Oil prices rose slightly on Friday after three days of losses, driven higher by the looming storm in the Gulf of Mexico. Oil prices were, however, on track for a weekly fall as investors braced for the return of Iranian crude supplies after officials said Iran and world powers made progress on a nuclear deal. Brent crude futures settled at $66.44 a barrel on Friday, while U.S. West Texas Intermediate was at $63.54 a barrel.
A weather system forming over the western Gulf of Mexico has a 40% chance of becoming a cyclone in the next 48 hours, the U.S. National Hurricane Center (NHC) said on Friday. This early storm prompted traders to buy crude ahead of the weekend in anticipation of potential production shut-ins. However, the gains were limited by the expectation that Iran could add a million or more barrels per day of oil production later this summer.
The two benchmarks fell almost 3% on the week, after Iran’s president, Hassan Rouhani, said the United States was ready to lift sanctions on his country’s oil, banking and shipping sectors. Iran and world powers have been in talks since April on reviving the 2015 nuclear deal and the European Union official leading the discussions said on Wednesday, he was confident a deal would be reached.
Still, investors remain upbeat about fuel demand recovery this summer as vaccination programs in Europe and the United States would allow more people to travel, although rising cases of infections across parts of Asia are raising concerns. U.S. energy firms are also showing optimism, adding oil and natural gas rigs for a fourth week in a row, as higher oil prices prompted some drillers to return to the well-pad. The oil and gas rig count, an early indicator of future output, rose by two to 455 last week.