Brent crude prices settled slightly higher on Tuesday after a volatile session in which potential supply concerns surrounding Venezuela and Iran jockeyed with comments from President Donald Trump, who said he was not pleased with US-China trade talks.
Brent futures rose 35 cents to settle at $79.57 a barrel, a 0.44 per cent gain. Last week, the global benchmark topped $80 for the first time since November 2014.
US West Texas Intermediate (WTI) crude futures fell 11 cents to settle at $72.13 a barrel, a 0.15 per cent loss. They earlier touched $72.83 a barrel, the highest since November 2014.
Futures pulled back from session highs in afternoon trading after Trump said he was not pleased with recent trade talks between the United States and China, but kept the door open for further negotiations.
“Trade is positive for energy demand,” said Phil Flynn, analyst at Price Futures Group in Chicago. “If we get into a trade war, it could potentially slow economic growth.”
Further weighing on prices, Trump also said on Tuesday there was a “substantial chance” his summit with North Korean leader Kim Jong Un will not take place as planned on June 12 amid concerns that Kim is resistant to giving up his nuclear weapons.
The US government imposed new sanctions on Venezuela following Sunday’s re-election of President Nicolas Maduro, a move that analysts say could further curb the country’s oil output, already at its lowest in decades.
Concern about a potential drop in Iranian oil exports following Washington’s exit from a nuclear arms control deal with Tehran also supported prices.
On Monday, the United States demanded Iran make sweeping changes – from dropping its nuclear programme to pulling out of the Syrian civil war – or face severe economic sanctions. Iran dismissed Washington’s ultimatum and one senior Iranian official said it showed the United States is seeking “regime change” in Iran.
Venezuela and Iran are members of the Organization of the Petroleum Exporting Countries, which with its allies has curbed production since January 2017 to get rid of a supply glut that in mid-2014 led to a price collapse.
OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters.
The OPEC-led supply curbs have largely cleared an inventory surplus in industrialised countries based on the deal’s original goals, and stocks continue to decline.
US crude inventories fell 1.3 million barrels in the week to May 18 to 433.9 million, data from the American Petroleum Institute industry group showed on Tuesday, compared with analysts’ expectations for a decrease of 1.6 million barrels.
Rising supply in the United States, where shale production is forecast to hit a record high in June, has limited the upward pressure on prices.