U.S. crude oil futures may break below $100 a barrel this week as Iran continues diplomatic overtures towards the West, according to CNBC's latest market survey of traders, analysts and strategists.
Market uncertainty over the U.S. budget impasse and the debt ceiling will likely hasten any move below triple digits, survey respondents said.
Iranian President Hassan Rouhani and U.S. President Barack Obama spoke by telephone on Friday in the highest-level contact between the two countries in three decades, raising hopes of a breakthrough in Western efforts to prevent Iran from building a nuclear bomb, Reuters reported. Rouhani seeks to lift international sanctions which have cut Iran's crude oil exports by more than half since early 2012
"With Syria silent and Iran mellowing down" U.S. crude futures may drop towards $95 before finding support, said Sankalp Shangari of Shangari Ventures, a Singapore-based commodities trading, advisory and debt raising firm.
Advancing diplomacy further, Iranian Foreign Minister Mohammad Javad Zarif joined nuclear talks with six world powers on the sidelines of the United Nations General Assembly last Thursday, taking a seat next to U.S. Secretary of State John Kerry, according to Reuters, the first meeting between a top U.S. diplomat and an Iranian foreign minister since a brief encounter in May 2007.
Despite the progress some traders warned that the oil market's interpretations of the recent diplomatic events may be too optimistic.
"Iran's language has certainly softened recently and Kerry's meeting yesterday with his Iranian counterpart was historic," said David Nevin, a London-based broker with XConnect Trading Ltd. "However, with the next round of nuclear talks scheduled for October 15-16 any return to the market for Iranian oil is still a long way off. To begin pricing in a return of Iranian oil to the market at this stage is jumping the gun."
More than half of the respondents in CNBC's latest poll of oil market sentiment (about 53 percent, or 10 out of 19) believe prices will fall this week, 26 percent (or 5 out of 19) say prices may gain and four out 19 - or 21 percent - expect prices to trade around current levels.