Forexpros – Crude oil futures retreated on Tuesday, after rallying by the most in six weeks during the previous session on the back of strong U.S. manufacturing data, as investors awaited further clues on the health of the global economy before pushing prices higher.
On the New York Mercantile Exchange, light sweet crude futures for delivery in May traded at USD104.56 a barrel during European morning trade, shedding 0.6%.
It earlier fell by as much as 0.65% to trade at a session low USD104.58 a barrel.
Crude prices surged 2.2% on Monday, the biggest one-day gain since February 21, after the U.S. Institute for Supply Management said its index of purchasing managers rose by 1.0 point to 53.4 in March, topping market expectations and keeping the reading above 50.0, indicating expansion in the sector.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand. Investors often use manufacturing numbers as indicators for future fuel demand growth.
But prices failed to break higher during early trade on Tuesday as investors sought further signs of improvement in the global economy before chasing risky assets higher.
Later in the day, the U.S. was to produce industry data on oil inventories from the American Petroleum Institute, as well as official data on factory orders, while the Federal Reserve was to release the minutes of its most recent policy meeting.
On Friday, attention will turn to U.S. non-farm payrolls data, which could shed further light on the strength of the U.S. economy and the need for further monetary easing in the U.S.
Oil traders have long been taking cues from the monthly jobs report, the most-closely followed indicator of U.S. employment.
Meanwhile, markets continued to monitor tensions between Iran and the West and a potential disruption to oil supplies from the region.
Iranian Foreign Minister Ali Akbar Salehi warned that the Islamic Republic will not surrender to international pressure as tightening sanctions restrict the country’s trade in the run-up to the talks over its nuclear program.
Iran and six world powers will meet in Turkey on April 13 and 14 for a round of talks over Tehran’s disputed nuclear program, U.S. Secretary of State Hillary Clinton said on Monday.
The Obama administration said Friday that world oil supplies were sufficient to proceed with sanctions on banks in countries that import Iranian oil.
The stand-off between Iran and Western countries has dominated sentiment in the oil market in recent months.
There are fears that the escalating rift 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, which could send oil prices skyrocketing.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery dipped 0.5% to trade at 124.82 a barrel, with the spread between the Brent and crude contracts standing at USD20.26, the widest since October.
Brent prices remained supported amid prospects of tighter crude supplies from the North Sea region, as well as supply disruption fears in South Sudan and a reported halt of Iraqi oil exports from the Kurdistan region.
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