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Oil Declines as Investors Await Outcome of Critical Iran Talks


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These translations are done via Google Translate
(Bloomberg) Oil fell below $66 a barrel amid concern the market could encounter additional Iranian barrels if sanctions on the Persian Gulf producer are lifted.

West Texas Intermediate futures declined, with prices having traded within a $10 a barrel range since March. Talks between Iran and world powers are underway in Vienna to revive a nuclear accord, traders are awaiting detail on the negotiations, including sticking points, and the timing of any revival in official flows.

The drop in prices on Thursday came despite more evidence that the recovery in U.S. oil consumption is gathering pace as the pandemic fades. American drivers continue to travel almost as many miles on interstates as they did in 2019, while stockpiles of crude and gasoline fell last week. JPMorgan Chase & Co. expects prices to hit $80 by the end of the year, analysts including Natasha Kaneva wrote in a note.

U.S. crude inventories fall to the lowest since late February

Oil has largely traded in a tight range since March after an early-year surge, with investors weighing rising demand in the U.S., Europe and China against weaker consumption in parts of Asia where the coronavirus remains potent. At the same time, the OPEC+ alliance is now easing output curbs, and the Iranian talks may usher in a return of more supply if the nuclear deal is revived.

“The data has been supportive but there is currently no trend,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “That seems to keep some sorts of investors away from the market.”

Prices
  • WTI for July delivery fell 0.8% to $65.67 a barrel at 10:27 a.m. in London.
  • Brent for July settlement lost 0.8% to $68.30
  • The prompt timespread for Brent was 14 cents in backwardation, compared with 32 cents at the start of last week.

Ministers from the Organization of Petroleum Exporting Countries and its allies are due to meet June 1 to assess the state of the market and their production policy. Citigroup Inc. said, given the Iranian talks, the group may stick with plans to raise output again next month, but rethink the increase set for July.

The Memorial Day weekend at the end of May usually heralds the start of the summer driving season. However, gasoline stockpiles are low and are setting the stage for a supply squeeze typically only seen when a hurricane knocks out refineries, according to one fuel distributor.

Other market news:
  • Fresh from striking a blow in the boardrooms of the world’s biggest oil companies, the climate movement has a clear message: the energy transition is happening and there’s no turning back.
  • In the latest desperate attempt to deal with fuel shortages, government leaders in Venezuela are trying to re-purpose two oil upgraders to make a main ingredient for gasoline instead.
  • Total SE and Chevron Corp. will suspend cash distribution by a joint venture that counts a Myanmar state-owned company as a shareholder.


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