nuclear deal is still being questioned, according to Rakuten Securities commodity analyst Satoru Yoshida.
According to him, there is pressure on prices from both the upside and the downside, with concerns about a tighter supply and increased demand as the United States begins the driving season being balanced by worry over future increases in interest rates in the United States and a gradual increase in gasoline consumption in China.
On Thursday, the US and Iran both denied that they were close to reaching an interim agreement in which Tehran would curtail its nuclear program in exchange for the lifting of sanctions, which included the ability to export up to 1 million barrels of oil a day.
However, other analysts claim that if the U.S. Federal Reserve decides against raising interest rates at its upcoming meeting on June 13–14, oil prices may rise. According to Reuters’ survey of economists, there won’t be an increase during the meeting.
