Investing.com - Crude oil futures edged higher on Tuesday, continuing to draw support from news that a major U.S. pipeline reversal may start ahead of schedule, while Brent prices declined amid easing concerns over geopolitical tensions.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD103.63 a barrel during European morning trade, adding 0.25%.
It earlier rose by as much as 0.3% to trade at a session high of USD103.67 a barrel.
Meanwhile, on the ICE Futures Exchange, Brent oil futures for June delivery dipped 0.25% to trade at 118.39 a barrel. It earlier fell by as much as 0.5% to trade at USD117.99 a barrel, the lowest since February 15.
The spread between the Brent and crude contracts stood at USD14.76 a barrel, the narrowest differential since February 28.
The reduced spread between the two main global oil benchmarks came following news on Monday that owners of the Seaway pipeline slated to carry crude from Cushing, Oklahoma to the Gulf of Mexico had asked federal authorities to fast-forward the project by about two weeks.
Pipeline operators Enbridge and Enterprise Products Partners said they plan to switch the flow on Seaway about May 17, according to a filing with the Federal Energy Regulatory Commission.
If approved, the pipeline will start operating two weeks ahead of the original June 1 start date, helping to ease a supply gut in the U.S. Midwest by pumping it to refineries on the Gulf Coast.
Such expectations were “a reminder that the two crude-oil benchmarks are about to become more closely connected, applying downward pressure on the Brent-WTI spread,” Citigroup analysts said in a report Monday.
Wall Street investment bank Goldman Sachs said in a report on March 27 that the Brent-WTI spread is set to narrow with the reversal of the Seaway pipeline in June. The price for the U.S. benchmark crude will rise and the discount to the London-traded grade will narrow, the bank said, reiterating its recommendation to buy September WTI futures at the time.
Also weighing on Brent prices were easing fears over a military conflict between Iran and the West after talks between Iran and six world powers over the weekend was labeled as “constructive” by both Catherine Ashton, the European Union’s foreign policy chief, and Iran’s lead negotiator, Saeed Jalili.
The stand-off between Iran and Western countries has dominated sentiment in the oil market in recent months, pushing up prices from USD75 a barrel in October to as high as USD110 in early March.
But prices have been under pressure in recent weeks as the market is now balancing assurances from Saudi Arabia that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran.
Meanwhile, markets were jittery as Spain was due to auction up to EUR3 billion of 12 and 18-month government bonds later Tuesday, as concerns mounted that the government will not be able to meet deficit reduction targets in the face of a looming recession.
Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD103.63 a barrel during European morning trade, adding 0.25%.
It earlier rose by as much as 0.3% to trade at a session high of USD103.67 a barrel.
Meanwhile, on the ICE Futures Exchange, Brent oil futures for June delivery dipped 0.25% to trade at 118.39 a barrel. It earlier fell by as much as 0.5% to trade at USD117.99 a barrel, the lowest since February 15.
The spread between the Brent and crude contracts stood at USD14.76 a barrel, the narrowest differential since February 28.
The reduced spread between the two main global oil benchmarks came following news on Monday that owners of the Seaway pipeline slated to carry crude from Cushing, Oklahoma to the Gulf of Mexico had asked federal authorities to fast-forward the project by about two weeks.
Pipeline operators Enbridge and Enterprise Products Partners said they plan to switch the flow on Seaway about May 17, according to a filing with the Federal Energy Regulatory Commission.
If approved, the pipeline will start operating two weeks ahead of the original June 1 start date, helping to ease a supply gut in the U.S. Midwest by pumping it to refineries on the Gulf Coast.
Such expectations were “a reminder that the two crude-oil benchmarks are about to become more closely connected, applying downward pressure on the Brent-WTI spread,” Citigroup analysts said in a report Monday.
Wall Street investment bank Goldman Sachs said in a report on March 27 that the Brent-WTI spread is set to narrow with the reversal of the Seaway pipeline in June. The price for the U.S. benchmark crude will rise and the discount to the London-traded grade will narrow, the bank said, reiterating its recommendation to buy September WTI futures at the time.
Also weighing on Brent prices were easing fears over a military conflict between Iran and the West after talks between Iran and six world powers over the weekend was labeled as “constructive” by both Catherine Ashton, the European Union’s foreign policy chief, and Iran’s lead negotiator, Saeed Jalili.
The stand-off between Iran and Western countries has dominated sentiment in the oil market in recent months, pushing up prices from USD75 a barrel in October to as high as USD110 in early March.
But prices have been under pressure in recent weeks as the market is now balancing assurances from Saudi Arabia that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran.
Meanwhile, markets were jittery as Spain was due to auction up to EUR3 billion of 12 and 18-month government bonds later Tuesday, as concerns mounted that the government will not be able to meet deficit reduction targets in the face of a looming recession.
Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout.