Oil capped the longest stretch of weekly gains since February 2014 as Iran disputed the framework for a nuclear deal with world powers that would allow the OPEC member to boost crude exports.
Futures extended their advance on Friday as the U.S. oil rig count dropped to the lowest since December 2010, paving the way for slower production in the coming months. Sanctions against Iran must be lifted as soon as an agreement is signed, the nation’s supreme leader Ayatollah Ali Khamenei said Thursday, contradicting U.S. and French descriptions of an accord announced on April 2.
Any delays to a final deal with Iran risks postponing the full resumption of oil exports from the Islamic Republic, which could add to a global glut that cut prices by almost half in 2014. Oil is down about 3 percent this year amid surging U.S. crude supplies, which rose the most in 14 years last week.
“As supreme leader Khamenei raises concerns over the nuclear framework and the lifting of sanctions, the end result is that you are introducing greater uncertainty, above and beyond what was already there, as to when significant volumes of Iranian oil could eventually make their way back on to the market,” said Harry Tchilinguirian, BNP Paribas SA’s London-based head of commodity markets strategy.
West Texas Intermediate for May delivery added 85 cents, or 1.7 percent, to end at $51.64 a barrel on the New York Mercantile Exchange. Futures climbed 5.1 percent this week, their fourth gain in a row.
Brent for May settlement rose $1.30 to $57.87 on the London-based ICE Futures Europe exchange, marking the third weekly gain in four. The European benchmark crude traded at a premium of $6.23 to WTI.
Iran may be hoarding from 7 million to 35 million barrels of oil, shipbrokers and government officials estimated. Barclays Plc and Societe Generale SA predict this crude would be sold abroad first should a nuclear pact be reached. The nation could raise crude exports by 1 million barrels a day within a few months of sanctions being lifted, Oil Minister Bijan Namdar Zanganeh said March 16.
“Judging by the price reaction alone, the market is not confident at all that a deal will be reached to restore Iran’s crude exports,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said by e-mail. “If the lifting of the sanctions is an Iranian prerequisite to the agreement, then there is no agreement.”
In the U.S., the oil rig count dropped 42 to 760 this week, according to Baker Hughes Inc. The country has lost more than half its oil rigs since October as the collapse in crude prices caused drillers to scale back. Traders are watching the rig totals as they wait for U.S. production to drop and rebalance oil markets.
Oil prices are steadying amid stronger global demand, according to Ibrahim al-Muhanna, an adviser to Saudi Arabia’s oil minister.
The decline in prices is “temporary,” and crude is steadying at $55 to $60 a barrel, according to Saudi Arabia’s al-Muhanna, a senior adviser to Oil Minister Ali al-Naimi. The world’s biggest oil exporter led OPEC last year in refusing to cut output in a bid to protect market share in the face of growing supply from producers outside the group.
WTI crude will probably decline next week, according to a Bloomberg survey. Seventeen of 38 analysts, or 45 percent, predicted futures will decrease through April 17, while nine forecast prices will gain.