Crude oil futures closed down more than 2% on Tuesday (Feb. 8) after likely profit-taking followed recent price gains. In addition, the market could soon see an increase in supply, as progress in the Iran nuclear deal negotiations could pave the way for Iran to return Iranian oil to world markets.
- WTI crude futures were down $1.96, or 2.1%, at $89.36 a barrel.
- BRENT crude futures were down $1.91, or 2.1%, at $90.78 a barrel.
Iran and representatives of the other major world economies resumed talks on a nuclear agreement yesterday in Vienna, Austria, after a ten-day break in negotiations. According to statements by both sides, the talks are on the right track, but the Iranian side, in particular, must give in.
The United States has been indirectly involved in the talks. In the past, the United States eased some sanctions on Iran, but Iran urged the United States to lift all sanctions and guarantee that no sanctions would be imposed on Iran in the future. However, the Iranian government refuses to talk directly with the U.S.
Progress in the talks on the nuclear agreement could result in more than 1 million barrels of Iranian oil per day entering the world market. This would increase oil supply on the world market by around 1% and depress oil prices.
Louise Dickson, senior oil markets analyst at Rystad Energy commented, “The U.S. government is attempting to tame oil prices by urgently negotiating a new nuclear agreement with Iran.”
Investors are eyeing the EIA crude oil inventory numbers released today. The weekly API report on crude oil stocks showed a decrease in the inventory by 2.025M barrels.
The Spot Market is Open
Wednesday, February 9, 2022