Oil prices jumped towards their week high after Saudi Arabia, the world’s top oil exporter, increased prices for its Asian customers for the second month running signaling a growth in demand.
West Texas Intermediate, the UIS benchmark, regained ground after tumbling more than 5% on Thursday on news that Iran and the world powers had agreed on a framework for a deal to constrain the country’s nuclear program.
WTI oil for May delivery most recently advanced $ 2.38 or 4.84% to trade at $51.84 a barrel on the New York Mercantile Exchange.
Brent futures, the international benchmark, also shrugged worries that the interim nuclear deal would see Iran flood the already flooded oil market to advance $2.91 or 5.26% to $56.08 a barrel on the London-based ICE futures Exchange.
“While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles,” Morgan Stanley analysts told Reuters.
“Even if a final deal is reached, we do not expect any physical market impact before 2016,” the analysts said.
The Prices were also helped up by dollar weakness caused by Friday’s job report which indicated that the US only added 126,000 non-farm payrolls in March, the lowest in more than 15 months.
The biggest market driver, however, was the announcement by Saudi Arabia that it was going narrow the discount o its main Arab Light grade crude for next month’s deliveries to Asia.
Saudi Aramco , the state supported Saudi Arabian Oil Company, also announced that it was going to hike its official selling prices for Asia with global demand continuing to improve as cheap prices boost use.
“The Saudis raised their prices to Asia and it’s kind of supportive,” Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, told Bloomberg.
“People realized that we aren’t going to see a big influx of Iranian oil in the market for at least the next three to six months. The risk reward is poised on the upside.”
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