Oil Stuck Near $68 as Questions Swirl Around Iran Nuclear Deal

Oil Stuck Near $68 as Questions Swirl Around Iran Nuclear Deal
Oil circles around $68 a barrel as traders sift mixed messages on the Iran nuclear deal.

(Bloomberg) -- Oil circled around $68 a barrel as traders sifted mixed messages on the Iran nuclear deal.

Futures in New York traded in the narrowest range since January this week. Investors were waiting to see whether the nuclear accord that Iran signed with world powers in 2015 will remain. U.S. President Donald Trump said at a press conference Friday that it needs to ensure that Iran “doesn’t even get close” to nuclear weapons, while German Chancellor Angela Merkel said she told Trump the Iran deal is part of a bigger Middle East picture.

“There’s lots of rhetoric around dispensing with the Iran deal and reimposing sanctions, which will further constrain the market,” said Rob Haworth, who helps oversee $151 billion in assets at U.S. Bank Wealth Management in Seattle. “You’ve got fears of further shutdowns of production supporting the market.”

As the May 12 deadline looms for U.S. President Donald Trump to decide whether or not to impose sanctions against Iran, traders are unwilling to sign contracts for Iranian crude and refined products that would be valid after that date.

“The Iranian situation is just haunting the market,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. “It’s just going to continue to provide support until we get to May 12. At this point, the geopolitical risk premium is bountiful.”

West Texas Intermediate crude for June delivery slipped 9 cents to settle at $68.10 a barrel on the New York Mercantile Exchange. Total volume traded was about 27 percent below the 100-day average. Prices declined 0.4 percent this week.

Brent crude for June delivery slipped 10 cents to end the session at $74.64 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $6.54 premium to June WTI.

U.S. oil majors reported first quarter earnings, with Exxon Mobil Corp. falling short on both production and profit, while Chevron Corp. beat every analyst estimate. The S&P 500 Energy Index fell as much as 1.6 percent on Friday.

Other oil-market news:

Gasoline futures rose 0.7 percent to settle at $2.1269 a gallon on Friday, while diesel futures slipped 0.4 percent to close at $2.1509 Petroleos Mexicanos reported its biggest profit in more than a decade as a rebound in oil prices helped it stabilize production. Money managers decreased bullish ICE Brent crude oil bets by 7,396 net-long positions to 612,486, weekly ICE Futures Europe data on futures and options show. The U.S. oil rig count rose by 5 rigs to 825, the highest since March 2015, according to Baker Hughes data released on Friday.

With assistance from Tsuyoshi Inajima, Sharon Cho and Grant Smith. To contact the reporter on this story: Jessica Summers in New York at jsummers24@bloomberg.net. To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Mike Jeffers.


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