U.S. oil rises ahead of supply data; Brent declines with Iran in focus

Investing.com - U.S. oil futures rebounded from the previous session’s losses on Tuesday, as market players awaited key U.S. weekly supply data to gauge the strength of oil demand from the world’s largest consumer.

Meanwhile, in London, Brent oil prices were lower as investors continued to assess the implications of a diplomatic deal that could see economic sanctions eased on Iran, allowing it to resume more robust crude exports.

On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD94.52 a barrel during European morning trade, up 0.45%.

New York-traded oil futures traded in a range between USD94.14 a barrel, the daily low and a session high of USD94.61 a barrel.

The January contract tumbled to USD93.08 a barrel on Monday, before trimming losses to end down 0.79% at USD94.09 a barrel.

Oil futures were likely to find support at USD93.08 a barrel, the low from November 25 and resistance at USD95.57 a barrel, the high from November 22.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 900,000 barrels.

U.S. crude prices have been on a downward trend in recent weeks amid concerns over rising U.S. inventories and increased production levels.

Total U.S. crude oil inventories stood at 388.5 million barrels as of last week, the highest since June. Domestic output was little changed at 7.98 million barrels a day, the highest in 24 years.

Investors are also looking ahead to a report on U.S. housing starts and building permits due later Tuesday to further gauge the strength of the economy and the need for stimulus.

Meanwhile, on the ICE Futures Exchange in London, Brent oil futures for January delivery shed 0.3% to trade at USD110.68 a barrel. The spread between the Brent and U.S. crude contracts stood at USD16.16 a barrel.

London-traded Brent prices dropped to USD108.05 a barrel on Monday, before recovering losses to end down 0.05% at USD111.00 a barrel.

Weekend talks among the U.S., Russia, China, Britain, Germany, France and Iran ended in agreement on a "first step deal” that is meant to limit advancements in Iran's nuclear program in exchange for easing economic sanctions against Tehran.

However, traders remained skeptical about how quickly Iran can ramp up production and increase its exports.

Trade sanctions slapped on Iran due to its alleged nuclear ambitions have taken out more than 1 million barrels of oil per day from the global market over the past two years.