Oil Traders Bet on Diplomacy Even as Physical Supply Tightens

Oil prices edged lower in early Asian trade on Tuesday, giving up gains from the previous session as hopes of diplomatic progress between the U.S. and Iran tempered fears of a further supply shock. At the time of writing, Brent crude was trading at $98.08, down 1.28% on the day, while West Texas Intermediate had fallen 1.91% to trade at $97.19. While futures are trading below $100, the physical market is showing signs of serious distress, with Forties Blend nearing $149 per barrel on Monday. The futures market is proving highly sensitive to even…