Oil Futures Choppy as Markets Eye Iran Talks, US Supplies

By Eric Yep

Crude-oil futures were choppy in Asian trade Wednesday as markets kept a close watch on U.S.-Iran nuclear talks and the build-up in U.S. oil supplies.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded at $ 47.38 a barrel at 0428 GMT, down $ 0.22 in the Globex electronic session. May Brent crude on London’s ICE Futures exchange fell $ 0.08 to $ 55.03 a barrel.

Oil prices have fallen for three consecutive quarters now. Nymex crude lost 10.6% in the January-March quarter, and has fallen by 55% over the last three quarters, while Brent crude lost 3.9% in the last quarter and has fallen by 51% over the last three quarters.

The April-June quarter will be the weakest part of this year for oil prices, after which the market will slowly rebound, Barclays analyst Michael Cohen said in a report.

“We expect the support to oil from temporary factors to fade away in Q2, and that a massive U.S. crude oil stockbuild will find its way back to the global market in the form of products in the months ahead,” he said.

He said geopolitical unrest in the Middle East is poised to push up oil prices but weak demand-supply fundamentals will eventually win out.

Late Tuesday, the American Petroleum Institute, an industry group, said its data showed U.S. crude inventories rose by 5.2 million barrels last week. The U.S. Energy Information Administration is due to publish its inventory numbers on Wednesday and analysts expect a stockpile increase of 4.6 million barrels.

Meanwhile, nuclear talks between Iran and six world powers missed its deadline on Tuesday, but officials have agreed to continue talks in Switzerland for an extra day.

There were some signs of progress in negotiations in the early morning hours of Wednesday, with Russian Foreign Minister Sergei Lavrov saying the sides reached agreement in principle on a framework outlining elements of a final nuclear deal to be reached by June 30, according to his spokeswoman.

A successful nuclear deal could pave the way for the lifting of sanctions against Iran, and release a large amount of stockpiled oil into an oversupplied global market, pressuring oil prices.

Oil markets also shrugged off a marginal improvement in Chinese manufacturing numbers. Earlier Wednesday, China’s official Purchasing Managers Index rose to 50.1 in March from 49.9 in February, although the HSBC China manufacturing PMI, fell to a final reading of 49.6 in March from 50.7 in February.

Nymex reformulated gasoline blendstock for May–the benchmark gasoline contract–rose 35 points to $ 1.7735 a gallon, while May diesel traded at $ 1.7030, 50 points lower.

ICE gasoil for April changed hands at $ 522.75 a metric ton, down $ 3.75 from Tuesday’s settlement.

— Nicole Friedman and Laurence Norman contributed to this article

Write to Eric Yep at eric.yep@wsj.com

    (END) Dow Jones Newswires   04-01-150139ET   Copyright (c) 2015 Dow Jones & Company, Inc. 

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