SINGAPORE, Oct 15: Brent oil edged below $111 per barrel on Tuesday ahead of talks over Iran’s nuclear programme that might eventually lead to a pick-up in its oil shipments, but the prospect of a U.S. Debt deal in Washington provided some support.
On Monday the United States held out the prospect of quick relief from sanctions for Iran if Tehran moved swiftly to allay concerns about its programme.
But any deal would be complex and would take time, both countries said ahead of a two-day meeting in Geneva on Tuesday. ‘No one should expect a breakthrough overnight,’ a senior U.S. administration official said.
Brent crude futures were trading 8 cents lower at $110.96 a barrel at 0526 GMT, after settling down in the two previous sessions.
U.S. Oil was down 25 cents at $102.16 a barrel, after closing 39 cents higher.
A month-long battle over U.S. Government spending may be edging closer to a compromise that would reopen federal agencies and push back the possibility of a default for several months, although hurdles remained as a Thursday deadline drew near.
‘Even though it looks like a deal could be finalised before the deadline, nothing has been decided yet. And with such uncertainty, it is not easy for oil traders or hedging managers to take one-sided positions,’ said Ken Hasegawa, commodity sales manager at Newedge in Tokyo. ‘All we can do is wait.’
‘I don’t think the oil market will react much (to a deal), but an agreement will prevent a sharp fall in oil,’ Hasegawa said.
The talks on Iran’s nuclear programme will be the first since the election of President Hassan Rouhani, who has tried to improve ties with the West to pave the way for an end to sanctions, which have cut Iranian oil exports by more than 1 million barrels per day.
Oil prices could fall around $10 per barrel in the event of Iran resuming full exports, according to Newedge.
South Korea more than doubled its Iranian crude imports to 140,000 barrels a day in September from August, customs data showed on Tuesday. Still, volumes remain close to the target of cutting shipments for the June-November period by 15 percent to extend a U.S. Sanctions waiver for another six months.
To win waivers, Iran’s crude buyers must continually reduce their shipments. Japan won its fourth six-month waiver last month, while Iran’s other top buyers, China, India and South Korea, have to renew exemptions in early December.
Elsewhere, Britain’s Grangemouth refinery began halting work on Monday ahead of a 48-hour strike. In 2008 a strike there interrupted flows of crude through the Forties Pipeline System and shut in production at 70 North Sea fields, pushing up Brent oil prices.
Oil investors will do without U.S. Oil inventory data this week for the first time since 1979, as the Energy Information Administration will not publish its weekly report scheduled for Wednesday due to a lack of government funding.
U.S. Commercial crude oil inventories were forecast to have increased 2.3 million barrels in the week to Oct. 11, a Reuters poll of analysts showed on Monday.
Industry group American Petroleum Institute will release its weekly inventory report on Wednesday.
Algeria’s energy minister said on Tuesday that current oil prices were ‘reasonable’ and that it was too soon to predict whether OPEC might change its output target at its meeting in December.
The Organization of the Petroleum Exporting Countries, which pumps more than a third of the world’s oil, meets on Dec. 4 in Vienna to decide whether to adjust its output target. (agencies)
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