WTI futures advance ahead of inventories data, Iran exports unclear, Libya clashes

West Texas Intermediate rose on Tuesday ahead of the release of a private and a government stockpiles reports that may show U.S. crude inventories fell for the first time in ten weeks during the seven days through November 22, signaling demand in the worlds top consumer is picking up. Sundays interim accord between Iran and six world powers continued to weigh on the market, although its effect was muted as export limitations remained standing and investors didnt expect more Iranian oil to enter the global market immediately. Disappointing housing data from the U.S. released on Monday also pressured prices while clashes between the Libyan army and armed militants fueled concern over supplies from Africas biggest crude reserves holder.

On the New York Mercantile Exchange, WTI oil for settlement in January rose by 0.36% to $94.43 per barrel by 8:23 GMT. Prices shifted in a narrow range between days high and low of $94.61 and $94.14 a barrel respectively. The American benchmark fell on Monday but trimmed its weekly decline to 0.4% following Tuesdays rebound.

Meanwhile on the ICE, Brent futures for delivery in January were down 0.26% on the day and traded at $110.72 a barrel at 8:23 GMT. Prices ranged between days high and session low of $111.07 and $110.52 a barrel respectively. The European benchmark rose on Monday but pared its weekly advance to 0.1% on Tuesday.

The oil market drew support on expectations that U.S. crude oil stockpiles fell last week, snapping nine straight weeks of gains. According to a weekly Bloomberg News Survey, U.S. crude inventories fell by 300 000 barrels in the week ended November 22, retreating from the highest level since June. Motor gasoline supplies are projected to have jumped by 1 million barrels last week, while distillate fuel inventories likely shed 1.03 million after the EIA reported a 4.8 million decline in its latest report.

The industry-funded American Petroleum Institute will release its separate report later on Tuesday. APIs statistics however are considered as less reliable than numbers by the EIA as they are based on voluntary information from operators of refineries, pipelines and bulk terminals, while the government requires reports to be filed with the EIA.

Jonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney, commented for Bloomberg: “Demand is slowly starting to occur but there’s still a long way to go. The sell-off yesterday was a little bit overdone, and that’s why we saw the bounce back.”

Iran accord

The oil market, and particularly Brent, continued to be pressured after Sundays groundbreaking diplomatic breakthrough between Iran and six world powers eased sanctions on the Islamic republics oil exports. The impact of the agreement on the market however began to diminish as investors judged the historic deal will not bring any new Iranian oil to the global scene immediately.

The temporary deal offers the Persian Gulf nation about $7 billion in relief from sanctions but leaves banking and financial measures standing. The accord grants Iran access to $4.2 billion in oil revenue frozen in foreign banks but the current limitations to the country’s outbound shipments remain unchanged at around 1 million barrels per day. However, the European Union will remove a ban on insurance for tankers carrying Iranian oil, easing the trade between Iran and its six remaining customers, but exports to members of the single currency bloc remained prohibited.

Tetsu Emori, a commodities fund manager at Astmax Investments, said for CNBC: “The deal is weighing on prices, but it is just the first step and it is too early to tell how much more Iranian oil will come back to the market. Prices are likely to stabilize now as other fundamental factors out there start to weigh in.”

The Persian Gulf nation was reported mobilizing more ships to store and carry oil, aiming to keep oilfields operational and mitigate losses as export sanctions remained in place for the next six months.

The deal will also provide $400 million in tuition payments to schools for Iranian students who study abroad and give access to civilian aircraft parts and allow the trade in precious metals.

In exchange for the partial lift of sanctions, Iran must improve its cooperation with United Nations monitors by granting nuclear inspectors access to its facilities, eliminate its inventories of uranium enriched to 20% and refrain from bringing online a heavy water reactor at Arak, which will provide the country with a second path to nuclear weapons by producing plutonium.

Meanwhile, oil prices drew support on renewed concern over supplies from Libya, the holder of Africas biggest crude reserves. Clashes between the Libyan army and armed militants in the eastern city of Benghazi on Monday resulted in the death of at least nine people.

Output in the African country fell to an average of 450 000 barrels of oil per day in October, down from 1.45 million bpd a year earlier, according to estimates from Bloomberg.

Meanwhile, investors will also be keeping a close watch on this week’s upcoming key U.S. economic data to gauge oil’s demand prospects in the world’s top consumer and also assess whether the Federal Reserve might scale back its monthly bond purchases earlier than expected.

Data released on Tuesday may show that the number of building permits issued in September and October also advanced, followed by two consecutive gains in housing starts in the respective months. Housing prices are projected to have jumped in September with the S&P/Case-Shiller Composite-20 Home Price Index surging by 12.97% on annual basis, up from 12.82% a month earlier. Meanwhile, the Conference Board will likely report that consumer confidence rose to 72.1 in November following a steep drop to 71.2 in October.

On Wednesday, data by the Labor Department is expected to show that the number of people who filed for initial unemployment benefits rose to 330 000 in the week ended November 23, while durable goods orders probably fell by 1.7% in October. Business activity in Chicago likely slowed in November but remained firmly in the expansion zone, while the Thomson Reuters/University of Michigan Consumer Sentiment Index is projected to confirm the Conference Board’s improvement prediction, marking a surge to 73.1 from October’s 72.0.