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Oil Price Fundamental Daily Forecast – Prices Plunge on Reported Progress in US-Iran Nuclear Talks

By:
James Hyerczyk
Published: May 18, 2021, 20:20 UTC

Today's API report is expected to show U.S. crude inventories to have risen by 1.6 million barrels last week, according to a Reuters poll.

WTI and Brent Crude Oil

In this article:

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower late in the session on Tuesday as traders try to claw back heavy mid-session losses. Prices plunged earlier in the session from a two-month high, sliding nearly 2%, after the BBC said the United States and Iran have made progress on reviving a deal restricting Iran’s nuclear weapons development, that could release more barrels into the market.

At 19:57 GMT, July WTI crude oil futures are trading $65.59, down $0.69 or -1.04% and July Brent crude oil is at $68.80, down $0.66 or -0.95%.

Prices tumbled after the media, cited Russian ambassador to the UN Mikhail Ulyanov as saying significant progress had been made, but the losses were capped after he said on Twitter that negotiators need more time to finalize an agreement.

Trader read the initial report as bearish because the U.S. lifting of sanctions on Iran, could boost oil shipments, adding to global supply.

“That could put significant amount of crude oil on the market, which is why we are steadily drifting lower now,” said Bob Yawger, director of energy futures at Mizuho.

Traders Await American Petroleum Institute Weekly Inventories Report

Also weighing on the market, analysts forecast U.S. crude inventories to have risen by 1.6 million barrels last week, according to a Reuters poll ahead of weekly reports from the American Petroleum Institute (API) at 20:30 GMT, and the government on Wednesday at 14:30 GMT.

Last week, oil prices rose after the API reported a draw in crude oil inventories of 2.533 million barrels for the week ending May 7. Analysts had predicted a draw of 2.817 million barrels for the week.

The API also reported a build in gasoline inventories of 5.640 million barrels for the week ending May 7. Analysts had expected a 600,000 barrel draw for the week. Distillate stocks saw a decrease in inventories last week of 872,000 barrels for the week.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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