(Bloomberg) --Oil clung to losses as investors weighed developments in ongoing talks between world powers to revive the Iran nuclear deal.
Futures in London fell as much as 3.1% on Tuesday after a Russian envoy in Vienna said significant progress has been made in efforts to broker an agreement between Iran and the U.S, the BBC Persian news channel reported However, the same diplomat, Mikhail Ulyanov, subsequently took to Twitter to play down reports that a major announcement on the matter was likely on Wednesday.
“I said that significant progress have been achieved, in my view,” Ulyanov said in the tweet. “That is true. But unresolved issues still remain and the negotiators need more time and efforts to finalise an agreement on restoration of JCPOA.”
A return to the 2015 nuclear deal could allow for the removal of U.S. sanctions on the Persian Gulf country’s crude exports, raising the prospects of more supply coming back to the market. Iran has already been preparing to ramp up global oil sales, though the flow of additional crude may be gradual even if a deal is struck.
Prices were already weak earlier in the session after Brent futures failed to sustain a rally past the key psychological $70-a-barrel mark, which it hasn’t closed above since May 2019. Meanwhile, concerns are lingering around the worsening Covid-19 crisis in India. The South Asian country’s gasoline exports soared 85% in the first half of May from the same period last month, according to Vortexa.
“We’ve had a pretty robust rally, but the question continues to be if we’re going to see some slowdown because of continued issues in India,” said Bart Melek, head of commodity strategy at TD Securities. “The market’s going to need something fundamental happen for prices to break out” to the upside “and at this point we’re not getting it.”
Prices:
Still, oil is joining other commodities in a blistering rally this year. Crude prices are up more than 30%, as raw materials emerge as a hedge against inflation. Much of Wall Street is calling for higher prices, with Goldman Sachs Group Inc. talking up the prospects of $80 a barrel oil. At the same time, the Organization of Petroleum Exporting Countries and its allies are boosting supply to meet rebounding demand.
Meanwhile, shippers on the largest U.S. fuel pipeline say they can’t access the pipeline’s communications system, preventing them from making nominations or submitting changes to their batches of fuel. The Colonial Pipeline has been working to restart after a cyberattack more than a week ago caused a spate of panic-buying across a dozen states.
In the U.S., oil inventories are expected to have risen last week, according to a Bloomberg survey. If confirmed by U.S. government data on Wednesday, that would be the first weekly increase in three weeks. The industry-funded American Petroleum Institute reports its storage tally later Tuesday.
