Oil held the biggest two-day gain since March as investors tracked a recovery in demand that may enable the market to accommodate any fresh flows from Iran should the nation’s nuclear deal be revived. West Texas Intermediate traded near $66 a barrel after rallying more than 6% in the previous two sessions. Talks between Iran and world powers will continue in Vienna this week to resolve outstanding issues on the accord, which may pave the way for the removal of U.S. sanctions on Iranian crude flows. Goldman Sachs Group Inc. said the market will likely be able to absorb the extra barrels, highlighting the strength of demand as vaccines are rolled out.

WTI has once again rebounded above its 50-day moving average

Mobility in the U.S. is picking up, aiding energy consumption. With more than 61% of U.S. adults having received at least one vaccine dose, new coronavirus cases rose just 0.5% in the past week, the slowest increase since March 2020. The upcoming Memorial Day break, a three-day weekend for many, marks the start of the nation’s summer driving season.

“The resumption of talks in Vienna from today could bring the Iran issue back center stage,” said Vandana Hari, founder of Vanda Insights. “Aside from Iran, I expect market focus to return to U.S. stockpiles and demand.”

PRICES:
  • WTI for July delivery was little changed at $66.07 a barrel on the New York Mercantile Exchange at 7:12 a.m. in London.
  • Brent for July settlement added 0.2% to $68.57 a barrel on the ICE Futures Europe exchange.
    • Earlier, intraday prices rose as much as 0.6% to $68.90, a one-week high.

The possibility of Iran’s official return to the global oil market has been well-flagged. While Tehran said on Monday that gaps remain in negotiations aimed at reaching a deal, diplomats are pressing for a solution. As part of that process, Iran has agreed to extend a key nuclear-monitoring pact with United Nations’ inspectors, clearing the way for more time for the talks.

Brent’s prompt time spread was 9 cents a barrel in backwardation. While that’s a bullish pattern — with near-term prices above those further out — it is down from 32 cents at the beginning of last week.