CommoditiesOil Edges Higher Amidst Fading Optimism on Resumption of Iran Supply

Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session. The prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the United States rejoining a nuclear agreement with Tehran.

Brent crude was up by 17 cents, or 0.2%, at $73.03 a barrel by 0347 GMT, having risen 0.2% on Monday.

U.S. oil gained 15 cents, or 0.2%, to $71.03 a barrel, having slipped 3 cents in the previous session.

oil chart
U.S WTI Performance Chart
Talks on Iran Oil Supply

Indirect discussions between the United States and Iran and other parties to the 2015 deal on Tehran’s nuclear programme resumed on Saturday in Vienna. They were described as “intense” by the European Union.

A U.S. return to the deal would pave the way for lifting sanctions on Iran that would allow the OPEC member to resume exports of crude.

“It is looking increasingly unlikely that we will see the U.S. rejoin the Iranian nuclear deal before the Iranian presidential elections later this week. Additional supply from OPEC+ will be needed over the second half of this year, with demand expected to continue its recovery” ING Economics

Other members of the Organization of Petroleum Exporting Countries (OPEC), along with major producers including Russia – a group known as OPEC+ – have been withholding output to support prices amid the pandemic.

Still, prices were off their highs earlier in the day, with U.S. crude briefly tripping into negative territory.

“Daily technical indicators are currently pointing to crude oil in overbought territory and a pullback may be due,” Avtar Sandu, senior manager commodities at Phillip Futures.

Investors and traders are also watching the outcome of the U.S. Federal Reserve meeting that starts later on Tuesday for signals on when it will scale back monetary stimulus

The Fed is getting ready to start debating how and when to start tapering a massive asset-purchase program that helped support the U.S. economy during the pandemic.

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