Oil prices subsided on Wednesday regardless of the prospect of more robust global economic growth as talks to revive the nuclear agreement with Iran open the possibility of easing oil exports sanctions. Brent Crude Futures fell 36 cents, or 0.6%, to $62.38 a barrel on 0843 GMT, while West Texas crude oil fell 36 cents, or 0.6%, at $58.97.
Prices were traded in previous positive areas in an earlier session, supported by improving economic data. “Optimism at the global economic outlook encourages sentiment in the crude oil market,” said an analyst from ANZ Bank.
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On Tuesday, the International Monetary Fund said that public expenditure that had been unprecedented to fight Covid-19 would encourage global growth to 6% this year, a level that was not achieved since the 1970s. However, the possibility of a leap in US fuel inventory and Iranian talks weighed.
US crude stocks were down 2.6 million barrels in the week ended April 2, while gasoline supplies rose 4.6 million barrels and stock distillation rose 2.8 million barrels, said three market sources, quoting the American Petroleum Institute (API). Official data will be released on Wednesday.
Meanwhile, Iran and the world Powers held what they described as “constructive” talks on Tuesday. They agreed to form a working group to discuss the possibility of reviving the 2015 nuclear agreement, which could cause Washington to raise sanctions in the Iranian energy sector and increase oil supply.
“Iran is the largest single reverse supply risk for the oil market,” said Stephen Brennock of Oiloker Brokerage PVM. Oil prices fell earlier this week after the organization of petroleum exporting countries (OPEC) and allies, a group is known as OPEC +, agreed to gradually reduce the cutting of oil output from May.
But analysts said the increase’s size is unlikely to have a significant impact on the market rise. “OPEC + decision … it is not expected to endanger oil balancing and hence the background of the price increases,” Brennock said.
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