Oil futures settled actively lower Tuesday, following reports that American Secretary of State Mike Pompeo said Iran is ready to enter negotiations over its missile program, easing concerns about tensions between Washington and Tehran that had put the flow of oil in the Middle East at risk.
Oil had been moving higher earlier Tuesday, with U.S. prices briefly touching highs above $60 a barrel, on expectations that U.S. government data due Wednesday will show a decline in weekly domestic crude stockpiles on the back of storm-related disruptions to output.
August West Texas Intermediate crude CLQ19, +0.68% dropped $1.96, or 3.3%, to settle at $57.62 a barrel, for the lowest end on the New York Mercantile Exchange since July 5. The downturn followed an earlier Tuesday high of $60.06 and a decline of 1.1% on Monday. The international benchmark September Brent BRNU19, +0.95% lost $2.13, or .2%, to end at $64.35 a barrel on ICE Futures Europe.
At a Cabinet meeting at the White House, Pompeo said the Iranians have told the U.S. that they are prepared to negotiate on their missile program, according to The Washington Times. The news followed concerns that Iran may have seized small United Arab Emirates oil tanker traveling through the Strait of Hormuz over the weekend.
Prices had logged losses Monday as production within the Gulf of Mexico began its recovery from what was known as Hurricane Barry over the weekend. On Tuesday, about 58% of Gulf oil output remained offline, compared with 69% on Monday.
Crude oil ended higher final week, its third positive weekly close out of the past four weeks, “thanks to ongoing Middle East tensions, falling U.S. crude inventories and storm Barry in the Gulf of Mexico—all raising short-term supply shock risks,” said Fawad Razaqzada, technical analyst at Foreign exchange.com, in a note Tuesday.
U.S. oil inventories data are due out from the Energy Info Administration on Wednesday. Commerce group the American Petroleum Institute will issue its figures late Tuesday. Analysts expect the government report to reveal a fall of 4.2 million barrels in crude supplies, on average, for the week ended July 12, according to a survey conducted by S&P World Platts. Gasoline stockpiles are expected to fall by 1.5 million barrels, while distillate supplies are seen higher by 300,000 barrels, the study showed.