Oil futures finished with a loss on Thursday, pressured by a report that the U.S. and Iran may be nearing a deal on Tehran’s uranium enrichment and oil exports.
Prices, however, settled above the session’s lowest levels after a U.S. government official reportedly said the article was “false.”
Traders, meanwhile, were also wary of the prospects for weaker energy demand.
Price action
-
West Texas Intermediate crude for July delivery
CL00,
-1.33% CL.1,-1.33% CLN23,-1.33% fell $1.24, or 1.7%, to settle at $71.29 a barrel on the New York Mercantile Exchange, the lowest front-month contract finish in a week. It traded as low as $69.03 during the session. -
August Brent crude
BRN00,
+0.33% BRNQ23,+0.33% , the global benchmark, shed 99 cents, or 1.3%, to $75.96 a barrel on ICE Futures Europe, the lowest finish since June 1. -
Back on Nymex, July gasoline
RBN23,
-0.59% declined by 1.1% to $2.61 a gallon, while July heating oil HON23,-1.07% lost 0.5% to $2.39 a gallon. -
July natural gas
NGN23,
-3.83% tacked on 1% to $2.35 per million British thermal units.
Market drivers
Oil futures fell on Thursday, with analysts attributing the decline to a report from the Middle East Eye, a London-based news site, that said the U.S. and Iran are nearing a temporary deal that would offer some sanctions relief in return for Iran reducing uranium enrichment activities. The report cited two sources with direct knowledge of the talks.
Terms of the deal would include Iran ceasing its 60% and beyond uranium enrichment activities and in return, it would be allowed to export up to a million barrels of oil a day, the report said.
Other news reports have cited progress in the negotiations in recent days.
“It is an emotional reaction at this point” for oil, said Phil Flynn, senior market analyst at The Price Futures Group. The reality is that the news would be “not as bearish because it is no big secret that Iran has been selling its oil anyway,” he said.
A spokesperson for the White House National Security Council, however, called the report “false and misleading,” according to Reuters.
Worries about energy had already been pressuring prices in Thursday dealings ahead of the news developments.
“The reality is that it is the demand equation that matters the most,” said Naeem Aslam, chief investment officer at Zaye Capital Markets, in market commentary.
“Yes, OPEC is playing an important active role in the market and must never take their eyes off this important aspect,” he said. Last weekend, the Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, extended their previously announced production cuts into 2024 and Saudi Arabia volunteered to cut its own output by 1 million barrels a day in July.
But “what the world needs is more demand,” said Aslam.
Natural-gas futures, meanwhile, gave up early gains Thursday to finish higher, after the U.S. Energy Information Administration reported on Thursday that U.S. natural-gas supplies in storage rose by 104 billion cubic feet for the week ended June 2. Analysts called for a storage increase of 114 billion cubic feet on average, according to a survey conducted by S&P Global Commodity Insights.
The data, however, included revisions to figures tied to reclassifications of some natural gas in storage from working gas to base gas. Working gas is the volume of gas available in the market, while base gas is defined as the amount of natural gas that’s needed to maintain adequate reservoir pressures and deliverability rates through the supply withdrawal season.
The EIA’s reclassifications resulted in decreased working gas stocks of 14 bcf last week in the nonsalt South central region, so the implied flow for the week is an increase of 118 bcf to working gas stocks, the EIA said.
