OIL FUTURES: Crude slides 3% amid rising US supply, Iranian nuclear talk restart

Crude futures settled down more than 3% Nov. 3 as supply concerns eased amid rising US inventories and a restart date for Iranian nuclear talks.

NYMEX December WTI settled $3.05 lower at $80.86/b and ICE January Brent declined $2.73 to $81.99/b.

US commercial crude oil stocks moved 3.29 million barrels higher in the week ended Oct. 29 to 434.1 million barrels, US Energy Information Administration data showed Nov. 3.

The crude build was largely in line with recent market expectations. American Petroleum Institute data released late Nov. 2 showed US crude inventories climbed 3.6 million barrels over the period.

Still, EIA showed a US crude production averaged 11.5 million b/d over the period, an increase of 200,000 b/d from the week prior and the highest since late August, prior to hurricanes Ida and Nicholas shutting in Gulf of Mexico output.

"The oil price correction has accelerated on Wednesday on the back of inventory data from API and EIA which showed larger than expected increases last week," OANDA senior market analyst Craig Erlam said in a note. "Perhaps this is the clearest sign yet that we're going to see a deeper correction after the recent dip was quickly bought up after just a couple of days."

NYMEX December RBOB settled down 11.16 cents at $23385/gal and December ULSD gave up 7.37 cents to settle at $2.4345/gal.

Meanwhile, the next round of Iran nuclear talks, which could swing global oil supply by 1.5 million b/d next year, have been set for Nov. 29 in Vienna after a five-month pause.

Iran's chief negotiator, Ali Bagheri Kani, said in a tweet Nov. 3 that he had agreed to the date in a call with EU envoy Enrique Mora.

EU officials confirmed the date in press release, adding that representatives of China, France, Germany, Russia, and the UK will also attend.

The Joint Comprehensive Plan of Action reached in 2015 set restrictions on Iran's nuclear program in exchange for relief from US sanctions. The Trump administration reimposed sanctions on Iran's oil, petrochemical, shipping and other sectors in 2018.

S&P Global Platts Analytics expects Iranian oil supply to rise to 3.66 million b/d by December 2022 if a deal is reached and US oil sanctions are removed. If talks are delayed further or collapse, the Iranian supply outlook would fall to 2.17 million b/d.

The market is likely to look toward the Nov. 4 OPEC+ group meeting or next direction. The group is widely expected to go ahead with its planned 400,000 b/d December output increase, but calls for the group to send more crude to market to offset rising prices are growing.

If you take a look at gas prices and you take a look at oil prices, that is a consequence of thus far the refusal of Russia or the OPEC nations to pump more oil. We will see what happens on that score sooner or later" US President Joe Biden said Nov. 2 at the COP26, UN Climate Change Conference.

Recent public comments from OPEC members, however, showed they are unlikely to budge. Kuwait's oil minister said Nov. 1 he supports the OPEC+ group's planned 400,000 b/d monthly crude output hike, while Saudi Arabia's energy minister Prince Abdulaziz bin Salman said Oct. 20 he saw no evidence of a crude shortage.

"Pressure on OPEC+ to combat high oil prices continues to build, as President Biden blames the group of producers for inflationary pressure at home," TD Securities analysts said in a note. "Yet, the group of producers' Joint Technical Committee has paved the way for a status-quo increase in output by downgrading their deficit expectations for this quarter.