DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled mostly lower in quiet trade Friday, with the U.S. crude benchmark consolidating below $60 barrel (bbl) as markets mulled over a potential increase in Iranian crude oil exports after the Biden administration indicated it was prepared to lift all sanctions on the Islamic Republic in exchange for the return to compliance with the embattled 2015 nuclear deal.

Following days of multilateral talks in Vienna this week, Iranian negotiators appear closer than at any point in the last four years to ink a deal with western powers, ultimately agreeing to set up a roadmap for removing punishing sanctions on its crude exports. Iran's chief negotiator Abbas Araghchi said Thursday both sides are now focusing on removing sanctions in a single step but didn't specify what Tehran was offering in return.

Iran has been subject to a tough sanction regime since 2018 that targeted the country's crude exports among other activities, when the administration of President Donald Trump unilaterally withdrew from an international deal on May 8. Iran's crude production would fall from 3.823 million barrels per day (bpd) in April 2018 to 2 million bpd in December 2020. Market intelligence data suggest Iran boosted crude exports to around 1.5 million bpd in recent months in a blatant sign of disregard for U.S. sanctions since Joe Biden assumed the presidency.

In financial markets, U.S. Treasuries pushed higher on Friday along with the dollar index as investors gauged inflation data out of the United States and China, indicating prices for most consumer goods are indeed rising at the wholesale level. U.S. producer prices rose a higher than expected 1% in March. Producer prices over the past 12 months jumped to 4.2%, the highest level since September 2011.

Overnight, China's National Bureau of Statistics said factory gate prices surged the most in three years in March, suggesting producers are increasingly passing on rising costs to consumers. National Bureau of Statistics found China's official producer price index rose to 4.4% in March compared with a 1.7% increase in February.

Inflation concerns have taken center stage in recent weeks as the pandemic recedes in some countries and major economies ease quarantine restrictions after more than a year in contending with government control and limitations on a host of activities. In the Eurozone, where renewed lockdown measures were thought to have dampened economic activity, manufacturing and service sectors returned to growth last month.

Despite upbeat data, there are still many pockets of rising COVID-19 infections worldwide with a host of countries in the very early stages in administering vaccinations that have traders worried about a recovery in global oil demand. COVID-19 deaths in Brazil surged toward 4,000 this week -- a new record high, and infections in India recently topped 100,000 a day. Also, the Ontario government announced a one-month stay-at-home order after Canada's most populated province saw a record number of patients requiring intensive care at its hospitals.

On the session, May West Texas Intermediate futures dipped 28 cents to $59.32 bbl and the June Brent contract on ICE eased 25 cents to just below $63 bbl at $62.95. NYMEX May ULSD futures settled down 0.22 cents to $1.8076 gallon and May RBOB futures added 0.28 cents to settle at $1.9621 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com