Oil futures: Prices recover as Saudi raises prospect of OPEC+ output cuts
Quantum Commodity Intelligence - Crude oil futures Monday were lower for much of the session amid volatile trading, as economic concerns and reports of a deal between Iran and Western powers moving closer o a deal initially outweighed rocketing European natural gas prices and OPEC+ underproduction.
However, comments from Saudi Arabia that OPEC+ may consider a cut in production countered earlier negativity, with prices heading into the final stages of the session little changed.
Front-month October ICE Brent futures were trading at $96.58/b (1900 GMT), compared to the day's range of $92.36-$97.28/b and Friday's settle of $96.72/b.
At the same time, October NYMEX WTI was trading $90.40/b, versus Friday's settle of $90.44/b, while the Sep22 contract was trading at $90.67/b ahead of expiry.
"Sentiment remains fairly negative, with the market still awaiting further details on how Iranian nuclear talks are progressing. Reports suggest that the US had discussions with the UK, Germany and France over the weekend to go through the EU proposal for a nuclear deal," said Warren Patterson, head of ING's commodity research, although noted that it was still not clear where the US stands on the latest proposal.
Benchmarks also took a hit after the latest data showed that funds increased bets sharply that crude would fall last week, as fears of a short-term oversupply of crude pushed the net speculative length held in crude futures contracts to fresh pandemic lows.
Iran
Oil markets were weighed down in early Monday trade as Qatar-based Al Jazeera reported over the weekend that an Iran nuclear deal was 'imminent,' while other reports indicated Tehran was ready to drop its demand that the Islamic Revolutionary Guard Corps be removed from the US State Department's List of Foreign Terrorist Organizations.
More broadly, weaker economic growth remains the driving factor on the downside for oil, but in part has been countered by OPEC+ struggling to make quotas, soaring natural gas prices and demand proving resilient in most sectors.
Oil prices had rebounded from initial lows as Dutch TTF futures prices for Sep22 rocketed Monday at one point by nearly 20% to over €290/MWh before easing, although heading for a further record settlement amid growing concerns over Russian shortfalls.
But turning focus to natural gas, ING's Patterson said: "The European market is getting increasingly anxious about how Russian flows will evolve as we move closer to the next heating season."
Prices ended last week around 1.5% lower, as a strong rebound in the second half saw oil benchmarks claw back most of the early-week losses.
Meanwhile, Baker Hughes' latest weekly survey showed active drilling rigs in the US dropped by just one unit to 762, although it was still the third fall in as many weeks. Drilling rigs specifically for crude oil were unchanged 601.
