Categories: Economic News

Oil falls on economic data, pending news of Iran nuclear deal

  • China unexpectedly cuts key rates as economic data disappoints
  • Iran responds to EU nuclear text, seeks US flexibility
  • Oil production in Permian Basin to rise to record high in September -EIA
  • Coming soon: API data on US oil inventories at 4:30 PM ET

NEW YORK, Aug 16 (Reuters) – Oil prices fell more than 1 percent in volatile trade on Tuesday as economic data fueled concerns about a possible global recession, while the market awaited clarity on talks to revive a deal that would allow more Iranian oil exports.

Brent crude futures fell $1.41, or 1.5%, to $93.69 a barrel, after hitting a session high of $95.95. West Texas Intermediate (WTI) crude fell $1.33, or 1.5%, to $88.08 a barrel, after rising to $90.65.

Contracts fell about 3% in their previous sessions.

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The European Union is assessing Iran’s response to what the bloc has called its “final” proposal to save the 2015 nuclear deal and is consulting with the United States, an EU spokesman said on Tuesday. Read more

Iran responded to the proposal on Monday afternoon, but neither Tehran nor the EU provided any details on the content of the response.

“It’s still not clear what Iran said to the European Union last night, so some complicated elements may affect the outcome of the nuclear deal,” said UBS analyst Giovanni Staunovo.

Weak economic indicators weighed on prices.

U.S. homebuilding fell to the lowest level in nearly 1-1/2 years in July, weighed down by higher mortgage rates and building material prices, suggesting the housing market it could contract further in the third quarter. Read more

“Oil traders reacted because of concerns about an economic slowdown and housing uses for energy,” said Phil Flynn, analyst at Price Futures Group. “That took us by surprise.”

China’s central bank cut lending rates to try to revive demand as the country’s economy unexpectedly slowed in July after Beijing’s zero-Covid policy and a housing crisis slowed factory and retail activity. Read more

State media quoted Premier Li Keqiang as saying that China will reasonably step up macro policy support for the economy. Read more

Barclays cut its Brent price forecasts by $8 a barrel for this year and next as it expects a large near-term crude glut due to “resilient” Russian supplies. Read more

Market participants awaited industry data on US oil inventories due later on Tuesday. Crude and gasoline inventories likely fell last week, while distillate inventories rose, a preliminary Reuters poll showed on Monday.

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Reporting by Stephanie Kelly in New York; additional reporting by Ahmad Ghaddar in London and Muyu Xu in Singapore; edited by Barbara Lewis and Marguerita Choy

Our standards: the Thomson Reuters Trust Principles.

Stephanie Kelly

Thomson Reuters

A New York-based correspondent covering the U.S. crude market and a member of the energy team since 2018 covering oil and fuel markets as well as federal policy on renewable fuels.


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