Geopolitics Beat Fundamentals To Lift Oil Prices

Brent Crude

Brent Crude

Oil markets are underestimating the impact that a collapse of the Iran nuclear deal - and the re-imposition of US sanctions on Iran - could have on prices, a Middle East strategist told CNBC.

The West Texas Intermediate for June delivery rose 0.35 USA dollars to settle at 68.05 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery added 0.14 dollars to close at 74.00 dollars a barrel on the London ICE Futures Exchange. Meanwhile, the US benchmark crude has averaged around $66 a barrel so far this month and analysts and traders surveyed by Bloomberg are bullish on USA futures as OPEC trims output against a backdrop of record American crude output.

Following his visit to Washington, French President Emanuel Macron appeared to have little hope of persuading US President Donald Trump to remain in a nuclear deal with Iran, meaning more sanctions against the Middle Eastern country could be imminent.

Mr Khoman also believes members in Mr Trump's circle are critics of Iran such as nominee for secretary of state Mike Pompeo and John Bolton, national security adviser increases the possibility of the USA reimposing sanctions on Iran.

Analysts had expected a drop in crude oil inventories.

Brent crude for June delivery rose 74 cents to end the session at $74.74 on the London-based ICE Futures Europe exchange.

Crude oil futures were slightly higher Thursday despite an unexpected rise in USA inventories.

US crude oil inventories rose by 2.2 million barrels in the week to April 20, to 429.74 million barrels, while domestic output, driven by shale extraction, climbed by 46,000 bpd to 10.59 million bpd. Total volume traded was less than 1% below the 100-day average.

There is a price divergence in the market that could raise some concerns amongst traders. It is widely anticipated that President Trump will pull the United States out of the Iran nuclear deal, which is bullish for prices, said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics. That's an increase of more than a quarter since mid-2016.

Crude oil futures are trading lower early Friday.

"Our focus for 2018 is on execution and we believe we are off to a very strong start to the year", Chief Executive Officer John Hess said. Analysts polled by S&P Global Platts predicted a decline of 1.1 million barrels in crude stockpiles and 500,000 in gasoline supplies for last week.

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