Oil Futures Settle Sharply Lower For 2nd Straight Day

Crude oil prices settled sharply lower on Tuesday, extending losses from the previous session, and falling further from a 7-year high it touched last week.

Oil prices dropped with traders eyeing U.S.-Iran talks. A flurry of diplomacy preceding the resumption of Iran nuclear talks in Vienna suggests there could be a deal on Iran’s nuclear program.

Oil exports from the OPEC producer could resume swiftly if a nuclear deal is reached. The deal could allow over 1 million barrels per day of Iranian oil, equal to over 1% of global supply, back onto the market.

Meanwhile, the U.S. Energy Information Administration (EIA) said in its Short Term Energy Outlook today that oil production in the U.S. will likely rise to 12 million barrels per day in 2022 and 12.6 million barrels per day in 2023, from 11.2 million barrels per day in 2021.

West Texas Intermediate Crude oil futures for March ended lower by $1.96 or about 2.2% at $89.36 a barrel.

Brent crude futures were down $2.00 or 2.16% at $90.69 a barrel a little while ago.

Meanwhile, traders look ahead to weekly oil reports from the American Petroleum Institute (API) and EIA. While the API data is due later today, the EIA will release its inventory data Wednesday morning.

A preliminary Reuters poll showed on Monday that U.S. crude oil and gasoline stockpiles likely rose last week, while distillate inventories were seen falling. Crude inventories were seen increasing by about 700,000 barrels in the week to Feb. 4.

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