LONDON—Oil prices fell on Friday on continuing concerns about
oversupply as investors keep an eye on Greek bailout talks and the
looming deadline for Iran's nuclear deal.
After staging a 40% rally in the spring on expectations of
strong demand and production cuts, price movements have been
confined to a narrow band in the past two months because the global
glut of oil shows few signs of abating.
"The market appears to have been set on cruise control, but the
road remains rife with hazards," said analysts at Barclays. "Prices
face downward pressure for the remainder of the year on resilient
oil supplies."
Brent crude for August delivery fell 0.3% to $63 a barrel on
London's ICE Futures exchange. On the New York Mercantile Exchange,
West Texas Intermediate futures for July were trading down 0.4% at
$59.43 a barrel.
According to Michael Poulsen, oil analyst at Global Risk
Management, "this weekend and early next week will be highly
dominated by both the Greek debt issue and Iranian nuclear deal,
both with deadlines on 30 June."
The uncertainty of the outcome of either of the deals is
weighing on oil prices at present and markets are looking for
direction, he added.
"Expect volatility on any news from the negotiations in the
coming days," Mr. Poulsen said.
European finance ministers have pushed talks over a Greek
bailout deal to this weekend, after failing to reach an agreement
this week. Failure to clinch a deal could put Greece on the road to
bankruptcy and exit from the common currency area, which could roil
financial markets. A Greek default could also hurt European oil
demand, analysts said.
Meanwhile, in Iran, Supreme Leader Ayatollah Ali Khamenei has
taken a harder line over his country's nuclear program this week,
putting at risk negotiations for a final agreement ahead of the
June 30 deadline. A final agreement to curb Iran's nuclear program
next week is expected to pave the way for the lifting of Western
sanctions and allowing of additional Iranian crude to be exported
to global markets, which would pressure oil prices further.
The latest U.S. oil drilling rig count—a proxy for activity in
the industry—will be released later on Friday by Baker Hughes Inc.
The number of rigs has fallen sharply since oil prices headed south
last year. There are now about 61% fewer rigs working since a peak
of 1,609 in October.
The rate of decline, however, has slowed in recent weeks and
some shale oil companies say they could add rigs in the coming
months if prices stabilize near the current levels.
Nymex reformulated gasoline blendstock for July—the benchmark
gasoline contract—rose 0.1% to $2.0374 a gallon, while ICE gasoil
for July changed hands at $572 a metric ton, up $1.75 from
Thursday's settlement.
Eric Yep contributed to this article
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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