ANS stable near $70
 Click here to go to the full PDF version of this issue, with any maps, photos or other artwork that appears in
some of the articles.
US inventory surge, US/Iran nuclear deal progress pressure prices
Steve Sutherlin Petroleum News
Alaska North Slope crude dove $1.38 May 21 to close at $67.67 per barrel -- narrowly retaining its position in the top quadrant of the $60s, while West Texas Intermediate dropped 99 cents to $61.57 and Brent fell 47 cents to close at $64.91.
Prices were chilled by a surprise swell in U.S. crude stocks, and word of a fresh new round of U.S./ Iran nuclear negotiations to take place in Rome May 23.
U.S. commercial crude oil inventories for the week ended May 16 -- excluding Strategic Petroleum Reserve levels -- increased by 1.3 million barrels from the previous week to 443.2 million barrels -- 6% below the five-year average for the time of year, the U.S. Energy Information Administration said in its weekly petroleum report.
Analysts answering a Reuters poll had called for a 1.3 million barrel crude drawdown, while analysts surveyed by The Wall Street Journal had predicted an 800,000-barrel draw.
Gasoline and distillate levels rose also.
Total motor gasoline inventories increased by 0.8 million barrels to 225.5 million barrels -- 2% below the five-year average for the season, the EIA said. Distillate fuel inventories increased by 0.6 million barrels for the week to 104.1 million barrels -- 16% below the five-year average for the time of year.
Sentiment was soured by the EIA data, ANZ Research analysts said in a report quoted in the Wall Street Journal.
There is also a risk-off tone cast on the market by a weak U.S. Treasury auction, ANZ analysts added.
"While rising U.S. inventories have raised concerns, some investors expect the summer driving season starting after Memorial Day weekend to draw down stocks, limiting further downside," Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment told Reuters. "Traders remain cautious, avoiding large positions as they assess conflicting signals over U.S.-Iran nuclear talks and a media report of potential Israeli strikes on Iranian nuclear facilities."
An agreement on Iran's atomic energy activities could return more of Iran's oil supplies to world markets, unfettered by U.S. sanctions. Even with sanctions in place, Iran produces 3.3 million barrels of crude per day, International Energy Agency data shows. Iran is the third-largest producing member of the Organization of the Petroleum Exporting Countries.
Sanctions and tanker blacklisting have scant impact on Iran's crude exports, according to Anas Alhajji, managing partner at Energy Outlook Advisor.
"Almost all Iranian oil is going to China," Alhajji told MarketWatch, adding that Iran exports some 1.5 million to 1.6 million barrels per day of oil by sea, and some100,0000 to 150,000 bpd by land.
A nuclear deal would allow Iran to boost oil exports by 300,000 to 400,000 barrels per day if sanctions were eased, StoneX analyst Alex Hodes told Reuters.
Conversely, the specter of supply interruptions stemming from worsening of the Iran situation could cause a world supply deficit.
The hopeful news of U.S./Iran talks, revealed by Oman's foreign minister, won out -- reversing gains in futures prices seen earlier in the May 21 session sparked by CNN reports citing U.S. intelligence sources, saying Israel is preparing to strike Iran's nuclear facilities. The sources were unsure if Israel had reached a final decision on an attack.
ANS hovers near $70 During the trading week from Wednesday-to-Wednesday, ANS stayed within striking distance of $70 -- in the course of falling $1.40 from its May 14 close of $69.07 to a close of $67.67 May 21.
ANS gained 52 cents May 20 to close at $69.05, but WTI fell 13 cents to close at $62.56 and Brent fell 16 cents to close at $65.38.
On May 19, ANS edged 6 cents higher to close at $68.53, WTI added 20 cents to close at $62.29, and Brent added 13 cents to close at $66.54.
ANS lifted 69 cents May 16 to close at $68.47, as WTI lifted 87 cents to close at $62.49 and Brent lifted 88 cents to close at $65.41.
On May 15, crude benchmarks fell some 2% on comments that a U.S. Iran nuclear agreement might be close at hand. ANS plunged $1.29 to close at $67.78, WTI plunged $1.53 to close at $61.62 and Brent plunged $1.56 to close at $64.53.
U.S. President Donald Trump, in remarks during his Middle East tour, said he was near a deal with Iran -- and that Tehran had "sort of" agreed to the terms, Reuter's reported.
Ali Shamkhani, adviser to Iran's Supreme Leader Ayatollah Ali Khamenei said in an NBC interview that Iran would commit to never making nuclear weapons, and that the country would dispose of its stores of highly enriched uranium.
On May 21, ANS closed at a $6.10 premium to WTI, and at a $2.76 premium to Brent.
| 