Oil prices turned higher Friday, consolidating recent action and headed for a weekly gain, as global supplies remain tight and the market looks for possible new sanctions against Iran.
Earlier, a stronger dollar was credited with driving down the U.S.-based crude contract.
At last check, June West Texas Intermediate crude oil
rose 27 cents, or 0.8%, to $68.70 a barrel on the New York Mercantile Exchange. The contract is headed for a nearly 0.7% weekly gain, according to FactSet data. International benchmark July Brent
meanwhile, added 29 cents, or 0.4%, to $73.92 a barrel on ICE Futures Europe.
Oil prices are practically flat on Friday… after both benchmarks posted solid gains yesterday, buoyed by a tumble lower in the dollar, as well as continued speculation that the U.S. will impose fresh sanctions on Iran, said Christina Parthenidou, investment analyst at brokerage XM.
Dollar-denominated commodities like oil tend to have an inverse relationship with the dollar.
The ICE U.S. Dollar Index
rose 0.2% to 92.566, trading around its highest level since early January. The index was on track for a 1.1% weekly gain, which would mark a third straight week of advances.
Giovanni Staunovo, commodities analyst at UBS Wealth Management, said the oil market was mainly awaiting a decision from President Donald Trump on whether the U.S. will pull out of a 2015 international agreement to curb Irans nuclear program by a self-imposed May 12 deadline.
Prices have been bolstered in recent weeks on growing expectations Trump will abandon the deal, triggering a reimposition of economic sanctions on Iran that would hinder its oil output and reduce global supply. Brent climbed to more than three-year highs, breaching the symbolic $75-a-barrel threshold, on such expectations.
Irans foreign minister said on Thursday U.S. demands were unacceptable. European interests want to hand Trump a plan to save the Iran nuclear deal next week. But they have also started work on protecting E.U.-Iranian business ties if the U.S. president makes good on a threat to withdraw, Reuters reported.
This will be the main issue preoccupying the oil market, with fundamental factors such as stock levels and production data taking a back seat until this has been resolved, according to analysts at Commerzbank.
Oil-market participants are looking ahead to weekly data Friday afternoon from Baker Hughes on the number of rigs drilling for oil in the U.S., a proxy for activity in the sector.
Among the energy products on Nymex Thursday, June gasoline
rose 0.5% to $2.0983 a gallon, while June heating oil
advanced by 0.9% to $2.1317 a gallon.
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