As for the Iran issue, John Kilduff, founding partner at Again Capital, noted that "The prospect for talks between President Trump and President Rouhani is a tantalizing, bearish element for oil prices: any thawing in the U.S. - Iran relationship would naturally expect to involve easing of sanctions on Iran, resulting in increased oil sales". This is according to data from the United States Department of Energy.
In its Crude Oil Stocks report for the week ended on August 23, the American Petroleum Institute (API) says that a surprise 11.1 million barrels of decline was witnessed in the U.S. inventories versus the previous draw of 3.5 million barrels.
The US government's weekly report is due to be released Wednesday morning and if official numbers confirm the API data then it will be the biggest weekly decline in nine weeks.
"The only thing that will lift the storm clouds over oil markets this week will be if both China and the US talk and decide to mutually take a step back", said Jeffrey Halley, market analyst at Oanda. Analysts predicted a draw in gasoline inventories of 388,000 barrels for the week. Analysts were looking for a 2.112-million barrel draw. Peaking in April 2019 at 2.4 million t while falling back to 1.1 million t in June, the monthly average for the first six months of 2019 has reached 1.6 million t, up by 65% from 1H18.
USA crude oil inventories were forecast to have fallen by over two million barrels last week, a Reuters poll showed, ahead of industry data.
Traders will now focus on Crude Oil Stocks Change report from the Energy Information Administration (EIA) for the week ended on August 23 while also keeping an eye over trade/political headlines.
Oil prices climbed yesterday after U.S. President Donald Trump gave the indication that he expected to sign a trade deal with China, calming nerves after a round of tit-for-tat tariff hikes had sent markets reeling.
On the other hand, simmering tensions between the United States and Iran should continue to underpin prices. Brent was trading up $0.89 (+1.53%) at $59.01-$1.10 down from last week's levels.