Futures Movers: Oil prices mostly higher on tight supplies, but traders eye potential resumption of Iran talks

The market has “traded on both sides of unchanged,” Phil Flynn, senior market analyst at The Price Futures Group. Most traders are “skeptical” that any nuclear talks between Iran and world powers will go very far, he said.

Robert Malley, U.S. special envoy for Iran, warned that efforts to resume the Iran nuclear are entering a “critical phase,” Al Jazeera reported Monday. Talks were suspended in June. Iran has said it’s willing to return to the negotiations, but wants the outcome of the talks to lead to a lifting of sanctions, the report said. If the U.S. lifts sanctions on Iran’s oil, that would lead to more global supplies.

Meanwhile, some traders are “wondering if the oil prices have come up too far, too fast,” so they’re reluctant to drive prices higher “until we get a better handle on [crude] inventories this week,” said Flynn.

For now, the oil market is likely to see “some extreme volatility…in the next couple of days, but make no mistake about it: global inventories are tight and there seems to be significant upside risks to prices, even though we may settle down here in the short term,” he said.

West Texas Intermediate crude for December delivery
CL00,
+0.49%

CLZ21,
+0.49%
rose 9 cents, or 0.1%, to $83.85 a barrel on the New York Mercantile Exchange after touching lows below the $83 mark. The U.S. benchmark traded at a seven-year high above $85 a barrel on Monday before ending that day unchanged.

December Brent crude
BRNZ21,
+0.24%,
the global benchmark, was up 8 cents, or nearly 0.1%, at $86.07 a barrel on ICE Futures Europe after closing at a three-year high Monday. January Brent
BRN00,
+0.34%

BRNF22,
+0.34%,
the most actively traded contract, rose 17 cents, or 0.2%, to $85.34 a barrel.

A softer tone during Monday’s session was tied speculation about the potential revival of talks on the Iranian nuclear accord, though no official announcements have been made, noted Carsten Fritsch, commodity analyst at Commerzbank.

Meanwhile, the focus remains on tight crude supplies. Russia’s deputy prime minister, Alexander Novak, on Monday said he expected the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, next week to agree to raise output by another 400,000 barrels a day in November — in line with the timetable agreed earlier this year.

A reluctance by OPEC+ to boost production beyond its existing plans has been cited as a factor behind crude’s fall rally.

Meanwhile, November natural gas
NGX21,
-3.65%

NG00,
-3.65%
pulled back, down 4.7% at $5.62 per million British thermal units. The contract, which expires at the end of Wednesday’s session, climbed by nearly 12% Monday following a forecast from the National Oceanic and Atmospheric Administration predicting colder-than-normal conditions for most of the U.S. Southeast and Midwest during the first week of November.

Natural-gas prices are “being driven up by forecasts of lower temperatures in the coming two weeks and the expectation of higher LNG exports now that maintenance work has been completed at a number of liquefaction facilities,” Fritsch wrote. “Both are likely to increase demand for U.S. natural gas and result in a decline in U.S. natural gas stocks, which — shortly before the start of the heating season — are 4% below the average level of the years 2016-20.”

The Energy Information Administration will release its weekly data on U.S. petroleum supplies on Wednesday.

On average, analysts expect the EIA to report domestic crude supplies down 100,000 barrels for the week ended Oct. 22, according to a survey conducted by S&P Global Platts. They also forecast weekly inventory declines of 2.7 million barrels for gasoline and 2 million barrels for distillates.

On Nymex Tuesday, November gasoline
RBX21,
+0.09%
added nearly 0.1% to $2.518 a gallon and November heating oil
HOX21,
+0.20%
tacked on 0.1% to $2.568 a gallon.