Oil prices ticked higher in Asian trade Friday after rising overnight as gains in China’s stocks markets gathered pace and Iranian nuclear talks likely headed for a setback.
Investors still remain cautious about the stability of Chinese equity markets, which have had a ripple effect on oil and commodities prices this week, but the stalling of Iranian nuclear talks could alleviate significant pressure on oil prices, traders said.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $53.04 a barrel at 0205 GMT, up $0.26 in the Globex electronic session. August Brent crude on London’s ICE Futures exchange rose $0.17 to $58.78 a barrel.
In the previous session, Nymex oil futures had settled 2.2% higher, snapping a five-session losing streak; while Brent crude had gained 2.7%.
“While the market may have regained some of the confidence lost during the prior price drop, we don’t see any fundamental support for a move higher,” analyst Tim Evans at Citi Futures writes.
He said preliminary data for June points to a 1.88 million-barrel-a-day surplus that was 1.07 million barrels larger than a year earlier, and rising oil inventories worldwide are also consistent with both a market surplus and the current price weakness.
Meanwhile, negotiations over an Iranian nuclear deal appear to be headed for a breakdown with senior Iranian officials saying the U.S. and European powers have backtracked on recent commitments including sanctions relief and the lifting of a United Nations arms embargo on Iran.
Iran and the U.S. on Thursday charged each other with an unwillingness to make crucial political decisions to conclude nearly two years of talks, making it unlikely that a deal will be reached within this week’s extended deadline.
