U.S. Crude Heading for $70/bbl as Iran Nuclear Deal Influences Trading Behaviourweighs

OPEC's cutbacks and strong demand are seen as drivers of oil in the near term. File Image / Pixabay

Friday was relatively flat for crude prices, although Brent enjoyed a third consecutive week of gains (nearly 1 percent for this week), and a bullish sentiment combined with ongoing geopolitical fears translated into widespread expectations that U.S. crude could cross $70 soon.

Brent ended the day down 10 cents at $74.64 per barrel, while West Texas Intermediate finished the session down 9 cents at $68.10 per barrel.

The bullish sentiment is such that Brent rose by 6.5 percent this month despite a higher dollar, which hit its strongest level since January 11.

Of course, prices are also being supported by uncertainty over whetherU.S. president Donald Trump will scrap the Iran nuclear deal next month, and if so, to what extent will a lack of Iranian oil on the market impact supply and demand; his latest remark about the issue that is sure to cause some traders the jitters cam on Friday, when he declared that it must be ensured that the Islamic republic "doesn't even get close" to nuclear weapons.

John Kilduff, founding partner at Again Capital, remarked, "The Iranian situation is just haunting the market; it's just going to continue to provide support until we get to May 12.

"At this point, the geopolitical risk premium is bountiful."

Indeed, geopolitical tensions combined with Organization of the Petroleum Exporting Countries (OPEC) compliance on production cuts as well as global demand will continue to drive crude oil prices, according to Manoj Kumar Jain, director of commodity and currency at IndiaNivesh Commodities.

He added, "The prices could move further to go beyond $70."

But that's in the short term; longer term forecasts for crude are all over the map, the most recent coming from Goldman Sachs, which earlier this week worried that lack of industry investment will lead to a "very, very tight market in the 2020s."