Oil prices bounced around on Monday in see-saw trading, with some investors taking profits after signs of progress in the U.S.-Iran nuclear talks while others kept bullish sentiment bolstered by rising consumption amid ongoing supply constraints.
Brent crude was up 20 cents, or 0.2%, at US$93.47 a barrel as of 0601 GMT, after touching its highest since Oct. 3, 2014 of US$94.00 earlier. It slid to as low as US$92.47 in an early trade.
U.S. West Texas Intermediate crude fell 33 cents, or 0.4%, to $91.98 a barrel, having dived to as low as $91.35 earlier in the session and risen to as high as US$92.73.
Both benchmarks rose more than US$2 on Friday, extending their rally into a seventh week on ongoing worries about supply disruptions fuelled by political turmoil among major world producers.
“Investors scooped up short-term profits on the news suggesting progress in the U.S.-Iran nuclear talks, but fresh buying kicked in again after the technical corrections as global supply is expected to stay tight,” said Tatsufumi Okoshi, a senior economist at Nomura Securities.
U.S. President Joe Biden’s administration on Friday restored sanctions waivers to Iran to allow international nuclear cooperation projects, as the talks on the 2015 international nuclear deal enter the final stretch.
If the United States lifts sanctions on Iran, the country could boost oil shipments, adding to global supply. [nL1N2UH0HN]
“Investors expect more twists and turns in the U.S.-Iranian talks and no agreement to be reached anytime soon,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
“The market tone remained bullish, with investment bankers predicting Brent hitting US$100 a barrel and global supply continuing to be tight with OPEC+ not reaching their output targets and the United States not raising output much,” he said.
Crude prices, which have already rallied about 20% this year, are likely to surpass US$100 per barrel because of strong global demand, analysts have said.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, are struggling to meet targets despite pressure from top consumers to raise production more quickly.
In the United States, even though the rig count has climbed for a record 18 months in a row, oil production is still far from pre-pandemic record levels.
U.S. demand for distillates has been running ahead of pre-pandemic levels for months on strong manufacturing and trucking activity.
Fuelling supply concerns, tensions remain high in Eastern Europe, with White House national security adviser Jake Sullivan saying on Sunday that Russia could invade Ukraine within days or weeks but could still opt for a diplomatic path.