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Oil prices climb on stronger demand, uncertainty over Iran deal
[SINGAPORE] Oil prices rose in Asian trade on Wednesday on hopes for stronger than expected US crude demand, while doubts over reaching an agreement next week over Iran's nuclear programme eased oversupply concerns.
Brent crude for August delivery had climbed 10 cents to US$64.55 a barrel by 0215 GMT, after settling up US$1.11, or 1.8 per cent, in the previous session.
US crude for August delivery gained 12 cents to US$61.13 a barrel, after rising 63 cents the day before.
"US crude inventories have been at historic highs ... but the thing is crude inventories may have peaked after oil demand picked up in June," said Tony Nunan, oil risk manager at Tokyo's Mitsubishi Corporation.
"US$60 a barrel is the new normal for the next several months." Mitsubishi analysts forecast US oil demand grew to 1.4-1.8 million barrels a day in June from the same month last year.
The American Petroleum Institute (API) forecast on Tuesday that US commercial crude oil stocks fell by 3.2 million barrels last week, larger than analyst expectations of a 1.5-2.1 million barrel draw and the eighth straight week of declines. The US Energy Information Administration will release official stockpile data later on Wednesday.
Mr Nunan said there are roadblocks to an agreement next week between Iran and six world powers on Tehran's nuclear programme that would end sanctions and allow Iran to boost oil production.
That followed Tuesday's decision by Iran's parliament to pass a bill banning access for UN inspectors to its military sites and scientists.
Also on Tuesday, Iran's Supreme Leader Ayatollah Ali Khamenei ruled out freezing sensitive nuclear work for a long time after France and the five other world powers wanted Iran to halt parts of its nuclear programme for at least 10 years as part of a deal to lift sanctions. "There's always a chance (an agreement) could be scuttled. June 30 is a self-imposed deadline, so it could be put off," Mr Nunan said.
But gains were capped as the dollar hovered at its highest in over a week against a basket of major currencies early on Wednesday following reasonably strong US data on Tuesday. A strong dollar makes commodities, including oil, priced in other currencies more expensive.