Alex Longley, Devika Krishna Kumar and Christopher Charleston
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(Bloomberg) -- Oil ended the session slightly higher following a volatile day of trading as investors look for clues about Russia-Ukraine truce talks and a potential nuclear deal with Iran.
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Brent futures traded higher to settle near $65.50. West Texas Intermediate also rose.
US President Donald Trump said that Ukraine and Russia would begin talks “immediately” on ending their war after a phone call with Russian President Vladimir Putin on Monday.
“I suppose with expectations set so low, any progress toward a ceasefire is being seen as a modest positive for negotiations — and slightly bearish for crude,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “That said, I’d still argue that the potential market impact is far more significant when it comes to Iran.”
Uncertainty over a deal with Iran also added to volatility in oil markets. Tehran won’t abandon its pursuit of civilian nuclear energy under any circumstances, President Masoud Pezeshkian said in remarks on state television. His comments come as the rhetoric between Iranian and US officials intensified in recent days.
Investors are closely watching developments as an easing of sanctions on either Iran or Russia could potentially add even more barrels to a global market that is facing oversupply this year. Tighter sanctions, on the other hand, could boost prices.
Oil had earlier declined with other risk assets after Moody’s Ratings stripped the US government of its top credit rating. The downgrade, which trailed other major agencies, risks reinforcing Wall Street’s growing worries over the US sovereign bond market and a slowing economy, which in turn clouded the outlook for oil consumption.
Still, the physical market offered some bullish signs as buying interest returned in the key North Sea market on Monday, with six shipments changing hands. There was also a raft of unanswered bids for US crude delivered into Europe and North Sea grades.
Crude prices rebounded over the previous two weeks on increased uncertainty over the progress of US-Iranian talks and following Israel’s strikes on Houthi-held areas of Yemen that have elicited promises of retaliation. Futures are still down more than 10% this year as Trump’s trade war threatens demand and OPEC+ returns shuttered production into a market that is forecast to be oversupplied later this year.
