Energy Prices Continue To Dip As Possible Easing Of Iranian Embargo

WTI crude oil is lower by 31 cents this morning against a recovering US dollar. Crude is trading at 94.83 while Brent oil is lower by 33 cents at 105.95. Crude oil prices rose yesterday as improved demand outlook from US supported oil prices as US markets were shuttered for the Veteran’s Day holiday. The US Dollar Index declined around 0.2 percent yesterday on the back of rise in risk appetite in market sentiments which led to decline in demand for low yielding currency. However, uncertainty over the QE tapering by the Federal Reserve cushioned sharp fall in the currency. The DX touched an intra-day low of 81.13 and closed at 81.20 on Monday. Expectations of reforms by the Chinese government to support the economy also raised the demand prospects from China and pushed oil prices higher. Iran and the western nations are likely to resume talks over nuclear program on November 20 and investors are likely to await a US decision this week on the imposition of tough new sanctions on Iran. US Secretary of State John Kerry said the delay in reaching a final decision was on the Iranian side as representatives had to return to seek approval on some of the points negotiated. A positive mood remains in place that sanctions will be eased. The deal agrees to a six month plan that would allow embargo to ease as a final agreement is approved. The United Nations atomic inspectors and Iran signed their first accord in six years, wherein the country would provide broader access to its nuclear facilities to the atomic officials. The IAEA (International Atomic Energy Agency) and Iran agreed to carry out “practical measures” aiding inspections wherein implementation will start within three months. Though this is just the tip of the ice, if the actual talks result into proper resolution to the political deadlock between the Persian Gulf country and the West we could see significant reduction in risk premium to the global oil markets and mainly the Brent.

Inventory data from US will be delayed by one day as US markets were closed on Monday. WTI oil fell from the highest close in Nov before govt data that’s forecast to show crude stockpiles rose to the most in four months in the U.S. Crude oil prices are expected to move up on expectations of increased demand from US and China.

Natural gas is trading at 3.576 flat this morning. Natural gas ended higher for a fifth straight session on Monday, with cold weather expected for the eastern half of the nation this week propping up prices despite the milder outlook for next week that should slow demand. U.S. natural gas futures ended higher on Monday on cold weather forecast for this week. However, milder weather forecast for next week can put pressure on prices today. Front-month gas futures on the New York Mercantile Exchange ended up 1.5 cents at $3.574.