London: Brent oil futures inched above $108 a barrel on Thursday as the market waited for further indications on whether a preliminary deal between world powers and Iran over Tehran’s nuclear programme could be reached this week.
Brent crude rose 18 cents to $108.24 a barrel by 1237 GMT, after gaining the most in a week and ending up $1.14 on Wednesday. US oil was up by 23 cents at $94.08 a barrel, after settling 4 cents lower.
In Geneva, major powers resumed talks on Wednesday with Iran over its nuclear programme. The United States warned it would be “very hard” to clinch a breakthrough deal, policymakers have said an interim accord on confidence-building steps could finally be within reach.
“Coming towards the end of the year, there are two taperings that people are watching — the tapering of Fed bond purchases and Iranian sanctions,” Olivier Jakob at Petromatrix consultancy in Switzerland said. Both would depress prices.
Investors have heightened expectations that the US Federal Reserve (Fed) will scale back its economic stimulus, and upcoming US data will be eyed closely for further clues.
But the oil market remained stuck near the Wednesday’s close waiting for new indicators. Unrest in Libya has helped support prices by stoking supply concerns.
“What we’re probably looking at here is a market still in search of catalysts,” Harry Tchilinguirian, head of commodity market strategy at BNP Paribas said.
Iran’s deputy foreign minister said on Thursday the country would not stop its enrichment programme but France’s foreign ministry was hopeful of striking an accord this week.
“Investors will watch to see whether the Iranian foreign minister flies into Geneva for the talks. If we hear that, then it’s a sign something will be signed,” Jakob at Petromatrix said.
An agreement may help defuse a decade-old standoff and dispel the spectre of a wider Middle East war over the Islamic Republic’s nuclear ambitions, which has kept oil near $100 a barrel despite a weak consumption outlook.
US DATA, STOCKS Investors were eyeing upcoming weekly US jobless figures and Markit flash manufacturing Purchasing Managers’ Index (PMI) for further clues on the Fed’s decisions.
“The manufacturing data feeds into the Fed’s thinking but if they set themselves a threshold of 6.5 percent unemployment to be reached before an eventual taper takes place, that’s what you have to be looking for,” BNP’s Tchilinguirian said.
Minutes of the US Fed’s October 29-30 policy meeting released on Wednesday showed officials felt they could decide to start scaling back stimulus at one of their next few meetings, which would boost the dollar and weigh on commodities such as oil.
