The upside momentum offers a much-needed respite to oil markets, however, at this stage, it qualifies as a natural technical correction after a strong movement. The downside may be resumed as long as the idea of easing Iranian sanctions floats around. Obviously, the market will be looking for additional signals, staying vigilant to new developments in the U.S.-Iran relationship. Thaw in relations is likely to result in more Iranian oil flowing into the oversupplied market.
In a separate development, the US Department of Energy reported that diesel stockpiles expanded by 2.7 million barrels during the last week, which came as a surprise because the markets were expecting a withdrawal. This news added to the downside pressure on Wednesday and may still have a negative effect on the markets into the end of the week.
Also, OPEC+ members meet today in Abu Dhabi. Investors will watch the event closely to see if deeper production cuts are in the works. Comments from a newly appointed Saudi Arabia Minister and his Russian counterpart Alexander Novak, who told the reporters on Wednesday that Russia would oppose new cuts.