Oil prices steady with U.S.-Iran nuclear talks in focus

Oil prices moved in tight ranges in holiday-thinned trade Tuesday, with focus squarely on nuclear negotiations between the U.S. and Iran.

At 08:10 ET (13:10 GMT), Brent oil futures for April rose 0.1% to $68.71 a barrel, and West Texas Intermediate crude futures rose 1.4% to $63.65 a barrel.

The move in WTI futures was skewed by a U.S. holiday on Monday, while many Asian countries, including China, remain on holiday.

U.S.-Iran dialogue in focus amid heightened tensions 

U.S. and Iranian ministers are meeting in Geneva, Switzerland, to discuss the Middle Eastern country’s nuclear enrichment activities.

Washington thinks Iran aspires to build a nuclear weapon that could destabilize the Middle East and threaten Israel’s existence. Iran says its nuclear program is purely peaceful, even though it has enriched uranium far beyond the purity needed for power generation, and close to what is required for a bomb. 

U.S. President Donald Trump told reporters on Monday that he will be “indirectly involved” in the discussions, although it was unclear what this will entail.

The Geneva meeting comes just weeks after talks between Tehran and Washington proved to be largely inconclusive earlier this month. 

Reports showed the U.S. had deployed a second aircraft carrier to the Middle East ahead of talks with Iran, and that Washington was planning an extended military campaign in the region if talks fell through. 

Markets priced in a greater risk premium for crude on the prospect of worsening geopolitical conditions in the Middle East, which stand to potentially disrupt supplies. 

Dollar strength weighs ahead of more economic cues 

Strength in the dollar pressured oil prices this week, with the greenback advancing in thin trade ahead of several more cues on the U.S. economy. 

The focus this week is squarely on a host of U.S. economic readings, including industrial production, trade, and most importantly, PCE price index data. The latter is the Federal Reserve’s preferred inflation gauge and is likely to factor into the central bank’s plans for interest rates.

The minutes of the Fed’s January meeting are also due this week and are likely to offer more cues on monetary policy. 

Saudi exports to China to rise - ING 

There are growing indications that Saudi Arabia’s crude exports to China will rise following a price cut to its flagship grade, now at its lowest level in more than five years for Asian buyers, analysts at ING said, in a note.

"Saudi Aramco may ship 56–57m bbl of crude next month, up from 48m bbl previously," said ING.