Oil rebounded, mirroring a broader rally in commodities, ahead of talks on reviving the Iranian nuclear accord.

West Texas Intermediate rose 2.3%, with most other commodities also climbing. Crude had plunged on Monday amid a resurgence in Covid infections in Europe and an imminent increase in OPEC+ supplies, which could swell further with an agreement with Iran. Multiparty negotiations take place in Vienna later on Tuesday, though the chances of a breakthrough are seen by analysts as slim.

The oil market’s structure also retreated sharply on Monday, with the much-watched spread between the nearest December contracts falling by almost $1. The decline suggests weakening expectations for the health of the market.

Oil rallied 22% in the first quarter as the rollout of vaccines spurred optimism that demand would rebound, while the Organization of Petroleum Exporting Countries and its allies kept a tight rein on supply. Although volatility has climbed in recent weeks amid waves of the virus in some nations, prices have also been supported by a slew of positive economic data from the U.S.

The “oil market is settling in after the OPEC+ decision on Thursday to start normalizing output,” said Jens Pedersen, a senior analyst at Danske Bank A/S. “Demand looks relatively bright in particular with reopening under way in the U.S. and strong support from monetary and fiscal policy.”

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Source: SweetCrudeReports