MOSCOW (MRC) -- Crude oil futures inched lower in mid-morning trade in Asia Oct. 26 amid reports of talks this week between Iran and the EU, opening the possibility of an eventual return of Iranian oil to global oil markets, reported S&P Global.
At 10:10 am Singapore time (0210 GMT), the ICE December Brent futures contract was down 4 cents/b (0.05%) from the previous close at USD85.95/b, while the NYMEX December light sweet crude contract dipped 11 cents/b (0.13%) to USD83.65/b.
Tehran's top nuclear negotiator Ali Bagheri Kani said in a tweet late Oct. 25 that he will be meeting with his EU counterpart Enrique Mora in Brussels on Oct. 27 to revive the country's stalled 2015 nuclear talks.
This follows an initial round of discussions between the EU and Iran held in Tehran on Oct. 14.
A deal will potentially bring back at least 1.3 million barrels of Iranian oil, according to some analyst estimates, helping to ease a severe shortage of oil at a time when the world needs it going into winter season.
"Prices gave up gains following reports that the EU will hold discussions with Iran later this week," said ANZ Research analysts in a note.
Nonetheless, analysts at ING said markets will likely take a cautious approach toward the talks.
"There is plenty of uncertainty around the timing and how talks will evolve. The market will likely take a more cautious approach in terms of pricing in the potential for a deal, given how talks broke down over the summer," ING's Warren Patterson and Wenyu Yao said.
"We are forecasting in our balance sheet that Iranian oil output will end 2022 around 1.3 million b/d higher than where it starts the year, but clearly this assumes a lifting of sanctions," they said.
In the near term, investors will be looking at US oil inventory data for a gauge of oil demand.
As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.