FX.co ★ Oil prices continue nosediving

On Wednesday, oil prices continue losing in value. The downtrend was mainly caused by a possible rise in the oil supply from Iran.

Thus, Brent futures for July delivery dropped by 1.18% to settle at $69.7 per barrel. At the same time, WTI futures for July delivery lost 1.24% to trade at $64.69 per barrel, whereas WTI June futures declined by 1.16% to $64.73 per barrel.

The downtrend was mainly caused by the news that Iran may increase its oil supply in case of successful negotiations with the US. The key aim of the talks between Iran and some large countries is to sign again the agreement reached in 2015. This document imposes restrictions on the Iranian nuclear program. If the parties come to a consensus, the US will lift sanctions, thus allowing Iran to increase its oil exports.

Moreover, investors focused on the data that was published yesterday by The American Petroleum Institute (API).

According to the report, in the previous week, US oil reserves advanced by 0.6 million barrels. Later on Wednesday, the crude oil inventories figures will be provided by the US Energy Department.

Analysts expect a decline of 2.9 million barrels in the oil reserves and a rise of 0.6 million barrels in petrol reserves amid suspensions of the Colonial Pipeline. Earlier, a hacker attack paralyzed oil supplies.

On Tuesday, at the end of the trading session, oi futures showed a significant drop. WTI slumped from more than a 2-year high, whereas Brent crude broke the level of $70 per barrel for the first time since March 2021.

June WTI futures lost 1.2% to settle at $65.79 per barrel and Brent futures for July delivery fell by 1.1% to $68.71 per barrel.

What is more, most assets in the futures market are trading sideways as in most countries, a rise in demand is under pressure exerted by COVID-19 and lockdowns.

However, in recent days, hopes for further lifting of lockdown measures in western countries, including the UK and the US, have become a key driver of oil market growth.

At the same time, OPEC+ performed the first of three planned monthly increases in global production. According to the report disclosed yesterday, the organization is still following its plan. In this case, a rise in oil global oil demand will come along with higher demand in the US and China.