Iran Tweet Causes More Losses For Oil, But Demand Continues To Skyrocket

Meanwhile, dated Brent breaches the $100 threshold: File Image/Pixabay

Oil trading on Wednesday was again driven by little more than hearsay:  Iran's top negotiator tweeting that a nuclear deal is imminent caused prices to fall substantially for a second straight session.

After Ali Bagheri Kani tweeted that restoring his country's nuclear deal with world powers is "closer than ever," West Texas Intermediate fell $1.77 to settle at $90.30 per barrel.

Brent fell $1.83 to settle at $91.45 per barrel.

For the record, the U.S. State Department was far more guarded about the talks: spokesman Ned Price said negotiations are in a "decisive period during which we'll be able to determine whether a mutual return to compliance with the JCPOA is in the offing or if it's not."

Still, Iran remained confident, and as if to prepare for its return to the international oil market officials from state-owned National Iranian Oil Co. will be meeting at least two South Korean refiners to discuss a potential return of supply from the Persian Gulf producer, according to people with knowledge of the talks.

Meanwhile, Wednesday saw more signs of demand outstripping supply on a global scale: government data showed that U.S. oil inventories at the nation's biggest storage hub stand at the lowest since 2018, while oil output remains far below pre-pandemic highs.

Also, S&P Global Platts reported that dated Brent, the price of cargoes bought and sold in the North Sea, reached $100.80 per barrel on Wednesday for the first time since 2014.

This came on the heels of the premium of Brent oil's front-month contract to the second month - known as prompt timespread - expanding further after reaching the widest bullish backwardation structure since 2019.

Mike Wirth, CEO of Chevron, said, "US$100 is certainly within the realm of what we could see in the next few months."

Travis Stice, chief executive officer of Diamondback Energy Inc., remarked, "Eighteen months ago, we were in a global apocalypse for the energy sector, and now you're talking about out-sized returns.

"We should all pause and recognize the tectonic shift."