Crude oil prices steadied yesterday, as strong demand for oil products helped to balance a global overhang of crude oil for immediate delivery.
North Sea Brent crude oil traded within a fairly narrow range as investors eyed a weak physical crude market in the Atlantic basin amid reports of stronger demand for gasoline and diesel in the US and Europe.
Official prices for Nigerian crude have hit their lowest in at least a decade with up to 10 million barrels of unsold light, sweet crude oil capping Atlantic basin prices.
However, demand for oil products is fairly strong. US petrol demand in the week to June 19 hit the highest seasonal level since 1991, according to the US Energy Information Administration.
Brent for August was flat at $63.49 a barrel, after ending the previous day down 96c, or 1.5%. US crude for August was down 25c at $60.02 a barrel, after finishing Wednesday down 74 cents.
“Reports of unsold physical cargoes in the North Sea combined with a Brent crude oil contango (when prices for future delivery exceed spot prices) that shows no signs of tightening are a warning that the market is currently not tightening up into the high demand season as one should expect,” said Bjarne Schieldrop, analyst at SEB Markets in Oslo.
Analysts said a June 30 deadline for negotiations between Iran and world powers that could lift sanctions against the oil-producing nation were forcing oil investors to take a cautious approach, adding to the lack of price direction.