Oil pulls back as investors wait for Iran nuclear talks this week
Oil fell after hitting new multi-year highs on Monday, as investors awaited the outcome of this week’s talks between Iran and world powers over a nuclear deal that is expected to boost crude supplies.
Brent crude futures for August fell 38 cents, or 0.5%, to $ 71.51 a barrel at 5:19 a.m. GMT, after hitting $ 72.27, their highest since May 2019. Crude U.S. West Texas Intermediate for July hit $ 70 for the first time since October 2018, but of course reversed to $ 69.32 a barrel, down 30 cents, or 0.4%.
Investors may have sold some contracts to take profits when WTI hit $ 70, said Avtar Sandu, senior head of commodities at Phillips Futures in Singapore.
“The main concern is the return of Iranian barrels to the market, but I don’t think there will be an agreement before the Iranian presidential election,” he added.
Data showing a 14.6% year-on-year decline in China’s crude oil imports in May also weighed on prices.
Both contracts have increased over the past two weeks as demand for fuel rebounds in the United States and Europe after governments relaxed COVID-19 restrictions ahead of summer travel.
Global oil demand is expected to exceed supply in the second half of the year despite a gradual easing of supply cuts by OPEC + producers, analysts said.
A slowdown in talks between Iran and world powers to revive a 2015 nuclear deal and a drop in the number of US platforms have also supported oil prices.
Iran and the world powers will begin a fifth round of talks on June 10 in Vienna, which could include the lifting of economic sanctions by Washington on Iranian oil exports. Read more
While the EU envoy coordinating the negotiations said he believed a deal would be reached in this week’s talks, other high-level diplomats said the toughest decisions remained to be made. . Read more
Analysts expect Iran, which holds its presidential election on June 18, to increase production from 500,000 to 1 million barrels per day once sanctions are lifted.
In the United States, the number of operating oil and gas rigs fell for the first time in six weeks, as drilling growth slowed. Read more
This “suggests that US oil drillers are less enthusiastic about increasing US oil production and therefore reducing the risk of a supply glut in the global oil market in the second half of 2021” CMC Markets analyst Kelvin Wong said in comments sent via email.
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