Oil futures inched higher Tuesday, steadying after a fall the previous session sparked by renewed talks that could ease U.S. sanctions on crude exports by Venezuela.
Price action
-
West Texas Intermediate crude
CL00,
-0.32%
for November delivery
CL.1,
-0.32% CLX23,
-0.32%
rose 25 cents, or 0.3%, to $86.91 a barrel on the New York Mercantile Exchange after losing 1.2% on Monday. -
December Brent crude
BRN00,
-0.10% BRNZ23,
-0.10% ,
the global benchmark, gained 26 cents, or 0.3%, to $89.91 a barrel on ICE Futures Europe. -
November gasoline
RBX23,
+0.07%
added 0.2% to $2.2778 a gallon, while November heating oil
HOX23,
-0.38%
lost 0.5% to $3.1333 a gallon. -
Natural gas for November delivery
NGX23,
-1.67%
traded at $3.049 per million British thermal units, down 1.9%.
Market drivers
“Uncertainty still lingers over a potential spillover of the conflict in Israel in a way that could involve major oil producers in the region, in a dynamic that continues to create upside risk for prices,” said Ricardo Evangelista, senior analyst at ActivTrades, in market commentary.
Crude surged last week on fears the Israel-Hamas war could spill over to involve Iran, potentially leading the U.S. to increase enforcement of sanctions that would curb exports and further tighten global supplies.
“The markets are paying the most attention to statements regarding Iran, which produces over 3.1 [million barrels a day],” said Alex Kuptsikevich, FxPro senior market analyst, in a note. Since the end of last week, Iran has been “toughening its rhetoric.”
Oil prices pulled back Monday as investors monitored diplomatic efforts aimed at containing the conflict, while the prospect of more supply from Venezuela put added pressure on crude.
The Biden administration and the government of Venezuelan President Nicolás Maduro have agreed to a deal under which the U.S. would ease sanctions on Venezuela’s oil industry. Venezuela, in return, would conduct a competitive, internationally monitored presidential election next year, the report said. The report said the deal was expected to be signed Tuesday in Barbados.
The U.S. State Department later Monday said that it welcomed an announcement by Maduro representatives and others to resume Venezuelan-led talks in Barbados.
An agreement that eases sanctions would “provide some relief from the supply-side concerns that lately have dominated the mindset of oil traders,” said Evangelista.
See: Venezuela is set for a ‘long journey’ to boost oil output if U.S. eases sanctions
Meanwhile, a rush of diplomacy by global leaders to head off a wider conflict in the Middle East appeared to be soothing investor nerves for now, Raffi Boyadjian, lead investment analyst at XM, said in a note.
President Biden is set to visit Israel Wednesday, while Secretary of State Antony Blinken made a second visit in as many days on Monday, “underscoring the intense diplomatic efforts to contain the conflict and prevent a humanitarian catastrophe in Gaza,” Boyadjian wrote.
Read: 70% chance Israel-Hamas war spreads beyond Gaza, threatening oil, strategist warns
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