Oil prices climbed on Tuesday as investors took advantage of the previous day’s losses to cover short positions, although concerns persisted over economic headwinds from tariffs and US monetary policy that could dampen fuel demand.
Brent crude futures rose 36 cents, or 0.5%, to $66.62 a barrel at 0421 GMT. The US West Texas Intermediate crude contract for May, which expires on Tuesday, was at $63.73 a barrel, up 65 cents, or 1%.
The more actively traded WTI June contract was up 0.7%, or 43 cents, at $62.84 a barrel, Reuters said.
Both benchmarks dropped more than 2% on Monday, as signs of progress in nuclear deal talks between the US and Iran helped ease supply concerns.
“Some short-covering emerged after Monday’s sharp sell-off,” said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities.
“However, concerns about a potential recession driven by the tariff war persist,” he said, predicting that WTI will likely trade in the $55–$65 range for the time being given ongoing uncertainty related to tariffs.
On Monday, US President Donald Trump repeated his criticism of Federal Reserve Chair Jerome Powell and said the US economy could slow unless interest rates were lowered immediately.
His comments about Powell fueled worries about the Fed’s independence in setting monetary policy and the outlook for US assets. Major US stock indexes dropped and the dollar index slid to a three-year low on Monday.
“The growing uncertainty surrounding US monetary policy is expected to negatively impact financial markets and the broader economy, raising fears that it could lead to a decline in crude oil demand,” Kikukawa said.
A Reuters poll on April 17 showed investors believe the tariff policy will trigger a significant slowdown in the US economy this year and next, with the median probability of recession in the next 12 months approaching 50%.
The US is the world’s biggest oil consumer.
Progress in talks between the US and Iran, which on Saturday agreed to begin drawing up a framework for a potential nuclear deal, could also weigh on oil prices and reduce supply concerns as the Middle Eastern country is a major producer.
“Our view that Iran’s oil exports face imminent downside risks due to the enforcement of US sanctions has eased given ongoing talks between US and Iran,” Vivek Dhar, an analyst at Commonwealth Bank of Australia, said in a note, adding that US sanctions relief was potentially on the table.
Meanwhile, Russia’s economy ministry has cut its forecast for the average price of Brent crude in 2025 by nearly 17% from what it saw in its September calculations, according to documents obtained by Reuters.
US crude oil and gasoline stockpiles were expected to have fallen last week, while distillate inventories likely rose, a preliminary Reuters poll showed on Monday, ahead of weekly reports from the American Petroleum Institute and the Energy Information Administration.
