Oil Price Fundamental Daily Forecast – Rebounding After Buyers Find Value

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are rebounding on Friday after early session weakness drove prices to their lowest level since April 26. Nonetheless, both markets remain on track for weekly declines as investors braced for the return of Iranian crude supplies after officials said Iran and world powers made progress on a nuclear deal.

At 12:58 GMT, July WTI crude oil futures are trading $63.17, up $1.23 or +1.99% and July Brent crude oil is at $66.00, up $0.89 or +1.37%. Both WTI and Brent remain on pace to finish about 3% lower for the week.

Iran and world powers have been in talks since April on reviving the 2015 deal and the European Union official leading the discussions said on Wednesday he was confident a deal would be reached.

Oil prices have been falling since word leaked earlier in the week of possible deal since with it comes increased oil supply. Although the initial reaction to the news was expectedly bearish, some see it as a short-term event that OPEC+ could take care of by making a few adjustments to production.

Still others remain upbeat about fuel demand recovery this summer as vaccination programs in Europe and the United State would allow more people to travel, although rising cases across parts of Asia are raising concerns.

Iran’s Rouhani says US will lift sanctions, as Another Official Denies It

Iran’s president said on Thursday that the United States was ready to lift sanctions on his country’s oil, banking and shipping sectors that were reimposed after former U.S. President Donald Trump exited a 2015 nuclear deal three years ago.

But European diplomats said success was not guaranteed and very difficult issues remained, while a senior Iranian official contradicted the president.

“The talks in Vienna are about minor issues. They have accepted to lift sanctions on Iran’s oil and shipping sectors as well as sanctions on the Central Bank and others,” President Hassan Rouhani said during a televised cabinet meeting.

Iran’s top nuclear negotiator Abbas Araqchi said on Wednesday that some “key issues” needed to be discussed further.

And a senior Iranian official told the country’s Press TV that Washington had no intention to “completely lift any sanctions on the oil, banking, finance and energy sectors.”

“Washington intends to temporarily suspend some of the sanctions over a long period of time and in various steps,” said the official, who was not identified by the station run by hardliners and which is close to the Revolutionary Guards.

Daily Outlook

Friday’s rally isn’t a big surprise because the Iran supply issue is only expected to be a short-term problem. It was never going to be a trend-changing event.

Furthermore, crude oil was too expensive and prices needed to retreat into a value zone. Most professionals believe crude oil prices will move higher throughout the year as demand gets stronger, but it doesn’t make sense to chase it higher while demand is still facing headwinds. This made “buy the dip” the best trading strategy.