Oil prices were mostly steady on Monday on growing demand in the northern hemisphere’s summer driving season. Still, traders propped for a return of Iranian crude supplies, notwithstanding a pause in talks to end U.S. sanctions.
Brent crude for August fell 24 cents, or 0.3%, to $73.27 a barrel by 1255 GMT. U.S. West Texas Intermediate (WTI) crude for July was under 17 cents, or 0.2%, at $71.47.
Both benchmarks have increased for the past four weeks on optimism over the speed of global coronavirus vaccinations and anticipated pick-up in summer travel. The rebound has driven up spot premiums for crude in Asia and Europe to multi-month highs.
Oil’s underlying physical demand picture continues positive, stated OANDA analyst Jeffrey Halley. Notwithstanding the noise in financial markets, the real world is on the right path and will need growing amounts of energy as it reopens.
On Monday, Bank of America (NYSE: BAC) stated that Brent crude was expected to average $68 a barrel this year but could run $100 next year on unleashed pent-up demand and more private car usage.
Iran nuclear deal negotiations
Negotiations to improve the Iran nuclear deal halted on Sunday after hardline judge Ebrahim Raisi won the country’s presidential election.
Iranian and Western officials state Raisi’s rise is unpromising to alter Iran’s negotiating position. Two diplomats declared they expected a break of about ten days.
It is possible to prevent the return of Iranian oil to the market. Still, it is dubious about derailing the path to a deal, responded SEB chief commodity analyst Bjarne Schieldrop.
A deal could point to Iran exporting an additional 1 million barrels per day. This would be 1% of global supply, for longer than six months from its storage facilities.
Iran has increased the volume of crude it has stored on oil tankers in current months, data intelligence firm Kpler told, in what may be preparing for a resumption in exports.
Nevertheless, oil prices have drawn backing from forecasts of a limited increase in U.S. oil output, giving the Organization of the Petroleum Exporting Countries (OPEC) more power to control the market in the short term before a possibly substantial increase in shale oil production in 2022.