Oil futures on Tuesday ended the first half of the year with a hefty gain, settling higher for the session with the deadline for a final agreement over Iran’s nuclear program extended by a week.
Meanwhile, financial markets remained jittery as Euro zone finance ministers rejected Greece’s last-minute request to extend its bailout program, but said it will consider a request for a new rescue program. On the New York Mercantile Exchange, August West Texas Intermediate crude tacked on $1.14, or 2%, to settle at $59.47 a barrel. It had tallied a four-session loss of more than 4%. Tracking the most-active contracts, prices were up roughly 11.6% year to date. For the month, prices saw a loss of about 1.4%.
Brent crude for August delivery rose $1.58, or 2.6%, to $63.59 a barrel on London’s ICE Futures exchange. Prices were close to 11% higher year to date. Tehran and the West were supposed to have a final agreement Tuesday regarding Iran’s nuclear program, which was expected to eventually send million of barrels of Iranian oil onto the global market once sanctions on the nation were lifted. But the U.S. State Department said the parties effectively extended the deadline for the talks to July 7.
Richard Hastings, macro strategist at Global Hunter Securities, said he believes Iran is “unlikely to move the oil markets to severe oversupply, partly because global demand for their product is already so full.”
Still, many analysts have shown concern that if Iranian sanctions are lifted, Iran will be able to add millions of barrels oil to the global market. Oil traders were also monitoring developments in Greece. “In case of contagion from Greece, the economies of other peripheral countries — Spain, Italy, and Portugal — will suffer,” analysts at PVM brokerage said. “Oil demand will be impacted which will put further downward pressure on prices.” Over in China, apparent oil demand in May increased by 8.2% from a year earlier to an average of 10.36 million barrels a day, according to a Platts analysis of Chinese government data dated Tuesday.
Oil output from the Organization of the Petroleum Exporting Countries, meanwhile, climbed 744,000 barrels to 32.134 million a day this month, according to a Bloomberg survey released Tuesday. Weekly petroleum-supply reports will be released by the American Petroleum Institute late Tuesday and early Wednesday by the U.S. Energy Information Administration. Analysts polled by Platts forecast a decline of 1.3 million barrels in crude supplies.