Weekend talks on Iran nuclear program seen as constructive
By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures veered between gains and losses Monday, supported by a stronger-than-expected U.S. retail sales report but kept in check by concerns about European debt woes and after weekend talks on Iran’s nuclear program eased supply tensions.
Crude for May delivery CLK2 -0.61% retreated 67 cents, or 0.6%, at $102.18 a barrel on the New York Mercantile Exchange.
Futures traded lower earlier, but started to trim losses as most European equities rose and U.S. stocks opened higher despite renewed pressure on Spanish government bond prices amid resurgent sovereign-debt worries. See Europe Markets.
U.S. retail sales for March rose sharply, providing some hope the U.S. economy grew faster than expected in the first quarter and helping to earlier support oil.
The Commerce Department said sales increased 0.8% in March, rising for the third straight month. Read more about retail sales.
Oil prices had buckled on Friday as data showed China’s economy slowed more than expected during the first quarter, prompting fears about oil demand.
Analysts at Phillip Futures in Singapore expect the focus for the crude market to shift away from geopolitical risk in the Middle East and back toward macroeconomic fundamentals over the coming quarter.
They cited a “lengthening patch” of economic data suggesting softer global growth as the catalyst for further downside pressure on crude prices.
Prices destined for a drop?
Meanwhile, multilateral talks concerning Iran’s nuclear program took place in Istanbul over the weekend. Iran and international powers described the talks as constructive, according to reports, with negotiations to enter a second round next month in Baghdad.
Tensions surrounding Iran’s nuclear intentions have simmered in recent months, prompting international sanctions that have helped underpin strength in crude prices.
Moving into the second quarter, Phillip Futures analysts said “event risk outside Iran remains high, and positive demand shocks ... are keeping fundamentals, and spare capacity, tight enough to provide support.”
Phillip Futures forecast New York-traded crude will reach $95 a barrel by the third quarter, while Europe’s benchmark, Brent crude, is forecast to hit $135 a barrel over the same time period.
Brent on Monday traded $2.08 off, or 1.7%, to $119.13 a barrel on ICE Futures in London.
Other energy products traded lower, with gasoline for May delivery RBK2 -1.88% off 6 cents, or 1.8%, to $3.28 per gallon. May heating oil HOK2 -1.52% lost 4 cents, or 1.4%, to $3.13 a gallon.
Natural gas for the same month’s delivery NGK12 +0.40% rose 2 cents, or 1.1%, to $2 per million British thermal units. Natural gas has traded at or around its lowest in 10 years as warmer temperatures and increased production have pressured the commodity.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Virginia Harrison is a MarketWatch reporter based in Sydney.
