Oil futures settled back under $60 a barrel Thursday as traders weighed energy-demand implications tied to Greece’s debt woes and looked ahead to next week’s deadline for a deal on Iran’s nuclear program.
On the New York Mercantile Exchange, July crude declined by 57 cents, or 1%, to settle at $59.70 a barrel following a loss of 1.2% a day earlier. Brent crude for August delivery fell 29 cents, or 0.5%, to $63.20 a barrel on London’s ICE Futures exchange. “For crude oil, the main impact from Greece would be on what that means for [the] U.S. dollar and for European demand,” said Colin Cieszynski, chief market strategist at CMC Markets.
Greece and its international lenders met for another an intensive round of meetings Thursday, as they tried to reach a reform deal before a bailout deadline on Turesday, June 30. The oil market is also looking at another deadline that same day on Iran’s nuclear program. Officials have said talks may go beyond the end of June but a deal to curb the country’s nuclear program is still in the cards. If a deal between Iran and the West is reached, it could ease the international sanctions against Tehran and release more Iranian crude on the already oversupplied global market.
Still, UBS on Thursday raised its 2015 Brent forecast to $61.50 from $56.25 and the 2016 Brent outlook to $70 from $67.50, citing “clear signs of slowing non-OPEC investment, which will impact supply-side growth.”
The U.S. Energy Information Administration reported Wednesday that domestic oil inventories fell by a larger-than-expected 4.9 million barrels last week, but stockpiles of gasoline and distillates increased. “It’s interesting how oil rallied in the winter when U.S. inventories were rising and is flat to slightly lower now that U.S. [crude] stockpiles are coming back down again,” said Cieszynski. “This suggests that U.S. supplies peaking and coming back down was already priced in by $60 WTI.”