Brent oil capped the longest run of weekly declines since January as ample inventories and an accord to ease sanctions on Iran suggested global markets will remain oversupplied.
U.S. crude stockpiles remain almost 100 million barrels above the five-year average for this time of the year, Energy Information Administration data show. The prospect of increasing Iranian output may still weigh on prices even if the gain is gradual, according to Barclays Plc.
Oil’s recovery from a six-year low has faltered amid speculation the surplus will be prolonged as the Organization of Petroleum Exporting Countries kept pumping and Iran seeks to regain market share. The full impact of higher Iranian exports won’t be felt until 2016 as the nuclear deal is implemented, banks including Goldman Sachs Group Inc. predict.
“The market’s psychology is still bearish because of the oversupply situation,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The market is marking time to see what’s going on with the Iranian deal and the situation in Greece. It’s kind of in the doldrums now.”
Brent for September settlement rose 18 cents to end at $57.10 a barrel on the London-based ICE Futures Europe exchange. The August contract expired Thursday. Front-month futures dropped 2.8 percent this week.
WTI for August delivery slipped 2 cents to $50.89 a barrel on the New York Mercantile Exchange, down 3.5 percent for the week.
The amount of U.S. oil rigs decreased 7 this week to 638, down for the first week in three, according to Baker Hughes Inc.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI futures and the biggest oil-storage hub in the U.S., rose for a third week to 57.1 million barrels through July 10, the EIA said Wednesday. Nationwide, supplies dropped for the first time in three weeks to 461.4 million barrels.
Iran, the fourth-biggest member of the Organization of Petroleum Exporting Countries, won’t achieve a crude-export boost of more than 500,000 barrels a day, or about 50 percent, until next year as the Islamic Republic’s compliance with curbs on its nuclear program is verified, according to banks including Goldman, Citigroup Inc. and Commerzbank AG.
Iran is unlikely to flood the market with oil, Mudher Saleh, economic adviser to Iraq Prime Minister Haider Al Abadi, said Wednesday. That would only cause prices to fall, which is not in anybody’s interest, he said.
“OPEC could run into a few problems next year if global demand growth does not materialize,” Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by e-mail. “Who is prepared to make way for Iran’s 1 million extra barrels at a time where everyone is fighting for market share?”