A worker checks the valves at Al-Sheiba oil refinery in the Iraq city of Basra. Picture: REUTERS/ESSAM AL-SUDANI
A worker checks the valves at Al-Sheiba oil refinery in the Iraq city of Basra. Picture: REUTERS/ESSAM AL-SUDANI

New York — Oil prices were little changed on Tuesday as investors took profit following last week’s rally above three-year highs, with prices supported by growing concern over the potential for supply disruptions.

Brent crude oil futures were down 9c at $71.33 a barrel by 3.50pm GMT, having come off an earlier high of $71.89, while US crude futures slipped 8c to $66.14.

"We’re starting to see a little of the premium come off from geopolitics, and the focus is shifting to inventories," said Bill Baruch, president of Blue Line Futures in Chicago.

Brent has risen 1.4% so far this month. It hit a peak last week of $73.09, the highest since late 2014, amid mounting tensions in the Middle East, the possibility of renewed US sanctions against Iran and falling output in Venezuela, where economic crisis has dragged down oil output to multi-year lows.

"The rally upwards was purely on geopolitical risk and if now we haven’t had any further stimulus, we’re seeing prices slip off a bit," Natixis commodities strategist Joel Hancock said.

Analysts expected uncertainty over US policy towards Iran to continue to support prices until May 12, the deadline US President Donald Trump gave to Congress and European allies to "fix" the Iran nuclear deal. If Washington does not renew sanctions relief for Tehran at this point, Iran may have difficulty exporting its crude.

Healthy demand and co-ordinated crude supply cuts by oil cartel Opec and several partners, including Russia, have made oil one of the top-performing commodities of 2018, with a gain of 7%, after wheat and corn, which have gained nearly 10%. Bullish enthusiasm over the outlook for oil prices, however, might be contained by an increase in supplies in Cushing, Oklahoma, the delivery point for US crude futures.

"We’ve seen that front May-June spread in West Texas Intermediate (WTI) swing back into contango today. And that’s somewhat of a bearish ... it implies a continued up-trend in Cushing crude supply," said Jim Ritterbusch, president of Ritterbusch and Associates in Illinois. "There’s not much volatility today, as we wait for American Petroleum Institute (API) and the US Energy Information Administration (EIA) data."

The API publishes weekly US fuel inventory data later on Tuesday, while official government data, including on production, is due from the EIA on Wednesday.

Reuters