Oil futures edged lower Monday amid expectations that talks toward restoring the Iran nuclear deal will drag on following the country’s presidential election late last week.
West Texas Intermediate crude for July delivery fell 4 cents, or 0.1%, to $71.60 arrel on the New York Mercantile Exchange. August WTI the most actively traded contract, was off 5 cents, or 0.1%, at $71.24 a barrel.
August Brent crude the global benchmark, declined 12 cents, or 0.1%, to $73.39 a barrel on ICE Futures Europe.
Crude was underpinned, “with the latest round of Iranian nuclear talks failing to lead to a deal,” said Warren Patterson, head of commodity strategy at ING, in a note.
“Furthermore, only to complicate matters, Iran elected a new president last week, and this has the potential to further delay talks, particularly given that the new incoming president is currently under U.S. sanctions,” he said.
As was widely expected, hard-line judiciary chief Ebrahim Raisi won Iran’s presidential election on Friday after his strongest competitors were disqualified from the contest. Raisi was sanctioned by the U.S. two years ago for his close ties to Iranian Supreme Leader Ali Khamenei.
Top diplomats involved in talks between Iran and global powers attempting to restore the 2015 nuclear deal said Sunday that negotiations had made progress, the Associated Press reported. A restoration of the deal would add significant amounts of supply to the global oil market as early as the second half of this year, analysts have warned.
Oil futures logged gains last week, despite a sharp selloff in other commodities tied in part to a surge higher by the U.S. dollar, which was lifted after the Federal Reserve signaled that policy makers expect rates to rise sooner than had been previously anticipated. A stronger dollar can be a negative for commodities priced in the currency, making them more expensive to users of other currencies.
Still, “the fact that the U.S. dollar is holding on to last week’s gains is keeping a certain bearish pressure on the barrel’s price,” said Pierre Veyret, technical analyst at ActivTrades, in a note.
WTI “remains in its midterm bullish channel, trading higher and higher following its rebound over $70. A clearing of resistance at $71.70 will open the way to $72.25 and $72.90 by extension,” Veyret said.