Oil prices nudged higher in Asian trade on Wednesday on hopes for stronger than expected U.S. crude demand, while doubts over the prospect of reaching an agreement next week on Iran’s nuclear program eased oversupply concerns.
Brent crude for August delivery LCOc1 rose 3 cents to $64.48 a barrel by 0703 GMT (0303 EDT), after settling up $1.11, or 1.8 percent, in the previous session.
U.S. crude for August delivery CLc1 gained 8 cents to $61.09 a barrel, after rising 63 cents the day before.
“U.S. crude inventories have been at historic highs … but the thing is crude inventories may have peaked after oil demand picked up in June,” said Tony Nunan, oil risk manager at Tokyo’s Mitsubishi Corporation.
“$60 a barrel is the new normal for the next several months.”
Mitsubishi analysts forecast U.S. oil demand would grow by 1.4-1.8 million barrels per day (bpd) in June from the same month last year, Nunan said.
The U.S. Energy Information Administration said on June 9 that U.S. oil demand would rise to 19.41 million bpd this year, up from 19.03 million bpd last year.
The American Petroleum Institute (API) forecast on Tuesday that U.S. commercial crude oil stocks fell by 3.2 million barrels last week, larger than analysts’ expectations of a 1.5-2.1 million barrel draw and the eighth straight week of declines.
The U.S. Energy Information Administration will release official stockpile data later on Wednesday.
“Although crude inventories could cause prices to move higher, we expect to see strong resistance at $61.80 and $65 for West Texas Intermediate and Brent. Therefore, expect prices to remain unchanged,” Singapore’s Phillip Futures said in a note on Wednesday.
Nunan said there were roadblocks to an agreement next week between Iran and six world powers on Tehran’s nuclear program that would end sanctions and allow Iran to boost oil exports.
That followed Tuesday’s decision by Iran’s parliament to pass a bill banning access for U.N. inspectors to its military sites and scientists.
Iran’s Supreme Leader, Ayatollah Ali Khamenei, also ruled out freezing sensitive nuclear work for a long time. France and the five other world powers want Iran to halt parts of its nuclear program for at least 10 years.
“June 30 is a self-imposed deadline, so it could be put off,” Nunan said.
Gains were capped by a firm dollar following reasonably strong U.S. data. A strong dollar makes commodities priced in other currencies more expensive.