Oil Swings as Traders Seek Next Clues on Iran Nuclear Deal

Oil bounced between small gains and losses as Iran cast fresh doubts on the status of nuclear talks with the US.

Brent traded below $65 a barrel after jumping as much as 1.1% earlier after Iran’s foreign minister, Abbas Araghchi, said he saw “many opposing and contradictory positions” from US negotiators. West Texas Intermediate edged up near $62.. Ellen Wald, Senior Fellow at the Atlantic Council, joins for a discussion on low oil prices and what President Trump's trip to the Middle East could mean for the outlook for gas and energy prices.

Prices had slumped Thursday when US President Donald Trump suggested the two sides were closer to a deal, which could pave the way for some extra supply from Iran. But those barrels would have a limited impact in a market already gearing up for a surplus.

“The promise of an Iran nuclear deal today looks less clear-cut today than yesterday,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “Global oil inventories are low, and the geopolitical supply situation is uncomfortable. So a running surplus the coming one to two years will likely be highly welcomed by many governments around the world utilizing it to stack up their Strategic Petroleum Reserves.”

The International Energy Agency on Thursday reiterated that it expects an increase in new production worldwide to exceed demand growth this year and next, creating a global glut. The excess supply may be even bigger if the Organization of the Petroleum Exporting Countries and its partners confirm further output hikes.

“We wouldn’t overstate the impact on Iranian supply here — a deal might add 200,000 to 300,000 barrels a day to Iranian exports, which isn’t enormous,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. “We maintain the view that Brent should remain in a $60 to $65 holding pattern in the weeks ahead.”

Oil is set to eke out a second weekly gain, after rising on the détente in the trade conflict between the US and China, the world’s biggest crude consumers. Prices are still down more than 10% this year because of the twin hit of trade uncertainties and faster-than-expected output increases by OPEC+.

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