Oil prices slipped Tuesday, struggling to move significantly above the $50 mark amid persistent concerns over a global oil glut.
A stronger U.S. dollar is also weighing on oil prices after the ICE U.S. dollar index hit a three-month high on Monday, triggering a selloff across commodities as investors shifted to other asset classes.
Light, sweet crude futures for delivery in August CLQ5, +0.00% traded at $50.10 a barrel, down 4 cents, or 0.1%, on the New York Mercantile Exchange. It lost 1.5% in the previous session, falling to a near four-month low of $50.15 a barrel. September Brent crude BRU5, -0.10% on London’s ICE Futures exchange gave up 4 cents, or 0.1%, at $56.61 a barrel.
Nymex crude has fallen for four consecutive trading sessions and is down around 16% so far this month, while Brent crude has declined for two consecutive sessions and has lost around 11% this month.
The strength in the U.S. dollar DXY, -0.19% may be driving investors away from commodities, with money managers holding the currency as the preferred store of value, analyst Tim Evans at Citi Futures said. He said concerns that a recovery in Iranian oil production would add to a global surplus in crude supply also continued to weigh on market sentiment.
On Monday, the U.N. Security Council unanimously endorsed the nuclear accord between Iran and the six world powers, setting in motion a yearslong process to eventually lift international sanctions in exchange for stringent new controls on Tehran’s nuclear program.
The provisions of the new resolution won’t come into effect for 90 days to give the U.S. Congress time to review the landmark accord. In a separate decision, European Union foreign ministers also agreed to lift sanctions at a future date.
Since the accord was signed last week, there has been a wide range of projections about the return of additional Iranian oil to the market, with most expecting significant volumes to emerge only next year.
“The deal paves the way for the removal of international sanctions by [first quarter 2016] at the earliest and we do not expect new exports in 2015,” analysts at BMI Research said in a report.
It expects a quick rise in Iran’s oil production over 2016, reaching 600,000 barrels a day of new output by the end of the year, but said production may stagnate after initial gains.
Later Tuesday, the American Petroleum Institute will publish weekly U.S. oil inventory data. Price-reporting agency Platts estimates the stockpiles to have decreased by 1.9 million barrels.
