(Bloomberg) -- Oil switched between gains and losses as traders weighed the potential for a resumption of the nuclear deal with Iran against the risk of disruption to Kazakh oil flows.
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Brent futures were trading little changed near $96 a barrel after earlier losing as much as 2.3%. Prices have swung in a range of about $13 this month.
President Joe Biden spoke Sunday with leaders from France, Germany and the UK about reviving a nuclear deal with Iran, which could lead to returning supply from the OPEC producer. Meanwhile, there was the prospect of renewed interruptions to Kazakhstan’s Capsian Pipeline Consortium loadings after damage at two moorings.
Crude has given up all of the gains since Russia’s invasion of Ukraine in late February as fears over an economic downturn filtered through the oil market. On Monday, China was said to be planning a series of special loans to ramp up support for its beleaguered property market, the latest sign of the world’s largest crude importer moving to shore up its economy.
President Biden and his European allies discussed “ongoing negotiations” toward a nuclear agreement, including “the need to strengthen support for partners in the Middle East region,” according to a US summary of the call released Sunday. Iran submitted its response on Aug. 15 to a framework circulated by the EU for a deal, which the EU took as constructive.
“We are in a macro economic deteriorating situation with rising interest rates, droughts, China Covid-constraints, and an ugly energy crisis in Europe,” said Bjarne Schieldrop, chief commodities analyst at SEB AB, adding that the oil market appears to be putting a high probability on the chances of a resumption of the Iran nuclear deal.
Rising flows of long-haul cargoes into Asia from regions such as the US, which take twice as long as Middle Eastern barrels to reach buyers, have forced spot premiums of Persian Gulf barrels to dip in this month’s trading cycle. Meanwhile options markets have been pricing growing premiums for bearish put contracts that would profit a buyer if prices fall.
China’s Sichuan province extended industrial power cuts and activated its highest emergency response on Sunday to deal with “extremely outstanding” electricity supply deficiencies, adding to manufacturers’ woes as factories are shuttered and adding to fears of further economic weakness.
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