Oil prices rose in today as investors await key US oil supply data due later today. The West Texas Intermediate futures for July were trading up 0.3 per cent at $57.67 (£37.71) a barrel on the New York Mercantile Exchange.
Data by the US Energy Information Administration is due later, and markets expect weekly supplies to have decreased by 1.1 million barrels, according to analysts polled by The Wall Street Journal.
The newspaper reports that uncertainty surrounding nuclear negotiations with Iran is fuelling bullish sentiment as an expected increase in the country’s oil exports hinges on the outcome of the talks.
Investors are also awaiting a meeting by the Organization of the Petroleum Exporting Countries (OPEC) in Vienna on June 5. The group is expected to maintain its production target despite falling prices and the global oversupply.
Oil producers pump two million barrels per day in excess
The International Energy Agency say big oil producers are pumping at least two million barrels per day (bpd) more than required. World oil stocks are rising at 1.95 million bpd this quarter and will continue to build until at least the end of 2016.
After collapsing last year, oil prices have rallied strongly since January on ongoing concerns over disruption to supplies from the Middle East. One of the defining factors behind the first quarter rise in oil has been a slowdown in US shale oil production and the conflict in Yemen.
But now analysts say the rebound may be temporary, and could be about to correct.
Oil prices have been tumbling since the summer of 2014, dropping below $45 a barrel at the end of 2014, due to a weakening demand in industrialised countries following the financial crisis.
The stagnating price of oil is set to continue in the near future, according to Saudi Arabia's representative at the Organization of Petroleum Exporting Countries (Opec).
Speaking at an energy conference in Riyadh in March, Mohammed al-Madi, Saudi's Opec governor, explained that it was unlikely oil prices would be able to return to the record levels seen in previous years. Mr Madi said that reaching $100 to $120 a barrel again anytime soon would be "difficult".