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Oil prices extend gains

Oil prices are recovering this morning after Wednesday’s pullback. By the time of writing, Brent was down 2.25% at $92.69/bbl, while WTI was trading 2.36% lower at $91.44/bbl.

Since the beginning of the week, crude futures have been in decline. On Wednesday, the main negative driver of the market was US inventory data, which unexpectedly showed a build of 1.12 mln bbl, as opposed to the median consensus that called for a 1.5 mln bbl drawdown. The situation surrounding Iran remains unclear. The French Foreign Ministry predicts a nuclear deal between Western countries and Iran could be sealed within the next few days, although it still remains unclear whether Iran is ready to back down from its demands that the US should lift its oil sanctions in exchange for Iran agreeing to abandon its nuclear program. And while the potential lifting of sanctions against Iran is bearish for the oil market, OPEC does not yet expect to see a significant supply overhang, which would require the cartel and its allies to immediately take steps to prevent prices from collapsing.

The $90/bbl mark still commands fairly strong support, but if the Brent price breaks through this level, it could tumble further to $88-89/bbl. Today, Brent prices are likely to reach $92.5/bbl.


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