TOKYO, May 22 - U.S. crude futures moved upward in early trading on Friday as investors expressed reservations about the likelihood of a decisive breakthrough in negotiations between the United States and Iran. Market attention centered on persistent disagreements over Tehran's uranium stockpile and the question of oversight or control in the Strait of Hormuz.
A senior Iranian source said no agreement has been reached with the U.S., although the same source indicated that the differences between the two sides have been narrowed. At the same time, U.S. Secretary of State Marco Rubio characterized the talks as showing "some good signs," while adding that any proposal for a toll system in the strait would be unacceptable.
Price action reflected the geopolitical uncertainty. U.S. West Texas Intermediate crude futures rose to a session high of $98.00 per barrel and were last recorded up $1.20, or 1.3 percent, at $97.55 as of 2228 GMT. That followed a roughly 2 percent decline on Thursday, which sent the contract to its lowest closing level in nearly two weeks. Despite Friday's gains, the benchmark remained on track for a weekly drop of more than 7 percent.
Traders appeared to be responding to the mixed signals coming out of the diplomatic discussions. On one hand, officials noted narrowing gaps; on the other hand, key sticking points - specifically the size of Iran's uranium holdings and mechanisms for managing traffic or security in the Strait of Hormuz - remained unresolved. Those unresolved matters kept some participants cautious about declaring the talks a success.
The combination of a recent sharp weekly decline and renewed doubt about a diplomatic resolution likely contributed to the intraday rebound. Market participants tracking physical and financial crude exposures were adjusting positions in response to the evolving outlook for supply-side risk tied to developments in the talks.
Market status:
- Session high: $98.00 per barrel (WTI)
- Last trade noted: $97.55, up $1.20 or 1.3% as of 2228 GMT
- Previous session: about 2% decline; lowest close in nearly two weeks
- Weekly trend: headed for a loss exceeding 7%