Oil settles down off 7-yr highs; U.S.-Iran talks eyed

Crude oil storage tanks are seen from above at the Cushing oil hub in Cushing
Crude oil storage tanks are seen from above at the Cushing oil hub, appearing to run out of space to contain a historic supply glut that has hammered prices, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford
  • Brent falls from more than 7-year high of $94/bbl
  • U.S.-Iran nuclear talks will resume on Tuesday
  • Iran stores more oil on tankers as talks enter final stage

Feb 7 (Reuters) - Oil prices settled lower on Monday on faint signs of progress in nuclear talks between the United States and Iran, which could lead to the removal of U.S. sanctions on Iranian oil sales.

Last week, crude prices rallied for the seventh week on ongoing worries about supply disruptions fueled by frigid U.S. weather and ongoing political turmoil among major world producers.

If U.S. sanctions are lifted, Iran could quickly export millions of barrels of crude and help to drive down red-hot oil prices.

Brent crude settled down 58 cents, or 0.6%, at $92.69. It session high of $94 was the highest since October 2014.

U.S. West Texas Intermediate crude fell 99 cents, or 1.3%, to settle at $91.32 after touching $92.73.

On Friday, U.S. President Joe Biden's administration restored sanctions waivers to Iran to allow international nuclear cooperation projects as talks on the 2015 international nuclear deal enter the final stretch. read more

Although the sanctions relief will have limited impact on Iran's struggling economy, markets viewed the move as a signal both sides were determined to reach a deal.

Speaking on condition of anonymity, a European official said top envoys to the Vienna talks - which are indirect because Iran has so far refused to sit down with U.S. diplomats - were likely to meet on Tuesday in the Austrian capital. read more

"Besides the feel-good vibe coming from the negotiations, the Biden administration is feeling pressure to lower inflation, and the fastest way to do that would be to lower energy prices," said Bob Yawger, director of energy futures at Mizuho.

Crude prices, which have rallied about 20% this year, are likely to surpass $100 a barrel because of strong global demand, analysts have said. read more

However, the relative strength index (RSI), a measure of momentum, shows the oil market is currently overbought, and ripe for a pullback.

Fueling supply concerns, tensions remain high in Eastern Europe, with White House national security adviser Jake Sullivan saying on Sunday that Russia could invade Ukraine within days or weeks but might still opt for a diplomatic path. read more

Additional reporting by Bozorgmehr Sharafedin in London and Yuka Obayashi in Tokyo Editing by Louise Heavens, Marguerita Choy and David Gregorio

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Thomson Reuters

Reports on oil and energy, including refineries, markets and renewable fuels. Previously worked at Euromoney Institutional Investor and CNN.