Oil futures: Brent surges Monday after US markets open

21 Jun 2021

London (Quantum Commodity Intelligence – Brent surged Monday after the US markets opened and tested the highs seen last week, with sentiment lifted by further signs of the US recovering and Iran’s election of a hardline cleric, which is viewed as likely to further delay an agreement on lifting sanctions.

Front-month August Brent futures were trading at $74.76/barrel (1747 GMT), compared to Friday’s settle of $73.51/b.

The crude future had slipped to a low of $72.96/b at 1407 GMT, triggering a rebound around the same time as a report showed the Chicago Federal National Activity Index rose to 0.29 points in May from -0.09 points in April. 

The index combines 85 different indicators to provide an overall picture of economic activity, and soothed concerns about hawkish comments on inflation made by the Federal Reserve Friday.

“The rebound in demand in the northern hemisphere summer is so strong that the market is becoming increasingly concerned about further sharp drawdowns on inventories. This comes as OPEC treads a cautious path back to normal output levels,” said Daniel Hynes, senior commodity strategist at ANZ.

Hard-line cleric, Ebrahim Raisi, was elected as Iran’s next president, which some analysts see as a barrier to a quick resumption of the 2015 Iranian nuclear deal.

However, discussions between Iran and the international community continued in Vienna over the weekend and while progress was made, any final decision has been deferred.

‘We are closer than we were one week ago, but we are still not there,” said European Union negotiator Enrique Mora. “We have made progress on a number of technical issues, we have more clarity.”

Russian negotiator Mikhail Ulyanov was less optimistic, saying diplomatic efforts have been “almost fully exhausted”, adding the time has come for political decisions.

Meanwhile, Commerzbank said in a research note Monday, "following the victory of the ultra-conservative cleric Raisi in the presidential elections in Iran, there is realistically only a month and a half left in which the deal could be ratified after all before the new government takes over at the beginning of August."