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Futures Movers: Natural-gas futures lose nearly 7%, but U.S. oil prices post a modest gain

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Oil futures fell Thursday, extending a retreat from multiyear highs that began the previous session after Iran signaled renewed interest in talks aimed at reviving its nuclear accord.

Iran has indicated it plans to resume talks on the Joint Comprehensive Plan of Action, known as the Iran nuclear deal. The U.S. withdrew from the JPCOA in 2018, under the Trump administration.

“In the initial weeks of the Biden administration, there was speculation that a quick U.S. return to the deal could be imminent, but rising tensions between the two countries and more hardline political shift in the latest Iranian elections have complicated any plans for a revised deal,” said Robbie Fraser, global research & analytics manager at Schneider Electric, in a daily note. Talks between the country and world powers to restore the 2015 deal were suspended in June.

“If a new round of talks proves productive though, it could see a rapid return of Iranian crude exports, with enough volume to potentially counter the total level of undersupply in the market based on recent data,” Fraser said.

West Texas Intermediate crude for December delivery
CL00,
+0.02%

CLZ21,
+0.02%

fell 50 cents, or 0.6%, to $82.16 a barrel on the New York Mercantile Exchange. December Brent crude
BRNZ21,
-0.19%
,
the global benchmark, was down 73 cents, or 0.9%, at $83.85 a barrel on ICE Futures Europe, while January Brent
BRN00,
-0.14%

BRNF22,
-0.14%
,
the most actively traded contract, dropped 72 cents, or 0.9%, to $83.15 a barrel.

Oil futures fell more than 2% Wednesday, extending losses after Iran’s chief negotiator, Ali Bagheri, said that Iran would return to nuclear discussions before the end of November.

“The ultimate goal of talks would be for the nuclear deal to be fully restored, which would also likely mean the lifting of U.S. sanctions on Iran. How talks evolve will be important for the oil outlook in 2022,” said Warren Patterson, head of commodities strategy at ING, in a note.

“We are currently assuming that Iranian output at the end of 2022 is around 1.3 million barrels a day higher than where it starts the year,” he said. “If we were not to see this increase in supply next year, the market would likely be much more balanced than we currently expect it to be in 2022.”

Data from the Energy Information Administration on Wednesday showed that U.S. crude inventories rose by 4.3 million barrels for the week ended Oct. 22, with the data helping to weaken prices for the oil during the trading session.

However, the EIA also reported another sizable decline in crude inventories at the Cushing, Okla., Nymex delivery hub, prompting Matt Smith, lead oil analyst, Americas, at Kpler to raise the alarm that storage at the hub could be “close to tank bottoms by December.”

Read: Why oil traders say this key crude delivery point looks ‘basically empty’

In Thursday dealings, November gasoline
RBX21,
-0.82%

shed 0.6% to $2.435 a gallon and November heating oil
HOX21,
-1.19%

fell 1.1% to $2.488 a gallon. The November contracts expire at the end of Friday’s trading session.

Meanwhile, natural-gas futures traded sharply lower, giving back the more than 3% gain from Wednesday and then some.

The EIA reported on Thursday that domestic supplies of natural gas rose by 87 billion cubic feet for the week ended Oct. 22. On average, analysts forecast an increase of 90 billion cubic feet, according to a survey conducted by S&P Global Platts.

The weekly climb also came in well above the five-year average supply build, which stands at 62 bcf and at the same time a year ago, the EIA reported a 32 bcf addition to supplies in storage, according to S&P Global Platts.

December natural gas
NGZ21,
-7.62%

fell 31.2 cents, or 5%, to $5.886 per million British thermal units.

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