Brent Slips As Supply Concerns Ease
Brent crude oil slid on Tuesday morning as the risk of supply interruptions faded. The commodity traded at $108.50 at 7:03 GMT on Tuesday morning as losses due to easing supply fears were mitigated by forecasts of falling crude inventories in the US.
Tension between the West and Iran over Tehran's nuclear capabilities has kept oil prices above $100 for almost two years. The oil rich nation's oil exports have been slapped with sanctions in an effort to cut funding to its nuclear development program. Although past diplomatic efforts included offering to lift some of those sanctions, no forward progress between the two sides has been made.
Now, newly elected Iranian President Hassan Rouhani has shown interest in diplomatically resolving the tense relationship between Iran and the west. The new president's willingness to begin talks with the West and improve their relationship has eased fears that further sanctions, or worse an escalation of the tension, could limit supplies.
Also relieving some of the supply pressure was a report from Reuters which indicated that the supply disruptions in Libya are nearly resolved. Libyan Oil Minister Abdelbari al-Arusi issued a statement saying the government would end the protests affecting the nation's oil facilities.
Brent has found some support in preliminary estimates of US commercial crude and gasoline stockpiles. A Reuters survey forecast an average fall of 700,000 barrels for the week that ended on August 2nd. Now, Investors will be waiting for the weekly inventory reports from the American Petroleum Institute and the US Energy Information Administration to confirm the drop.
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