Oil
holds above $64 before U.S. supply report, eyes on Iran
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[June 24, 2015]
By Alex Lawler
LONDON (Reuters) - Oil held above $64 a
barrel on Wednesday before a U.S. government report expected to show
domestic crude inventories fell for an eighth week, a sign that a supply
glut is easing.
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The industry group American Petroleum Institute (API) on Tuesday
reported a drop in U.S. crude stocks, ahead of Wednesday's official
data. Doubts over the likelihood of a deal next week on Iran's
nuclear work also supported prices.
Brent crude <LCOc1> rose 10 cents to $64.55 a barrel by 7.55 a.m.
EDT. U.S. crude <CLc1> gained 9 cents to $61.10. Both contracts made
gains on Tuesday.
"There could be some support from the APIs," said Tony Machacek, an
oil broker at Jefferies Bache in London. "We're probably going to be
testing $66 to the upside," he added, referring to Brent.
A steady decline in U.S. crude stockpiles from a record high earlier
this year has been supporting prices and inventories probably fell
by 2.1 million barrels last week, the eighth consecutive drop,
according to an analyst poll.
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Traders will be focusing on whether the U.S. government's supply
report due at 1430 GMT confirms the 3.2-million-barrel decline
reported on Tuesday by the API.
Crude was also supported by potential roadblocks for a nuclear
accord between Iran and six world powers that would open the
prospect of Iran boosting crude oil exports, as a self-imposed June
30 deadline approaches.
Iran's supreme leader on Tuesday ruled out freezing sensitive
nuclear work for a long time, and Iran's parliament passed a bill
banning access for U.N. inspectors to its military sites and
scientists.
Oil Minister Bijan Zanganeh has said Iran could raise oil output by
500,000 barrels per day within a month of a lifting of sanctions,
although analysts and other OPEC delegates doubt a recovery would be
that rapid.
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The debt crisis of Greece is also on the market's radar but is less
of a factor for oil than for other assets such as equities, which in
Europe traded lower on Wednesday as doubts returned over the issue.
"Greece continues to make headlines but there are so many of them
that it is difficult to trade them," said Olivier Jakob, oil analyst
at Petromatrix.
The dollar index eased as investors focused on the prospects for
higher U.S. interest rates. A weak dollar makes commodities priced
in dollars cheaper for holders of other currencies.
(Additional reporting by Keith Wallis; Editing by William Hardy and
Pravin Char)
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