Oil prices increased on Tuesday as the US and China report strong economic data fueling quicker economic recovery projections, although prices have come under pressure after the OPEC+ decision last week to ease production cuts for the coming months.
International benchmark Brent crude was trading at $62.73 per barrel at 0600 GMT for a 0.93% increase after closing Monday at $62.15 a barrel.
American benchmark West Texas Intermediate (WTI) was at $59.28 per barrel at the same time for a 1.07% rise after it ended the previous session at $58.65 a barrel.
The upward price trend is mainly driven by positive economic data from the US, which has raised hopes of economic recovery.
The Institute for Supply Management (ISM) on Monday announced that economic activity in the US services sector grew in March for the 10th month in a row, registering an all-time high of 63.7%, 8.4 percentage points higher than the February reading of 55.3%. The previous high was in October 2018, when it registered at 60.9%.
The US Labor Department also announced last Friday that employers added 916,000 jobs in March, which is seen as the biggest gain since August. "It’s very good news for over 900,000 working people and their families, with significant growth across most sectors of the economy indicating that recovery is building momentum," the department said, adding that over 8 million jobs that existed a year ago are also yet to return.
China's service-sector activity also hit a three-month high in March and the Caixin China Services purchasing managers index climbed to 54.3 in March from February's 10-month low of 51.5.
However, the decision last week of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries, known as OPEC+, on an incremental production increase of 350,000 barrels per day (bpd) for May and June and 400,000 bpd in July, threatens to limit the gains.
The negotiations in Vienna between representatives from Iran, France, the UK, Germany, Russia, China, and the EU, notably with the US missing, is expected to pave the way for the deescalation of tensions. This has raised the possibility of the US lifting Iran's oil sales restrictions, which in turn would limit price gains, fueling fears that markets will be flooded with Iranian oil.
The talks in Vienna will begin on Tuesday in what could be a lengthy process to bring the US back to the nuclear deal and pave the way for Iran's reversal of recent measures.
While Iran’s Deputy Foreign Minister Sayed Abbas Araghchi on Sunday ruled out any direct or indirect talks with the US in Vienna, he said that there is only "one step", which is Washington lifting sanctions “imposed, re-imposed and relabeled" over the years.
By Ebru Sengul Cevrioglu