Oil prices climbed on Tuesday, with U.S. prices posting their first gain in three sessions, as reductions in global production led by OPEC, as well as supply declines brought on by U.S. sanctions on Iran and Venezuela, continued to support the market. “The main focus continues to be on the supply side of the equation rather than demand,” said Fawad Razaqzada, technical analyst at Forex.com. “Concerns over demand have come into sharper focus, owing to further weakness in economic data, ultimately though, Saudi Arabia and [its allies] want higher oil prices and to achieve that, they continue to restrict supply of the stuff to artificially boost prices.” “We are likely to see further consolidation and sideways trading in oil for a while unless demand concerns deepen further, especially from places like China and other emerging market economies,” he said. U.S. futures prices on Monday had marked their lowest settlement in just over a week on the back of persistent worries about an economic slowdown hurting energy demand. The data as well as a slump in Treasury yields — and an inversion of the yield curve — underlined those economic worries. West Texas Intermediate crude for May delivery US:CLK9 on the New York Mercantile Exchange rose $1.12, or 1.9%, to settle at $59.94 a barrel. It settled Monday at $58.82, the lowest for the front-month contract since March 15. May Brent crude UK:LCOK9 tacked on 76 cents, or 1.1%, to $67.97 a barrel on ICE Futures Group. Efforts by the Organization of the Petroleum Exporting Countries to reduce output and U.S. sanctions on Venezuela and Iran have provided some support for prices, which have climbed by more than 50% year to date. Members of OPEC and other major oil producers, including Russia, have pledged to curb crude production by around 1.2 million barrels a day from October levels for the first half of this year to prop up markets. Tensions surrounding OPEC member Venezuela heated up Monday. U.S. Secretary of State Mike Pompeo told Russian Foreign Minister Sergei Lavrov that the U.S. “will not stand idly by” if Russia continues to send military personnel to Venezuela to support the regime of Nicolás Maduro, according to a report from The Washington Post. The U.S. recognizes opposition leader Juan Guaidó as the country’s legitimate president. Market participants will keep an eye on Middle East developments around Gaza, should tensions expand, although the news had yet to factor significantly in the futures market. Israeli forces continued striking targets across the Gaza Strip through Tuesday, including the offices of Hamas’ supreme leader, in response to a surprise rocket attack from the Palestinian territory, as the military bolstered its troops and rocket-defense systems in anticipation of a new round of heavy fighting with the Islamic militant group, the Associated Press reported. Looking ahead, U.S. supply data will be released by the American Petroleum Institute late Tuesday, while the official U.S. government report is due out early Wednesday. The EIA is likely to report that domestic crude supplies fell by 2.2 million barrels for the week ended March 22, according to the average estimate of analysts polled by S&P Global Platts. They also expect to see inventory declines of 3.6 million for gasoline and 800,000 barrels for distillates, which include heating oil. On Nymex, April gasoline US:RBJ9 rose 0.9% to $1.956 a gallon and April heating US:HOJ9 settled at $1.990 a gallon, up 0.5%. At the retail level, average gasoline prices as of Monday have risen for the sixth straight week, up 6.5 cents a gallon over the last week to $2.62 a gallon, according to data from fuel-price tracker GasBuddy. “Gasoline prices have increased in all fifty states in the last week as refineries continue working toward cleaner, more expensive gasoline [to meet summer environmental requirements], and as oil prices have continued creeping higher,” said Patrick DeHaan, head of petroleum analysis for GasBuddy. Meanwhile, April natural gas US:NGJ19 lost 0.5% at $2.74 per million British thermal units, ahead of its expiration at Wednesday’s settlement.
The price of West Texas Intermediate crude rose 1.9% to $67.97 per barrel on 26 March, while May Brent crude increased 1.1% to $59.94, amid concerns about tightening supply. Production cuts by OPEC, as well as ongoing US sanctions against Venezuela and Iran have helped increase oil prices, as analysts focus on supply issues. The American Petroleum Institute is set to release US supply data shortly, while the US Energy Information Administration is predicted to reveal a 2.2 million barrel decline in crude supplies for the week ending 22 March.