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Futures Movers: U.S. oil prices end at lowest since January; natural-gas futures rally to a 14-year high

Oil futures moved lower on Tuesday, looking to extend the sharp loss from a day earlier tied to the potential for an Iran nuclear deal and worries over the global economic outlook after weak data out of China.

Price action

West Texas Intermediate crude for September delivery



fell $2.15, or 2.4%, to $87.26 a barrel on the New York Mercantile Exchange after losing 2.9% on Monday.

October Brent crude

the global benchmark, was down $2.08, or 2.2%, at $93.02 a barrel on ICE Futures Europe, a day after losing 3.1%.

Back on Nymex, September gasoline

traded at $2.9065 a gallon, down 1.5%, while September heating oil

was up 0.5% at $3.459 a gallon.

September natural-gas futures

rose 5.3% to $9.184 per million British thermal units.

Market drivers

Crude prices saw volatile trading Tuesday, seesawing between losses and gains before trading solidly lower in afternoon dealings, a day after posting losses of roughly 3%.

Investors were tracking developments around efforts to revive Iran’s nuclear accord. Tehran responded to a draft agreement presented by the European Union, indicating it had reservations and signaling talks were likely to extend beyond what had been described as a Monday deadline, Politico reported.

The possibility of a nuclear deal for Iran means more supplies could hit the market,” Fawad Razaqzada, market analyst at City Index and, told MarketWatch.

See: Iran nuclear deal: What’s at stake for oil prices as Tehran prepares response to EU proposal

“However, even if a new agreement were to be signed, it would presumably take some time before sanctions could be fully lifted,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note. “When the 2015 agreement was reached, it took roughly half a year for this to happen. Iran’s oil production then increased by around 700,000 barrels per day in the first half of 2016.”

Meanwhile, the Chinese yuan

is weakening sharply because of disappointing Chinese data and the People’s Bank of China’s swift intervention, said Razaqzada.

This is also making commodities sold in the U.S. dollar more expensive for Chinese buyers, he said. “If we see more renminbi weakness, which is now likely, this could negatively impact crude oil and metal prices.”

Early this week, China’s industrial production and retail sales came in lower than the previous month and shy of analysts’ forecasts, and the PBOC delivered a surprise interest rate cut.

“The unexpected move gave the impression that it is alarmed about the extent of economic weakening,” said Commerzbank’s Fritsch. “In our view, problems in the real-estate sector, plus the government’s zero-COVID strategy, are likely to continue to weigh on the economy in the short to medium term, meaning that oil prices will probably face persistent headwind from this side.”

Still, U.S. data released Tuesday was somewhat upbeat, showing that industrial production rose 0.6% in July, more than the expected 0.3% increase, according to a survey by The Wall Street Journal.

The U.S. Energy Information Administration will release its weekly petroleum supply data early Wednesday.

On average, analysts expect the report to show declines of 1.7 million barrels each in commercial crude and gasoline inventories for the week ended Aug. 12, along with a climb of about 400,000 barrels for distillate stockpiles, according to a survey conducted by S&P Global Commodity Insights.

Hear from top Wall Street energy analysts at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. RBC’s Helima Croft will be there.

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