Oil was steady in Asian trading as investors weighed signs of an improving demand outlook in some regions against the prospect of more crude supply flowing from Iran should a nuclear deal be revived.
Futures in New York traded near $66 a barrel after climbing 6.5% over the past three sessions. An industry report showed shrinking crude and fuel inventories ahead of the start of the US summer driving season at the end of the month. China is poised to buy more cheaper crude from Russia, meanwhile, with its appetite growing as the nation leads an uneven Asian demand recovery.
Talks between Iran and world powers continued to resolve issues on a nuclear deal that may pave the way for lifting sanctions on the OPEC producer. That could unleash a flood of Iranian barrels stashed on tankers at sea.
Oil is up more than 35% this year as a robust rebound from the pandemic in the US, China and Europe drives recovery in consumption, despite parts of Asia facing a Covid-19 comeback. A key price spread for West Texas Intermediate is signalling that traders are bracing for a potential supply crunch just ahead of the busy summer driving season that sparks a demand surge.
“US and Chinese demand continue to return," said Stephen Innes, global managing partner at SPI Asset Management, adding that the possible revival of the Iran nuclear deal is capping further gains for oil. “There are also positive signals on India, which suggests the country may be turning the corner."
The American Petroleum Institute reported gasoline stockpiles fell by almost 2 million barrels last week, while crude inventories slid by 439,000 barrels, according to people familiar. Official government figures are due Wednesday.
Meanwhile, diplomats are still wrangling over US sanctions and Iran’s advanced enrichment technologies, according to officials involved in the talks who asked not to be identified in line with diplomatic rules. The Persian Gulf country may be holding as much as 69 million barrels of crude at sea in tankers, according to E.A. Gibson Shipbrokers Ltd.