Oil Down From Multi-Year Highs Due to Optimistic Demand Outlook

© Reuters.

By Gina Lee

Investing.com – Oil was down Monday morning in Asia, as investors keep monitoring the talks between Iran and world powers that could lead to increased Iranian supplies.

fell 0.38% to $71.62 by 12:57 PM ET (4:57 AM GMT). were down 0.26% to $69.44, after hitting $70 a barrel for the first time since October 2018 earlier in the session due to a brightening fuel demand outlook.

Investors could have sold off some contracts to take profit when WTI futures hit the $70 mark, according to Avtar Sandu, a senior commodities manager at Phillips Futures.

Talks between Iran and world powers in reviving a 2015 nuclear deal have been delayed, with a fifth round of talks to take place on Jun. 10 in Vienna.

The European Union envoy coordinating the discussion had expected that they would strike a deal this week, however, other senior diplomats have said it still has a long way to go.

Analysts expect Iran will increase its production by 500,000 to 1 million barrels per day once a deal is sealed.

“The primary concern is about Iranian barrels coming back into the market, but I don’t think there will be a deal before the Iranian presidential election” on Jun. 18, said Sandu.

Investors expected that fuel demand will surpass supplies in the second half of 2021 even if OPEC+ is gradually easing the supply cuts.

Oil prices have jumped over 40% this year due to demand rebound in the U.S., Europe and China as governments are lifting COVID-19 restrictions. However, the recent outbreak of COVID-19 cases in parts of the world indicated an uneven demand recovery.

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In the U.S., the number of oil and natural rigs operating dropped for the first time in six weeks due to a slowdown of growth in drilling.

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