(Bloomberg) -- Oil dropped to a one-week low after French President Emmanuel Macron proposed negotiating a new deal with Iran to contain its nuclear program in a bid to keep the U.S. on board.
Futures in New York, which had briefly climbed as President Donald Trump talked about Iran sanctions, ended the session 1.4 percent lower after Macron spoke during a visit to Washington. Meanwhile, the American Petroleum Institute was said to have reported U.S. crude inventories rose by 1.1 million barrels last week.
Macron “has quickly switched to ‘let’s negotiate a new deal.’ It was a bit of a surprise,” said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. “It would be a deal that would get everyone involved and try to avoid a confrontational situation. It does seem to be a situation that would hopefully not involve taking barrels off the market.”
Macron’s remarks, at a White House news conference with Trump, came after the American president earlier warned Iran not to restart its nuclear program even if the U.S. withdraws from the 2015 nuclear accord with the Islamic Republic.
Crude has rallied this month on geopolitical tensions, OPEC-led supply cuts and robust energy demand. Saudi Arabia’s claim to be solely interested in eliminating the supply overhang is questionable, according to a report by Ed Morse, head of commodities research at Citigroup Inc.
West Texas Intermediate crude for June settlement traded at $67.76 a barrel at 4:38 p.m. after settling at $67.70 on the New York Mercantile Exchange.
Brent crude for June declined 85 cents to end the session at $73.86 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $6.16 premium to June WTI’s settlement, the widest since January.
In the U.S., nationwide stockpiles declined by an estimated 2.2 million barrels last week, according to a Bloomberg survey. Inventories at the nation’s biggest oil-storage complex in Cushing, Oklahoma, probably dropped by 150,000 barrels last week.
The API tally was also said to show oil inventories fell at the Cushing hub, and nationwide gasoline and distillate inventories declined.
Other oil-market news:
- Gasoline futures fell 1.4 percent to settle at $2.0949 a gallon on Tuesday.
- Russia widened its lead over Saudi Arabia as China’s preferred source of crude oil in March, supplying 24 percent more than the year-earlier.
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