30 Mar 2015
Brent Crude weakens on a possible Iran deal
FXStreet (Mumbai) - Brent Crude futures retreated on Monday as a possible deal over Iran’s nuclear program could bring an end to sanctions and increase Iranian oil exports.
Supply glut and strong USD weigh over prices
Oil markets remain well supplied as shown by recent data that global production outstrips demand by around 1.5 million barrels per day (bpd), filling oil inventories from China to US. Demand for Crude from the refinery sector also tends to fall in the middle of the year. Meanwhile, the OPEC group is unlikely to announce production cuts in order to support prices. In such a scenario, Iran deal and the resulting increase in Iranian oil exports would only worsen the supply glut situation.
Meanwhile, sustained strength in the US dollar is also keeping price gains under check. "Continued dollar strength is (also) a headwind to the oil price recovery," Barclays said, forecasting the dollar would rise above parity with the euro by the fourth quarter of 2015.
Brent Crude Technical Levels
Brent futures currently trade at USD 55.76/barrel; down 1.15% for the day. Prices have declined below hourly 200-MA at 55.80. Failure to rise above the same could push prices lower to 54.69 levels. On the other hand, rise above 55.80 could see futures re-test 56.40 levels.
Supply glut and strong USD weigh over prices
Oil markets remain well supplied as shown by recent data that global production outstrips demand by around 1.5 million barrels per day (bpd), filling oil inventories from China to US. Demand for Crude from the refinery sector also tends to fall in the middle of the year. Meanwhile, the OPEC group is unlikely to announce production cuts in order to support prices. In such a scenario, Iran deal and the resulting increase in Iranian oil exports would only worsen the supply glut situation.
Meanwhile, sustained strength in the US dollar is also keeping price gains under check. "Continued dollar strength is (also) a headwind to the oil price recovery," Barclays said, forecasting the dollar would rise above parity with the euro by the fourth quarter of 2015.
Brent Crude Technical Levels
Brent futures currently trade at USD 55.76/barrel; down 1.15% for the day. Prices have declined below hourly 200-MA at 55.80. Failure to rise above the same could push prices lower to 54.69 levels. On the other hand, rise above 55.80 could see futures re-test 56.40 levels.