Oil prices fell after hitting a two-year high of more than US$72 per barrel on Monday. Demand recovery and OPEC + supply constraints provided potential support. However, they received pressure from the prospect of increased Iranian exports.
With the relaxation of COVID-19 restrictions, demand in the U.S. and Europe is rising. Besides, as another promising step in fuel use, India is relaxing its blockade.
OPEC And Its Allies Will Insist on Agreed Supply Limits by July
At 0920 GMT, Brent crude oil fell 62 cents, or 0.9%, to US$71.27. It had previously reached US$72.27, the highest level since May 2019. U.S. West Texas Intermediate crude oil hit US$70 for the first time since October 2018. However, the reversal trade fell 55 cents or US$0.8% to US$69.07.
According to Jeffrey Halley, an analyst at brokerage firm OANDA, as India’s pandemic situation has improved and the recovery in the U.S., China, and Europe is still on track, oil should be bought on dips.
Crude oil prices have risen in the past two weeks, and Brent crude oil has been increased by more than 37% this year.
Crude oil and Brent oil raised thanks to the supply constraints of OPEC and its allies. Also, the partial recovery of demand from the pandemic-induced collapse was a big help.
Commerzbank’s Eugen Weinberg said that the prices are currently getting a solid boost from almost every aspect. However, he added that Monday’s price adjustment after the recent rise was “not surprising.”
Phillips Futures’ senior commodity manager in Singapore said that when WTI reaches $70, investors might have sold some contracts. Additionally, the possibility of an increase in Iranian supplies and a decline in China’s crude oil imports also pose pressure.
The main concern on the market is the return of Iranian oil to the market. However, there may not be new deals before the Iranian presidential election. The election is on June 18.
Iran and global powers will hold the fifth round of talks in Vienna on June 10. The meeting will include Washington lifting economic sanctions on Iranian oil exports.