Investing.com - Crude oil futures erased losses on Tuesday, turning higher after reports surfaced that Iran halted oil shipments to Spain, underling concerns over a disruption to Iranian oil exports.
On the New York Mercantile Exchange, light sweet crude futures for delivery in May traded at USD102.89 a barrel during early U.S. morning trade, gaining 0.42%.
It earlier fell by as much as 0.7% to trade at a daily low of USD101.70 a barrel. Oil futures dropped to as low as USD101.07 a barrel on Monday, the lowest since February 14, before trimming losses to end the session with mild declines.
Oil prices turned higher after Iranian state television reported that Iran cut oil exports to Spain and may halt sales to Germany and Italy. The Islamic Republic already cut oil exports to Greece as well as to French and U.K. companies in late February.
The pre-emptive sales embargo by Iran comes in response to tighter sanctions on the country after European Union states agreed in late January to stop importing Iranian crude from July 1.
The announcement comes ahead of talks scheduled to take place later this week between Iran and six world powers in Turkey on April 13 and 14 surrounding Tehran's disputed nuclear program.
The six world powers include, the U.S., the U.K., France, Germany, Russia and China.
The stand-off between Iran and Western countries has dominated sentiment in the oil market in recent months.
There are fears that the escalating rift over Tehran's nuclear program could lead to an oil-export halt, a disruption to shipping traffic in the Strait of Hormuz or military conflict, which could send oil prices skyrocketing.
Iran produces about 3.5 million barrels of oil a day, making it the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
However, lingering concerns over the health of the global economy kept any upside movements in check.
Concerns over the global growth outlook intensified following a report showing China's trade balance swung to a surplus of USD5.3 billion in March, from a deficit of USD31.5 in the previous month,
The trade data showed that import growth trailed forecasts, underscoring risks of a deeper slowdown in the world’s second largest economy.
Imports grew 5.3% in March, decelerating sharply from February's 39.6% increase. Slowing imports suggest some exports slowdown in coming months as well as a domestic slowdown.
Market participants will now shift their attention to China’s gross domestic product growth data for the first quarter, which is due to be released Friday.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Friday’s dismal U.S. jobs data, which showed the weakest pace of jobs growth in five months, continued to weigh on investors confidence. Expectations that U.S. crude supplies rose to the highest level since 1990 for this time of year also weighed.
Meanwhile, growing concerns over Spain’s fiscal health added to the gloomy trade environment, as the yield on the country’s 10-year government bond climbed to 5.93%, the highest level since early December amid fears that the country will be the next in the euro zone to require a bailout.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery shed 0.47% to trade at 121.56 a barrel, with the spread between the Brent and crude contracts standing at USD18.67 a barrel.
On the New York Mercantile Exchange, light sweet crude futures for delivery in May traded at USD102.89 a barrel during early U.S. morning trade, gaining 0.42%.
It earlier fell by as much as 0.7% to trade at a daily low of USD101.70 a barrel. Oil futures dropped to as low as USD101.07 a barrel on Monday, the lowest since February 14, before trimming losses to end the session with mild declines.
Oil prices turned higher after Iranian state television reported that Iran cut oil exports to Spain and may halt sales to Germany and Italy. The Islamic Republic already cut oil exports to Greece as well as to French and U.K. companies in late February.
The pre-emptive sales embargo by Iran comes in response to tighter sanctions on the country after European Union states agreed in late January to stop importing Iranian crude from July 1.
The announcement comes ahead of talks scheduled to take place later this week between Iran and six world powers in Turkey on April 13 and 14 surrounding Tehran's disputed nuclear program.
The six world powers include, the U.S., the U.K., France, Germany, Russia and China.
The stand-off between Iran and Western countries has dominated sentiment in the oil market in recent months.
There are fears that the escalating rift over Tehran's nuclear program could lead to an oil-export halt, a disruption to shipping traffic in the Strait of Hormuz or military conflict, which could send oil prices skyrocketing.
Iran produces about 3.5 million barrels of oil a day, making it the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
However, lingering concerns over the health of the global economy kept any upside movements in check.
Concerns over the global growth outlook intensified following a report showing China's trade balance swung to a surplus of USD5.3 billion in March, from a deficit of USD31.5 in the previous month,
The trade data showed that import growth trailed forecasts, underscoring risks of a deeper slowdown in the world’s second largest economy.
Imports grew 5.3% in March, decelerating sharply from February's 39.6% increase. Slowing imports suggest some exports slowdown in coming months as well as a domestic slowdown.
Market participants will now shift their attention to China’s gross domestic product growth data for the first quarter, which is due to be released Friday.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Friday’s dismal U.S. jobs data, which showed the weakest pace of jobs growth in five months, continued to weigh on investors confidence. Expectations that U.S. crude supplies rose to the highest level since 1990 for this time of year also weighed.
Meanwhile, growing concerns over Spain’s fiscal health added to the gloomy trade environment, as the yield on the country’s 10-year government bond climbed to 5.93%, the highest level since early December amid fears that the country will be the next in the euro zone to require a bailout.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery shed 0.47% to trade at 121.56 a barrel, with the spread between the Brent and crude contracts standing at USD18.67 a barrel.