Crude Oil Rises As Iran Challenges IAEA's Powers To Inspect

(RTTNews) - Crude oil made sharp gains on Wednesday, even as the Israel-Iran ceasefire holds, as Iran has challenged the IAEA's power to inspect its nuclear sites without its security council's approval. A falling US dollar also offered support for oil.

WTI Crude Oil for August delivery closed up by $2.00 at $67.45 per barrel today.

September month Brent Crude was last seen trading up by $2.02 to $69.13.

Data from the American Petroleum Institute revealed US crude oil inventories rose by 0.680 million barrels for the week ending June 27. The increase broke a four-week declining streak, surprising investors as markets had anticipated a 2.26 million-barrel decrease.

Energy Information Administration data revealed that gasoline demand has dropped to 8.6 million barrels per day, sparking concerns about the much-anticipated peak summer travel consumption in the US. Usually during summertime, 9 million is the baseline consumption in healthy market conditions.

On the geopolitical front, Iran enacted a law today which forbids any inspection of its nuclear sites by the International Atomic Energy Agency without prior approval by the nation's Supreme National Security Council. Though investors are pricing in some geopolitical risk premium from Iran's move, the truce brought on by US President Donald Trump on June 24 between the warring Israel and Iran still continues to hold and no disruption to the oil supply chain is foreseen as of now.

Oil and energy traders are awaiting the OPEC+ meeting on July 6 wherein the cartel is reportedly planning to agree an output raise by 411,000 bpd from August. However, much of this supply side concern has been already priced in by investors.

The US monthly employment report is awaited tomorrow which could shape the depth and timing of interest rate cuts by the US Federal Reserve in the coming months. A lower interest rate regime could boost economic activity and thereby increase oil demand.

On the trade side, the July 9 deadline set by Trump for tariff negotiations to all its trading partners is approaching soon. Canada, China, India are reportedly catching up, while the EU is preparing to make concessions to sign a deal with US.

Analysts feel that a streamlined and stable tariff regime could bolster global trade and, in turn, trigger oil and energy demand.