Oil prices edged higher on Tuesday, though gains were capped as traders looked beyond easing geopolitical tensions in the Middle East and turned their attention to supply increases and demand prospects.
Brent crude futures gained 38 cents, or 0.5%, to $72.37 a barrel, while U.S. West Texas Intermediate crude rose 30 cents, or 0.4%, to $68.85 a barrel as of 0350 GMT, after settling down at around pre-Iran war levels on Monday.
The steps towards recovery in supply have eased the immediate risk premium, but the market remains wary of putting too much faith in the stability of the current truce given the on again-off again nature of U.S.-Iran relations,” said Tim Waterer, chief market analyst at KCM Trade.
“We will be watching for early signs of demand response, particularly from China. The market has priced in a lot of the positive supply news, so the next leg in oil prices will depend on whether physical reality matches the optimistic headlines.”
President Donald Trump said on Monday the U.S. would either reach a deal with Iran or “finish the job,” renewing his threat of military action as Tehran projects defiance following the funeral of former Supreme Leader Ayatollah Ali Khamenei.
