Oil prices closed 2% higher on Friday, driven by fears that a storm – which formed in the Gulf of Mexico – will limit the supply of energy. However, the hike was not enough to erase the week’s losses on a potential return in Iranian crude supplies, after officials said Iran and world powers had moved on to a nuclear deal.
Brent crude futures rose $ 1.33, or 2.04%, to $ 66.44 a barrel, while US West Texas Intermediate gained $ 1.64, or 2.65%, to $ 63.58.
A system forming over the western Gulf of Mexico has a 40% chance of becoming a cyclone in the next 48 hours, the United States’ National Hurricane Center (NHC) said on Friday. “This early storm led traders to buy crude ahead of the weekend in anticipation of potential production shutdowns,” said Phil Flynn, principal analyst at Price Futures Group.
For the week, the two contracts fell about 3%, their biggest decline since March, on news of the Iranian nuclear deal.
Iran and world powers have been in talks since April about reactivating the 2015 accord and the European Union official leading the discussions said on Wednesday he was confident a deal would be reached.
Iranian President Hassan Rouhani said the United States was willing to lift sanctions on his country’s oil, banking and shipping sectors. The Iranian oil industry is subject to an embargo by the United States, but improved relations between the two countries could ease sanctions and add a million or more barrels a day of Iranian oil production to the global market by the end of this month. boreal summer.
Still, investors remain optimistic about the recovery in fuel demand this summer, as vaccination programs in Europe and the United States would allow more people to travel, although rising cases in parts of Asia are raising concern. .
Option bets that the price of oil will top $ 100 in the Brent contract for December have skyrocketed after last week’s surprising US inflation data, and open interest in call options has almost tripled. in May, according to analysts at JPMorgan.
The bank’s forecast is for Brent to end 2021 at $ 74.
Barclays expects Brent and WTI oil prices to average $ 66 per barrel and $ 62 per barrel, respectively, this year. The bank cut demand estimates for the Asia Emerging Markets region (excluding China), pointing to the risk of further declines if the recent spike in contagion persists.
With information from Reuters and AFP.
