Oil slipped below $110 a barrel today but was on track to end higher for the second week running, with investors awaiting the outcome of talks on Iran’s nuclear programme.
Benchmark Brent crude oil saw its biggest jump in almost three weeks yesterday, fuelled by a surge in US fuel futures, signs of continued economic strength in the United States and indications that a deal to curb Tehran’s nuclear programme could be a long time coming.
“The focus is going to be about Iran and it doesn’t seem that everything is going to be done today. It risks slipping into the weekend,” Petromatrix analyst Olivier Jakob said.
Brent for January delivery was down 37 cents at $109.71 per barrel at 0843 GMT. US crude was trading 34 cents lower at $95.10 per barrel, after posting its biggest gain in nearly two months yesterday.
Sanctions on Iran have kept around one million barrels per day of oil from the global market and any deal could allow some of that oil to be sold, potentially bringing down prices.
Iran and six major powers made some progress this week towards an interim deal, but negotiators appeared to play down expectations of an imminent breakthrough in the three-day talks that began on Wednesday.
Before the meeting, expectations of a breakthrough had been high after the United States, Russia, China, France, Britain and Germany came close to winning concessions from Iran in the previous round of negotiations two weeks ago.
Adding to pressure on negotiators, US Senate Majority Leader Harry Reid said yesterday he was committed to moving ahead with a tougher Iran sanctions bill.
Signs of strength in the US economy helped support prices. The number of Americans filing new claims for jobless benefits fell sharply last week and a gauge of factory activity hit an eight-month high in early November.
China’s oil demand is expected to rise an average 3.8 per cent a year in 2014 and 2015 with demand for transportation fuels being a main factor, a senior researcher at top Asian refiner Sinopec said.
China has been the engine of global oil demand in the past decade, accounting for almost half of total growth. But demand growth hit a four-year low of 4.5 per cent in 2012, and a slowing economy has again weighed on its consumption this year.
China overtook the United States in September as the world’s biggest net oil importer, but crude oil imports dropped in October to a 13-month low.
Unrest in Iraq added to uncertainty over supply, with the country suffering its worst wave of violence in at least five years. (Reuters)
