Oil prices rose by about 1% on Tuesday, erasing earlier losses, as the market awaited clarity on talks to revive a deal that could allow more Iranian oil exports, and bleak economic data from top crude buyer China limited gains.
Brent crude futures rose 72 cents, or 0.8%, to $95.82 a barrel by 1219 GMT, after hitting a session low of $93.20. WTI crude futures rose $1.03, or 1.2%, to $90.44 a barrel, after falling to $87.82. The contracts fell about 3% in their previous sessions.
The European Union is assessing Iran’s response to what the bloc has called its “final” proposal to save a 2015 nuclear deal, and consulting with the United States, an EU spokesperson said on Tuesday. Iran responded to the proposal late on Monday but neither Tehran nor the EU provided any details on the content of the reply.
“It is still unclear what Iran has told the European Union last night, so some tricky items might impact the outcome of the nuclear deal,” UBS analyst Giovanni Staunovo said. Weak economic indicators weighed on prices.
China’s central bank cut lending rates to try to revive demand as the nation’s economy slowed unexpectedly in July after Beijing’s zero-Covid policy and a property crisis slowed factory and retail activity.
China’s fuel product exports are expected to rebound in August to their highest in nearly a year after Beijing issued more quotas, adding pressure to already-shrinking refining margins.
State media on Tuesday quoted Premier Li Keqiang as saying that China will reasonably step up macro policy support for the economy.
“The promise of economic support in China appears to have boosted the oil price, helping it to reverse some of the losses that followed a worrying set of data at the start of the week,” Oanda analyst Craig Erlam said.
Barclays lowered its Brent price forecasts on Tuesday by $8 per barrel for this year and next, as it expects a large surplus of crude oil over the near-term due to “resilient” Russian supplies.
In the United States, output in the major U.S. shale oil basins will rise to 9.049 million barrels per day (bpd) in September, the highest since March 2020, the U.S. Energy Information Administration (EIA) said in a report on Monday. In the Permian, the biggest US shale oil basin, output will hit a record 5.408 million bpd, it said.
Market participants awaited industry data on US crude stockpiles expected later on Tuesday. Oil and gasoline stockpiles likely fell last week, while distillate inventories rose, a preliminary Reuters poll showed on Monday. A Reuters survey of analysts showed crude and gasoline stocks likely fell last week, while distillate stocks rose.