U.S. West Texas Intermediate rose 78 cents, or 1.10% to $71.95 a barrel.
Indirect discussions between the United States and Iran, along with other parties to the 2015 deal on Tehran’s nuclear programme, resumed on Saturday in Vienna and were described as “intense” by the European Union.
A U.S. return to the deal would pave the way for the lifting of sanctions on Iran that would allow the OPEC member to resume exports of crude.
It is “looking increasingly unlikely that we will see the U.S. rejoin the Iranian nuclear deal before the Iranian presidential elections later this week,” ING Economics said in a note.
Other members of the Organization of Petroleum Exporting Countries (OPEC) along with major producers including Russia – a group known as OPEC+ – have been withholding output to support prices amid the pandemic.
“Additional supply from OPEC+ will be needed over the second half of this year, with demand expected to continue its recovery,” ING said.
Still, prices were off their highs earlier in the day with U.S. crude briefly tripping into negative territory.
“Daily technical indicators are currently pointing to crude oil in overbought territory and a pullback may be due,” said Avtar Sandu, senior manager commodities at Phillip Futures.
Investors and traders are also watching the outcome of the U.S. Federal Reserve meeting that starts later on Tuesday for signals on when it will scale back monetary stimulus, he said.
The Fed is getting ready to starting debating how and when to start tapering a massive asset-purchase program that helped helped support the U.S. economy during the pandemic.