Oil prices slipped on Tuesday as concerns over the possibility that the United States might reinstate sanctions against Iran faded somewhat, alleviating worries about the future of Iranian exports.
U.S. President Donald Trump and French President Emmanuel Macron pledged to try to resolve U.S.-European differences on Iran, though Trump stopped short of saying he would not abandon the international nuclear deal.
Renewed sanctions against Tehran could harm Iran’s ability to export its crude.
Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA, said new sanctions against Tehran “could push oil prices up as much as $5 per barrel.”
Brent traded as high as $75.47 and was down 82 cents at $73.80 at 2:09 p.m. EDT (1809 GMT). West Texas Intermediate (WTI) crude fell 93 cents to $67.71, retreating from the November 2014 high it hit on Thursday.
WTI’s discount to Brent
“We’re still really nestled within 3-1/2 year highs,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.
“With oil prices near $70, a dollar here or there is not really enough to move the needle,” he said.
Brent prices hit their highest since Nov. 27, 2014 before slipping. The Organization of the Petroleum Exporting Countries’ decision that day not to curb output subsequently sent prices plunging.
Oil began recovering in 2016 as OPEC discussed a return to market management with the help of Russia and other non-members. A deal to rein in output started in January 2017 and has been deepened by a steep output drop in Venezuela.
Meanwhile, demand in Asia, the biggest oil-consuming region, has risen to a record.
“Prices are being driven up by tight supply due to high production outages in Venezuela plus the cuts implemented by OPEC and Russia,” said Carsten Fritsch, analyst at Commerzbank. “What is more, demand appears robust.”
Growing U.S. demand, indicated by continued strong refinery utilization rates, is very supportive to prices, said Bob Yawger, director of energy futures at Mizuho.
“You could get rid of all of these geopolitical headlines -Syria, trade – and if you did that, you would still have a very impressive demand situation in the United States,” said Yawger.
The latest U.S. inventory figures are expected to show a 2.6-million-barrel drop in crude stocks.
The American Petroleum Institute, an industry group, releases its inventory data at 4:30 p.m. EDT on Tuesday, a day before the government’s supply report.