Oil gains on short-covering, nuclear talks

[HOUSTON] Oil prices gained on Friday (May 23) as US buyers covered positions ahead of the three-day Memorial Day weekend amid worries over the latest round of nuclear talks between American and Iranian negotiators.

Brent crude futures settled at US$64.78 a barrel, up 34 US cents, or 0.54 per cent. US West Texas Intermediate crude futures finished at US$61.53, up 33 US cents, or 0.54 per cent. “I think there is some short-covering going into this weekend,” said Phil Flynn, senior analyst with Price Futures Group.

The Memorial Day weekend kicks off the US summer driving season, the period of highest demand for motor fuels.

US and Iranian negotiators met in Rome on Friday in another round of talks aimed at curtailing the Islamic Republic’s nuclear programme. Traders are afraid crude supplies could be interrupted if talks fail to reach a deal, Flynn said.

“The talks are not looking good,” he said. “If these are the last talks and there’s no deal, it could give a green light to the Israelis to attack Iran.”

President Donald Trump said on Friday that he is recommending a straight 50 per cent tariff on goods from the EU starting on Jun 1, saying the bloc has been hard to deal with on trade.

“The oil market has been under pressure from two things,” said Andrew Lipow, president of Lipow Oil Associates. “We await the impact of tariffs on oil demand and Opec+ is expected to increase supply again this summer.”

Opec+, comprising the Organization of the Petroleum Exporting Countries and allies led by Russia is holding meetings next week expected to yield another output increase of 411,000 barrels per day (bpd) for July.

Reuters reported this month that the group could unwind the rest of its 2.2 million bpd voluntary production cut by the end of October, having already raised output targets by about one million bpd for April, May and June. REUTERS