Oil drops after scorching rally as markets eye Iran nuclear deal
BNN Bloomberg
Oil dropped to trade near US$91 a barrel, pausing a rally that’s propelled crude to its highest since 2014.
Oil dropped to trade near US$91 a barrel, pausing a rally that’s propelled crude to its highest since 2014.
Futures in New York fell 1.1 per cent on Monday after rallying for seven straight weeks and gaining almost 30 per cent. Diplomats are set to return to Vienna Tuesday to resume Iran nuclear negotiations, which are viewed as a path to restore the nation’s sanctioned oil to global markets. On Friday, the U.S. signed several waivers related to Iran’s civilian nuclear activities to ease diplomatic efforts.
The potential for eventual Iranian barrels, with crude being overbought from last week’s rally, is prompting the market to take a “pause to refresh,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. Crude futures “had a really good run at a time when the broader economy is not performing that way.”
Meanwhile, the second-largest U.S. refinery was unexpectedly shut down along with other plants on the Gulf Coast, sending spot gasoline prices in Houston to a two-month high. The closures could have an outsized impact on a market already squeezed for supplies. Heating oil margins climbed to their strongest since April 2020.
Though crude has begun the week on the back foot, the oil market’s structure has been indicating one of the strongest supply-demand balances in years. That has come as the average price of gasoline in the U.S. rose to the highest level in more than seven years and calls for US$100 a barrel by some of Wall Street’s biggest names grow louder.
