Oil price under the spell of the nuclear negotiations, US inventory drop supports prices

Brent gained by nearly 2% in price yesterday and at just shy of $65 per barrel this morning is right back in the middle of the corridor in which it has been trading over the past two months.

The nuclear negotiations with Iran are keeping the market on tenterhooks: the chances of an agreement finally being reached were doubtless further reduced when it was reported that the Iranian parliament had issued a law which prohibits UN inspectors from accessing military and other facilities.

Prices were however also boosted by the inventory report of the American Petroleum Institute which showed that crude oil stocks in the US had decreased by 3.2 million barrels last week. That is nearly twice as much as the market expects the official inventory data to indicate today. 

Market participants are also likely to be focusing their attention this afternoon on the trends on the product markets, because robust gasoline demand so far this summer driving season has caused gasoline prices to rise disproportionately.