By Peter Nurse
Investing.com — Crude oil prices edged lower Tuesday, consolidating after recent sharp gains as traders digest the possibility of additional supply from Iran hitting the global market.
By 9:10 AM ET (1410 GMT), futures traded 0.5% lower at $65.75 a barrel, after gaining almost 4% the previous session, while the international benchmark contract fell 0.5% to $68.02, having jumped 3% on Monday.
U.S. Gasoline RBOB Futures were down 0.6% at $2.1085 a gallon.
The oil market is closely looking toward Vienna, as world powers restart negotiations to potentially revive the 2015 agreement that reined in Iran’s nuclear program in exchange for the country’s return to oil markets and the global economy.
The return of Iran, which holds the world’s fourth biggest oil reserves, could mean up to 1 million barrels of oil a day reentering the global market.
“If and when the U.S. rejoins the Iranian nuclear deal, this will likely hit sentiment in the oil market, however we are still of the view that the market will be able to absorb this additional supply, so would expect price weakness to be short-lived,” said analysts at ING, in a note.
Goldman Sachs (NYSE:) agreed that the market will likely be able to absorb the extra barrels, in a note earlier this week, keeping to its view that crude could reach $80/bbl in the fourth quarter given the robustness of demand as vaccines are rolled out.
United Airlines (NASDAQ:) said its ticketed yields accelerated in the second quarter, as more domestic customers got on planes, while schools are set to offer compulsory in-house learning in the fall in New York, one of the hardest hit states. Even in India, the numbers of new coronavirus infections have fallen off highs of over 400,000 earlier this month.
In Europe, the German shrank more than expected in the first quarter as coronavirus-related restrictions weighed, but that quarter is expected to be the low point of the current cycle as the economy gradually reopens.
In corporate news, the Mexican state-owned oil company Petroleos Mexicanos has agreed Tuesday to pay Royal Dutch Shell (NYSE:) just under $600 million for the 50% stake in a Houston-area refinery it doesn’t already own. This follows Monday’s merger of Cabot Oil & Gas (NYSE:) with Cimarex Energy (NYSE:), increasing consolidation in the U.S. oil sector.
Staying with the U.S. market, crude oil supply data from the is due later in the session.
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