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Oil Holds Two-Day Surge as Investors Weigh Iran Talks, Demand By Bloomberg

© Bloomberg. Storage tanks located near a dock for Hornbeck Offshore Services, Inc. oil industry support vessels in Port Fourchon, Louisiana, U.S., on Thursday, June 11, 2020. Oil eclipsed $40 a barrel in New York on Friday, extending a slow but relentless rise that’s been fueled by a pick-up in demand and could signal a reawakening for U.S. shale production. Photographer: Luke Sharrett/Bloomberg

(Bloomberg) — Oil was steady after its biggest two-day surge since early March as investors tracked progress toward the revival of the Iranian nuclear deal and a recovery in the U.S. economy before the summer driving season.

West Texas Intermediate traded near $66 a barrel after rallying more than 6% in the previous two sessions. Talks between Iran and world powers will continue in Vienna this week to resolve outstanding issues on the accord, which may pave the way for the removal of U.S. sanctions on Iranian crude flows. Goldman Sachs Group Inc (NYSE:). said the market will likely be able to absorb the extra barrels, highlighting the robustness of demand as vaccines are rolled out.

Mobility in the U.S. is picking up, aiding energy consumption. With more than 61% of U.S. adults having received at least one vaccine dose, new coronavirus cases rose just 0.5% in the past week, the slowest increase since March 2020. The upcoming Memorial Day break, a three-day weekend for many, traditionally marks the start of the nation’s summer driving season.

Oil remains on course to post another monthly advance in May — the fourth out of five this year — as investors wager that demand will pick up in the U.S., Europe, and China. That will be offset, however, by continued weakness in parts of Asia, especially India, where the coronavirus is still running rampant.

The possibility of Iran’s official return to the global oil market has been well-flagged. While Tehran said on Monday that gaps remain in negotiations aimed at reaching a deal, diplomats are pressing for a solution. As part of that process, Iran has agreed to extend a key nuclear-monitoring pact with United Nations’ inspectors, clearing the way for more time for the talks.

©2021 Bloomberg L.P.

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