WTI recovers back to $90.00 level, still down about $1.50 on day amid profit-taking

• WTI dipped on Tuesday amid profit-taking though has recovered from session lows near $89.00 back above the $90.00 level.
• Analysts cited chatter about a potential US/Iran deal on nuclear and French President Macron’s Moscow visit as weighing on prices.

Front-month WTI futures pulled back from close to seven-year highs on Tuesday, at one point dropping as low as the $89.00 per barrel mark, but subsequently recovering back to the north of the $90.00 handle. At current levels, WTI still trades lower by about $1.50 on the session, with traders citing profit-taking ahead of the resumption of indirect US/Iran talks regarding a potential return to the 2015 nuclear pact. Chatter has been building in recent days about what a deal might mean for oil markets.

A return to the old nuclear pact would see US sanctions on Iranian oil exports eased, allowing the country to release a glut of oil stores and increase exports by as much as 1M barrels per day (about 1% of global daily demand). But analysts caution oil traders not to get ahead of themselves in forecasting a breakthrough in talks, which have not yielded anything so far despite eight rounds of negotiations since April 2021.

Another factor weighing on oil markets, market analysts said on Tuesday, is modest dialing down of West/Russia tensions following French President Emmanuel Macron’s visit to Moscow on Monday. The French President said his meeting helped prevent further escalation of tensions, though no broader deal to end the Russia/Ukraine crisis was reached (as expected).

Ahead, oil traders will be keeping one eye on weekly US oil inventory figures, with the private API numbers out later on Tuesday ahead of the official US government figures on Wednesday. Analysts are estimating that inventories rose by 700K barrels in the week ending last Friday, a week when the US was hit by a strong winter storm.