By Peter Nurse
Investing.com -- Crude oil prices retreated Tuesday, continuing Monday’s losses as the recent rally to record levels stalls.
By 9:35 AM ET (1335 GMT), U.S. crude was down 0.8% at $68.71 a barrel, weakening after reaching $70 for the first time since October 2018 at the start of the week. Brent was down 0.9% at $70.85, after hitting a two-year high above $72 a barrel early Monday.
U.S. Gasoline RBOB Futures fell 1% to $2.1705 a gallon.
Investors are keeping a wary eye on the outcome of talks between Iran and world powers in Vienna to revive a 2015 nuclear deal and potentially re-add Iranian crude to the global supply.
Also prompting a degree of caution is the proximity to Thursday’s U.S. consumer prices release, with a strong number having possible repercussions for U.S. monetary policy as well as the dollar.
However, the underlying tone within the market remains bullish, as overall global demand keeps improving even though the Covid-19 comeback in Asia and parts of Latin America suggests that the rebound will be bumpy.
Oil stocks in developed world nations fell by 6.9 million barrels in April, OPEC Secretary General Mohammad Barkindo said Monday, 160 million barrels lower than the same time one year ago.
"We expect to see further drawdowns in the months ahead," he said.
The Organization of the Petroleum Exporting Countries and allies, a group known OPEC+, decided in April to return 2.1 million barrels per day to the market from May through July, judging that the market was strong enough to cope with the additional supply.
"The market has continued to react positively to the decisions we took, including the upward adjustments of production levels beginning in May this year," he said.
More crude oil supply data, this time from the U.S. in the shape of the American Petroleum Institute’s weekly inventory estimates, are due later in the session.
In corporate news, KKR’s Independence Energy and Contango Oil & Gas have agreed to merge, doubling down on investing in exploration and production companies as many in the sector seek to recover from years of poor returns amid the shale boom and bust.
This follows on from Pioneer Natural (NYSE:PXD) Resources’ purchase this year of DoublePoint Energy and the planned acquisition of Crestone Peak Resources by peer Civitas Resources.