U.S. West Texas Intermediate and international benchmark Brent crude oil futures are trading mixed shortly before the regular session opening on Friday as investors continue to debate whether the reimposition of sanctions against Iran will disrupt supply enough to offset rising U.S. production.
At 900 GMT, June WTI crude oil futures are trading $68.26, down $0.17 or -0.25% and July Brent crude oil is at $73.34, down $0.28 or -0.46%.
The uncertainties over Iran are helping to underpin prices with buyers coming in on weakness, but refraining to buy enough to drive the market through resistance and into new multiyear highs. This is holding the markets in a range and giving the appearance of a sideways trade.
President Trump has until May 12 to make a decision about the sanctions. Some of the recent surge in prices is being attributed to bullish speculators who are betting that the president will make good on his threat to withdraw from the deal. This is likely to disrupt supply which could be supportive for prices moving forward.
Comments from Iran’s foreign minister triggered a volatile short-covering rally on Thursday after he said U.S. demands to change its 2015 nuclear agreement with world powers were unacceptable.
Trump and traders are waiting for the Europeans to hand Trump a plan to save the Iran nuclear deal by the end of next week. However, the situation remains uncertain enough that buyers are willing to come in on dips.
If the Europeans can come up with a plan that satisfies Trump then prices are likely to break sharply on speculative profit-taking and shorting. If Trump moves forward with sanctions then prices could rise, but gains are likely to be limited by rising U.S. production.