Oil futures lost ground Thursday, with weakness attributed in part to signs negotiators were making progress toward a deal that would see the U.S. lift sanctions against Iran, returning a large source of supply to the market.
West Texas Intermediate crude for June delivery
fell 67 cents, or 1%, to $62.70 a barrel on the New York Mercantile Exchange. July Brent crude
the global benchmark, was down 82 cents, or 1.2%, at $65.84 a barrel on ICE Futures Europe.
WTI tumbled 3.3% on Wednesday, while Brent lost 3% as crude got caught up in a broad selloff across stocks, commodities and crypto assets.
A slight relief rally early Thursday gave way, with a knock to sentiment potentially coming from signs “the U.S. appears to be moving closer towards rejoining the Iranian nuclear deal,” said Warren Patterson, head of commodities strategy at ING, in a note.
“I am quite sure that there will be a final agreement…I think we are on the right track and we will get an agreement,” Enrique Mora, the European Union diplomat coordinating indirect talks between Iran and the U.S., told reporters as a fourth round of negotiations adjourned, according to Reuters.
The Biden administration wants to return to the 2015 nuclear accord after former President Donald Trump withdrew the U.S. from the agreement in 2018 and reimposed sanctions on Iran. Tehran responded to the renewed sanctions by breaching several restrictions in the pact.
The continued surge in COVID-19 cases in India, the world’s third largest oil consumer, also remains a weight on crude, analysts said.
The largest refiner in the country, Indian Oil, said that gasoline and diesel sales have fallen by around 15% to 20% due to the latest wave, Patterson noted, with the refiner reducing operating rates at its plants from an average of a little more than 96% in April to around 84%.
“A resurgence in Covid-19 cases across parts of Asia is doing little to support the market in the near term,” he said.