AFP – Global oil prices rose on Tuesday, but gains were capped by the prospect of a return of Iranian supplies, with a deal to curb Tehran’s nuclear programme taking effect next week.
New York’s main contract West Texas Intermediate for February delivery added 21 cents to $92.01 a barrel.
Brent North crude for February firmed two cents to stand at $106.77 in London around midday in London.
Crude futures had fallen on Monday on oversupply worries following news that the interim Iran deal will take effect from 20 January.
Under the deal that was initially reached in November, Iran agreed to curb parts of its nuclear drive for six months in exchange for receiving modest relief from international sanctions and a promise by the so-called P5+1 – Britain, China, France, Russia, the United States plus Germany – not to impose new sanctions against its hard-hit economy.
This will give both sides time to come up with a more comprehensive solution to the dispute.
“Investors are quite aware that prices will come under pressure if Iranian oil eventually returns to the market, but they also know that it will take a while for production to return,” Fat Prophets analyst David Lennox told AFP.
Tehran has been subject to painful international sanctions aimed at bringing to an end its nuclear programme, which the West claims is being used to develop atomic weapons. Iran vehemently denies the claims.
The Islamic republic, a member of the OPEC cartel, pumped 2.8 million barrels of crude in December, according to data from the US Energy Information Administration (EIA).
Dealers were also keenly awaiting the latest official US stockpiles data to be released on Wednesday for clues about demand in the world’s biggest oil consumer amidst a record-breaking North American cold snap.
“The extreme weather in the United States not only affects demand but has caused several supply disruptions as well,” Lennox added.
The US government’s Department for Energy (DoE) will publish commercial crude inventory levels for the week ending 10 January.
Later on Tuesday, traders will digest separate weekly stockpiles data from US industry body the American Petroleum Institute.