Oil prices give up early gains as uncertainty reigns over supply

LONDON (Reuters) – Oil lost early gains on Tuesday and prices were back near their previous close in the face of uncertainty over how supply will be affected by Ukraine-Russia peace talks, international trade tariffs and OPEC crude output.

Brent crude futures were down 4 cents at $75.18 per barrel by 1406 GMT, retreating from $76.07 earlier in the session.

U.S. West Texas Intermediate crude futures were up 43 cents from Friday’s close to $71.17 a barrel. There was no settlement for WTI on Monday because of the U.S. Presidents’ Day holiday.

“Each rally seems to find willing sellers, whether or not it is because of neighbouring technical numbers that keep movement trapped or notions of a war settlement topped with tariffs is hard to tell,” said John Evans of oil broker PVM.

“Day trading and short-term flows are ruling the fate of oil prices at present.” 

U.S. and Russian officials held more than four hours of talks in Riyadh on Tuesday, their first on ending the war in Ukraine. But Moscow made a new demand: that NATO cancel its 2008 promise on Ukraine membership.

Ukraine was not at the talks and has said that no peace deals can be made on its behalf.

If a deal is reached, Washington and its allies could abandon sanctions throttling the supply of Russian oil to the world.

Oil prices were bolstered on Tuesday by a Ukrainian drone attack on a Russian pipeline that pumps about 1% of global crude supply.

The damage could reduce oil transit volumes from Kazakhstan by about 30% and take up to two months to repair, Russian oil transport company Transneft said.

Another question hanging over oil markets is whether OPEC is considering a delay to monthly supply increases scheduled in April.

Russian state media said the group’s members were not looking to hold off from the increases after Bloomberg News reported that OPEC members were exploring a possible delay.

(Reporting by Paul Carsten in London; Additional reporting by Colleen Howe and Trixie Yap; Editing by David Goodman and Jan Harvey)