Oil prices dropped in intraday trade on Wednesday, as fears of a delay in Iranian supplies even after the nuclear deal with the West seemed to subside a day after it was clinched. Copper, however, edged up in early trade after China, struggling until last week to halt a slide in its stock markets, beat expectations to record a 7% economic growth in the second quarter of 2015.
Brent crude futures lost 50 cents at $58.01 a barrel by 1104 GMT on fears that a pick-up in supplies from Iran would further worsen a glut. US crude futures eased 35 cents to $52.69 a barrel.
An official at the National Iranian Oil Company said on Wednesday that Iran’s oil production can increase by 500,000-600,000 barrels per day (bpd), confirming the prospect of a ramp-up in supply from the Islamic republic, Reuters reported. Iran can reach its pre-sanctions level of 4 four million bpd within six to twelve months if there is enough demand, the official said.
“We view the 2016 prospects for higher OPEC production, including from Iran, as a growing downside risk to our oil price forecast,” Goldman Sachs said in a note. It has predicted that Brent price would average $58 a barrel in 2015 and $62 next year, while US crude could average $52 this year and $57 next year.
Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), used to ship out almost three million bpd of crude at its peak before Western sanctions served to drag down its exports to about a million bpd over the past two-and-a-half years.
Copper and other base metals rose after top consumer China recorded strong industrial output and higher-than-expected growth in the second quarter of 2015.
Three-month copper on the London Metal Exchange jumped 1% to $5,620 a tonne in official midday rings. The metal had witnessed its price hitting its weakest in six years at $5,240 a tonne last week. Zinc gained 2.3% in rings intraday to $2,102 a tonne, while lead rose 1.7% to $1,871 a tonne.
China’s factory output beat expectation to grow 6.8% in June. However, the positive data failed to prevent a fresh slide in the country’s stock market on Wednesday. This also kept gains in base metals in check.