By Adedapo Adesanya
The Brent crude neared $70 per barrel on Thursday, May 27 as positive data from the United States eased recent worries about a potential addition of Iranian oil to the market.
During the session, the price of the international crude benchmark increased by 33 cents or 0.48 per cent to trade at $69.79 per barrel, while the United States crude benchmark, West Texas Intermediate (WTI), rose by 34 cents or 0.51 per cent to sell at $67.19 per barrel.
Data from the world’s largest economy and highest oil-consuming nation, the US, showed that the economy is improving.
The US economy in the first quarter of the year recorded its second-fastest growth rate since the third quarter of 2003, and other data on Thursday showed that business spending on equipment accelerated in April.
In addition, the number of Americans filing new claims for unemployment benefits dropped more than expected last week, according to data from the US Labour Department.
The market believes that the economic and demand rebound in the United States outweighed the problem of Iranian supplies reentering the market.
Iran and global powers have been negotiating since April to work out how the county and the United States should secure the lifting of sanctions on Iran, including its energy sector, in return for Iranian compliance with restrictions on its nuclear work.
Analysts have said Iran could provide about one million to two million barrels per day additional oil supply if a deal is struck and sanctions lifted.
Another trigger to the improvement seen yesterday was the northern hemisphere’s summer driving season and the lifting of coronavirus curbs, which have pushed up the demand for fuel.
As a result, US crude oil inventories fell last week in the United States according to the Energy Information Administration (EIA).
Meanwhile, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) is expected to confirm next week its May-July plan to ease the oil production cuts by the planned 840,000 barrels per day in July.
The ministers of the OPEC+ group are meeting on Tuesday, June 1, and at present, no surprises are expected, despite this year’s track record of decisions surprising the market to both the bullish and bearish sides.
The collective OPEC+ oil production is set to rise by 350,000 barrels per day in both May and June and by more than 400,000 barrels per day in July.
Additionally, Saudi Arabia is also gradually easing its extra unilateral cut of 1 million barrels per day over the course of the next few months, beginning with monthly production increases of 250,000 barrels per day in both May and June.
The improving situation in the other parts stands in contrast to India, the world’s third-largest oil importer, where a recent surge in COVID cases coupled with low vaccination efforts is threatening the country.
Dipo Olowookere