Oil prices declined as investors considered the progress in last-ditch talks reviving the 2015 Iran nuclear deal, which would allow Iranian crude exports to flow into the tight Western markets.
West Texas Intermediate fell 0.36% to $90.52 per barrel, coming close to breaking through the $90 level.
Brent Crude fell 0.21% to $96.01 per barrel.
ANZ Research analysts said in a note, “The spectre of a U.S.-Iran nuclear deal continues to hover over the market.”
Late Monday, the European Union offered a “final” text designed to revive the 2015 Iranian nuclear deal, pending approvals from Washington and Tehran. A senior official said there would be a final decision on the proposal within a “very, very few weeks.”
Commonwealth Bank analyst Vivek Dhar said in a note to clients, “While the details around the timing of the resumption of Iran’s oil exports remain uncertain even if the accord is revived, there is certainly scope for Iran to increase oil exports relatively quickly.”
He noted, within six months, Iran would be capable of boosting oil exports by 1 million-1.5 million barrels a day, equivalent to roughly 1.5% of global supply.
Dhar said, “A revival of the 2015 nuclear accord will likely see oil prices fall sharply given that markets probably don’t believe a deal will be reached.”
There is a floor under the market for now, given some signs that demand may not be impacted as much as feared, after stronger than expected trade data out of China over the weekend, and the surprisingly strong jobs numbers for July.
Traders are going to be looking very closely at the American Petroleum Institute’s US inventory data on Tuesday, and then the Energy Information Agency’s data on Wednesday.
A poll of analysts by Reuters found it is expected crude stockpiles fell by roughly 400,000 barrels and gasoline stockpiles will also have declined by roughly 400,000 barrels in the week ending August 5th. They expected distillate inventories, including diesel and jet fuel will be unchanged.
