Oil futures: Crude prices up 1.5% on Iran JCPOA response, Russian price-cap row
Quantum Commodity Intelligence – Crude oil futures Friday were higher after the US gave unfavorable feedback regarding Iran's latest response, while Russian supply concerns and the upcoming OPEC+ meeting also helped stabilize prices after a week of losses.
Front-month November ICE Brent futures were trading at $93.76/barrel (1812 GMT), compared to the day's high of $95.19/b and Thursday's settle of $92.36/b.
At the same time October NYMEX WTI was trading $87.57/b, versus the day's high of $89.66/b and Thursday's settle of $86.61/b.
Iran said it sent a "constructive" response to US proposals aimed at reviving Tehran's 2015 nuclear deal with world powers, known as the JCPOA, according to the Foreign Ministry.
However, initial indications from the US suggested Iran's counter proposal was falling well short with a State Dept saying: "We can confirm that we have received Iran's response through the EU. We are studying it and will respond through the EU, but unfortunately it is not constructive."
The potential return of Iranian crude to markets had weighed on sentiment, as French President Emmanuel Macron said Thursday he hoped that a deal to restore nuclear limits on Iran would be agreed in the coming days.
Oil prices also steadied after comments from Deputy Prime Minister Alexander Novak that Russia would stop supplying crude and products to countries that impose a price ceiling on its oil, speaking ahead of Friday's G7 meeting to discuss price-cap proposals.
The comments raised the prospect of further disruptions to Russian energy supplies over the winter, but any price rebound is expected to be fragile against a background of increasingly bearish economic indicators.
The Group of Seven wealthy nations on Friday agreed on a plan to implement a price capping mechanism on Russian oil exports: "We aim to align implementation with the timeline of related measures within the EU´s sixth sanctions package," they said.
The initial price cap would be set "at a level based on a range of technical inputs."
OPEC+
Crude prices have fallen by around 5.5% this week, having closed on Thursday back at lows from 22 August, shortly before Saudi Minister Prince Abdulaziz first flagged the Kingdom was considering production cuts due to what he said was a disconnect between oil futures and fundamentals.
Analysts said that the recent slump in prices had largely ruled out any prospect of further output hikes when OPEC+ meets Monday, with ministers presented with an opportunity to shore up markets by announcing a reduction in output.
In August, the 10 OPEC members bound by the current deal increased output by 300,000 bpd to 25.28 million bpd, according to a Reuters survey
Crude markets have also been dragged lower by weakness in products, which in turn has been exacerbated by renewed Covid restrictions in China. This includes the latest lockdown of the Chinese megacity of Chengdu.
"The demand outlook for China looks dire, it's settling into a 9-10 million barrel a day consumption rate compared with 10-12 in recent years," said Ole S Hansen, Head of Commodity Strategy at Saxo Group, adding that the hawkish rhetoric from the US Federal Reserve had also been a major driver.
Gasoline cracks in Asia slumped to negative levels this week for the first time since 2020, in turn helping drive the Brent/Dubai spread to the narrowest level in two years.
