Forexpros – Crude oil futures turned lower on Tuesday, pulling back from a two-day high amid speculation the U.S. was considering the release of strategic oil reserves and after Iran and six world powers agreed to meet next month for fresh talks over Tehran’s disputed nuclear program.
On the New York Mercantile Exchange, light sweet crude futures for delivery in May traded at USD106.73 a barrel during U.S. morning trade, shedding 0.28%.
It earlier rose by as much as 0.55% to trade at a two-day high of USD107.72.
Oil prices came under selling pressure amid market talk that a U.S. Energy Department aide said the U.S. was considering the release of strategic oil reserves.
Last week, reports surfaced that France and other industrialized nations were considering a release from strategic stockpiles.
U.S. President Barack Obama discussed releasing emergency oil supplies with U.K. Prime Minister David Cameron on March 14 but the leaders reached no agreement.
Though the report was denied by U.S. officials, it has still added a new dimension to the recent price increases, putting investors on watch for any government intervention.
Separately, a Western diplomat said earlier that Iran and six world powers, the U.S., the U.K., France, Germany, Russia and China, have agreed to meet on April 13 for a fresh round of talks regarding Tehran’s nuclear program.
U.S. President Barack Obama said Sunday that there is still time to resolve the dispute over Iran diplomatically, but that the window is closing.
The stand-off between Iran and Western countries has dominated sentiment in the oil market for weeks, raising fears that the escalating row over Tehran’s nuclear program could lead to an oil-export halt, a disruption to shipping traffic in the Strait of Hormuz or military conflict.
Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
A potential loss of Iranian barrels has helped underpin strong gains in oil prices this year and prices could go higher when a European Union embargo on Iranian oil imports go into effect on July 1.
Concerns over the global economic outlook also weighed, following the release of downbeat U.S. data on consumer confidence and housing.
Oil traders were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 2.5 million barrels last week, the fifth weekly increase in six.
Losses were limited after Fed Chair Bernanke said Monday that “continued accommodative policies” are needed to bring about big gains in the U.S. jobs market, which he described as “far from normal,” despite a recent improvement.
Markets interpreted the comments as an indication the central bank will maintain its ultra-loose monetary policy and reinforced the view that further easing from the central bank may be possible.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery slumped 0.54% to trade at 124.97 a barrel, with the spread between the Brent and crude contracts standing at USD18.24.
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