Crude oil prices are likely to remain sensitive to bearish news such as progress on the Iran nuclear deal with the United States and the latest on Covid-19 in Asia until at least the start of summer driving season in the United States and the opening up of Europe.
Prices are "in a holding pattern until we get to June, because that's when Europe's going to start to reopen and the U.S. driving season will have officially kicked off," Bloomberg quoted the CEO of Infrastructure Capital Management, Jay Hatfield, as saying earlier this week.
On the good news front, the European Union agreed on the terms for issuing so-called green certificates that contain information about whether a traveler has been vaccinated, has a negative PCR test result, or is immune to the coronavirus after recovering from the disease. This should spur a lot more travel within the 27-member bloc.
The Iranian nuclear deal, however, remains a major headwind for prices, severely limiting upside potential in the immediate term.
"There continue to be positive statements out of Vienna from various participants, including Iran, that a deal is at hand," John Kilduff, a partner at Again Capital, told Bloomberg. "Even though we know they have already been ramping up their exports, it is adding to negative market sentiment."
Iran's President Hassan Rouhani said yesterday that the United States was ready to lift oil and banking sector sanctions.
"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," Rouhani said as quoted by Reuters.
An Iranian government official, however, told Iranian media that it was not a done deal yet, with the U.S. still reluctant to "completely lift any sanctions on the oil, banking, finance and energy sectors".
Meanwhile, Covid-19 cases are on the rise in some parts of Asia, rekindling worry about oil demand in the key region.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Russia Is Making A Mad Dash To Outrun Peak Oil Demand
- OPEC’s Oil Exports Are Surging By 1 Million Bpd In May
- Is This One Of The Best Ways To Play The Electric Vehicle Boom?