Brent rises towards $106 after Iran talks end without deal

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Brent futures edged up towards $106 a barrel in Asia on Monday after Iran and six world powers failed to reach a deal on Tehran’s nuclear program, while data showed a slight rise in implied fuel demand in China.

High-level talks in Geneva at the weekend to ease international sanctions against Iran in return for restraints on its nuclear program had been watched closely by traders.

The sanctions have removed more than 1 million barrels per day of oil from world markets, and any increase in supply from Iran could push oil prices lower, analysts say.

The sides seemed on the verge of a breakthrough before cracks materialized among U.S. and European allies as French Foreign Minister Laurent Fabius dismissed the plans as a “fool’s game” of one-sided concessions.

While U.S. lawmakers on Sunday aimed to tighten sanctions on Iran, diplomats in Geneva said a deal was still possible.

Negotiators will resume lower-level talks on Nov. 20.

“This just shows that it’s going to take a while for any agreement to be reached,” said Tony Nunan, an oil risk manager at Mitsubishi Corp. in Tokyo. “Unless we see any breakthrough in talks, I don’t expect a big impact on oil markets.”
Brent was 40 cents higher at $105.52 per barrel at 0230 GMT. The contract hit a four-month low on Friday, and despite rising to close the session up $1.66 per barrel, Brent ended with its fourth straight week of losses.
U.S. crude was 5 cents higher at $94.65 per barrel, after closing up 40 cents on Friday.

China fuel demand

A surprise increase in U.S. jobs data on Friday, which strengthened the dollar as well as the possibility that U.S. stimulus could be pared sooner, weighed on most commodities including the domestic crude contract.
U.S. nonfarm jobs rose by 204,000 in October despite a 16-day government shutdown, well ahead of market expectations for a 125,000 increase.

China’s implied oil demand inched up 0.3 percent in October from a year earlier, after dipping the previous month in the first yearly decline in 17 months.

Fuel demand in China, the world’s top net oil importer, was about 9.79 million barrels per day last month, according to Reuters calculations based on preliminary government data. That compares to 9.76 million bpd a year ago and is up 1.9 percent from 9.61 million bpd in September.

The improvement came as official data at the end of last week suggested China’s economy has found its footing after a protracted slowdown, with factory activity growing faster than expected and a rebound in exports also stronger than the market had thought.

News that Saudi Arabia cut its crude output in October to 9.75 million barrels per day from 10.1 million in September also helped support prices.

In Libya, tensions seemed to worsen after protesters at the eastern port of Hariga on Friday prevented a tanker from loading 600,000 barrels of oil headed for Italy. The port has remained closed for more than two months.

The protests came after the worst fighting in months broke out in the capitol Tripoli.

Kuwait’s oil minister Mustapha al-Shamali said on Saturday he expected OPEC to keep its crude oil output target unchanged at its next meeting.

The Organization of Petroleum Exporting Countries (OPEC), which pumps more than a third of the world’s oil, will meet next on Dec. 4 in Vienna to decide whether to adjust its output target.