Oil prices decline despite prospects for stronger global economic outlook

By Ahmad Ghaddar

LONDON (Reuters) - Oil prices eased on Wednesday despite prospects for stronger global economic growth as talks to revive a nuclear deal with Iran opens the possibility of an easing of sanctions on its oil exports.

Brent crude futures fell by 36 cents, or 0.6%, to $62.38 a barrel by 0843 GMT while U.S. West Texas Intermediate crude was down 36 cents, or 0.6%, at $58.97.

Prices were trading in positive territory earlier in the session, buoyed by improving economic data.

"Optimism on the global economic outlook boosted sentiment in the crude oil market," analysts from ANZ bank said.

The International Monetary Fund on Tuesday said that unprecedented public spending to fight COVID-19 would push global growth to 6% this year, a rate not achieved since the 1970s.

However, a possible jump in U.S. fuel inventories and the Iran talks weighed.

U.S. crude stocks were down by 2.6 million barrels in the week ended April 2, while gasoline inventories rose by 4.6 million barrels and distillate stocks up by 2.8 million barrels, said three market sources, citing the American Petroleum Institute (API).

Official data is due to be released later on Wednesday.

Iran and world powers held what they described as "constructive" talks on Tuesday and agreed to form working groups to discuss the possibility of reviving the 2015 nuclear deal that could lead to Washington lifting sanctions on Iran's energy sector and increasing oil supply.

"Iran is the single largest upside supply risk for the oil market," said Stephen Brennock of oil brokerage PVM.

Oil prices dropped earlier this week after the Organization of the Petroleum Exporting Countries (OPEC) and allies, a group known as OPEC+, agreed to gradually ease oil output cuts from May.

But analysts say the size of the increase is unlikely to have a major impact on market rebalancing.

"The OPEC+ decision ... is not expected to jeopardise the oil rebalancing and hence the elevated price backdrop," Brennock said.

 

(Additional reporting by Jessica Jaganathan in Singapore; Editing by David Goodman)