MOSCOW (MRC) -- Crude oil futures extended the heavy losses seen overnight in mid-morning trade in Asia Oct. 28, pressured by news that Iran and Western powers were set for broader talks on the Asian country's nuclear program before end-November, setting the stage for the return of Iranian oil, reported S&P Global.
Reports of large inventory builds in the US also added pressure on prices.
At 10:09 am Singapore time (0209 GMT), the ICE December Brent futures contract was down USD2.08/b (2.46%) from the previous close at USD82.50/b, while the NYMEX December light sweet crude contract fell USD1.80/b (2.18%) to USD80.86/b.
Iran's top nuclear negotiator Ali Bagheri Kani wrote on Twitter late Oct. 27 that he had agreed to negotiations with six world powers on the country's nuclear program by end-November. This followed talks with his EU counterpart Enrique Mora on the same day.
Bagheri Kani added that an exact date would be announced next week.
The negotiations could set the stage for a lifting of sanctions, allowing up to 1.3 million b/d of Iranian oil to return to global export markets, according to some analyst estimates.
Oil prices settled lower by more than 2% overnight after the news.
Nonetheless, analysts cautioned that negotiations will likely be a lengthy process and won't result in a quick return of Iranian oil to the market.
"This is just a restart of talks and the process to get a deal done will be lengthy and unlikely to lead to immediate sanction relief, which means the global energy crunch will unlikely see any immediate benefits," OANDA senior market analyst Edward Moya said.
Investors also mentioned data from the US Energy Information Administration late Oct. 27 showing total commercial crude oil stocks climbed by 4.27 million barrels to 430.81 million barrels in the week ended Oct. 22. The build pushed stockpiles to their highest since the week ended Aug. 20, but they still remained relatively tight at around 5.6% behind the five-year average.
Gasoline stockpiles, meanwhile, declined 1.99 million barrels to 215.75 million barrels, while distillate stocks declined 430,000 barrels to 124.96 million barrels.
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.