Oil speculators looking to trade on the view that Iran may soon flood the world market with oil had a short window Tuesday. The price of WTI Crude rose nearing $53 per barrel. Jeff Mower, director, Americas Oil News, tells FOXBusiness.com, “The Iran deal timeline does not suggest Iranian exports of crude will increase significantly this year.” Mower adds the timeline for an increase could be pushed out well into 2016 if it happens at all.
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The timing of the landmark deal, which will lift sanctions imposed by the United States, the European Union and the United Nations, against Iran remains fluid. Any removal is dependent on whether or not Iran agrees and complies with the terms to curb its nuclear program. Tuesday the White House stressed that the deal will prevent Iran from acquiring a nuclear weapon.
Leaders in Tehran are expected to disclose the compliance details on October 15. If sanctions are lifted, Commerzbank predicts Iranian oil could rise by 500,000 barrels by mid-2016 and another 500,000 by year-end 2016.
Until then, fundamentals such as supply-demand will continue to dictate the oil trade. Although crude prices have rebounded from 2015 lows of around $43 per barrel, the market remains “oversupplied” notes Commerzbank. Last month, Saudi Arabia dialed up its crude oil output to 10.5 million barrels per day according to OPEC.
Even so, recent U.S. data suggests some of the slack is being absorbed. Last week, the American Petroleum Institute (API) reported that crude supplies declined by 958,000 barrels, more than expected. As did gasoline inventories which fell by 2.04 million barrels. FOX Business Network contributor Phil Flynn, of The PRICE Futures Group, noted the drop reflects strong driving demand over the Fourth of July holiday. Today, the Energy Information Administration’s (EIA) reported that drivers are enjoying the lowest gas prices since 2009. The average retail price for motor gasoline this summer (April through September) is expected to be $2.67 per gallon.
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A fresh snapshot of the oil market will be delivered late Tuesday with the release of the American Petroleum Institute’s weekly report. API Data is often a pre-cursor to the Energy Information Administration’s (EIA) report released each Wednesday.