SINGAPORE – Oil prices rebounded in Asia Monday on news that a labor strike at a US refinery would end soon, tempering recent losses fueled by an agreement to curb Iran’s nuclear program.
US benchmark West Texas Intermediate (WTI) gained 90 cents to $50.04 while Brent rose 69 cents to $55.64 in afternoon trade.
Prices fell sharply after six world powers and Iran agreed Thursday on a framework to rein in Tehran’s nuclear ambitions. Markets were closed Friday for Easter.
The tentative nuclear deal, if confirmed, would lead to the lifting of crippling economic sanctions against Iran and allow its crude exports back on the world markets, which are already oversupplied.
But Nicholas Teo, market analyst with CMC Markets Singapore, said Monday’s price rebound was driven by news that unionized workers at one of the remaining five US oil refineries still on strike had agreed to return to work next week.
“This could provide a further support and possibly boost the WTI’s price,” Teo said in a market commentary.
Also providing support was news that major producer Saudi Arabia jacked up prices for all May sales to Asia, saying demand was improving.
But Sanjeev Gupta, who heads the Asia-Pacific Oil and Gas practice at professional services firm EY, said prices are likely to fall during the week as traders digest the impact of the agreement between Iran and the US-led western powers.
“We anticipate stronger negative reactions to the benchmark prices this week,” Gupta said.
The outline of the deal marked a major breakthrough in a 12-year standoff between Iran and the West, which has long feared Tehran wants to build a nuclear bomb. Iran has insisted the nuclear programme is for peaceful purposes.