Oil prices were rising early on Friday, heading for a weekly gain but off recent highs, as market participants are growing apprehensive a week ahead of the May 12 deadline for the U.S. sanctions waiver decision regarding Iran.
At 08:50 a.m. EDT on Friday, WTI Crude was up 0.47 percent at $68.75, while Brent Crude was trading up 0.52 percent at $74.00. Both benchmarks slipped a little in mid-day trading.
U.S. President Donald Trump has another week to decide whether to waive the sanctions against Iran. Expectations that he would not waive the sanctions this time around have supported the price of oil over the past month, with Brent briefly breaching above $75 to its highest price level since November 2014.
Analysts are still struggling to quantify the impact of possible fresh sanctions on Iran and prices are expected to be volatile as the deadline for President Trump's decision is getting closer.
The month of May could be a very important one for oil prices with geopolitical risks stacked and too close to call. Apart from the Iran sanctions waiver, the market will be looking to the Venezuela presidential election that socialist leader Nicolas Maduro has scheduled for May 20.
"The geopolitical landscape will therefore remain tense and price conditions volatile," Stephen Brennock, an analyst at PVM Oil Associates, told Platts on Friday. Related: Will Higher Oil Prices Destroy Demand?
Commenting on the Iran sanctions waiver, Commerzbank analysts said in a note:
"This will be the main issue preoccupying the oil market, with fundamental factors such as stock levels and production data taking a backseat until this has been resolved".
Although geopolitical risks trump fundamentals right now, oil prices could react later today to the Baker Hughes rig count data, a proxy for U.S. production growth, and to the U.S. dollar movements after the U.S. jobs report that showed unemployment rate dropping to an 18-year low to 3.9 percent, but non-farm payrolls growth missing expectations.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
Comments
Biggest risk to oil prices is the 2M short hedge contracts that are almost all money losers right now starting to be covered because producers don't want to keep embarrassing themselves with hedge losses. That's massive compared to the ~800k spec long position.