The West Texas Intermediate (WTI) for June delivery was up 35 USA cents to settle at 71.31 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery rose 20 cents to close at 78.43 dollars a barrel on the London ICE Futures Exchange.
Brent crude oil hit a new 3½ year high Monday despite resistance emerging in Europe and Asia to US sanctions against OPEC member Iran, and growing USA drilling indicating higher North American production.
The difference between the two grades briefly widened to more than $8 a barrel, the widest gap since April 2015, reflecting surging US crude supplies and a greater geopolitical risk to Brent-based crudes.
Oil prices rose as OPEC reported that the global oil glut has been virtually eliminated, while US crude´s discount to global benchmark Brent widened to more than $7, its deepest in five months. "Brent is pricing in the idea that all the risk to supplies is overseas - there's a concern that all the supplies that are tight in Europe are only going to get tighter".
However, experts are of opinion that the market may get some clarity and things may ease out a bit after a review meeting in June by Organisation of Petroleum Exporting Countries (Opec) and non-Opec in which they may take the decision whether to continue with cut in oil production as was pledged earlier or pump out more to make up for any shortage. The deal was reached in July 2015 between Iran, Russia, the United States, Great Britain, China, France and Germany - the agreement guarantees the peaceful nature of Tehran's nuclear program, and its implementation removes the sanctions imposed by the UN Security Council, the United States and the European Union.
Iran will restart its uranium enrichment if it can not find a way to save the 2015 nuclear deal with the European Union after the United States pulled out last week, Tehran's government spokesman said on Tuesday.
Since the accord was reached at the end of 2016, oil prices have climbed to their highest in almost four years to exceed $77 a barrel, up from $30 in early 2016.
Russia's largest oil producer, in which British oil major BP owns a 19.75 stake, said production of liquid hydrocarbons, or oil and gas condensate, stood at 4.57 million barrels per day (bpd) in the first three months of 2018. As the dollar strengthens, investors can retreat from dollar-denominated commodities like oil.
OPEC figures published on Monday showed oil inventories in OECD industrialized nations in March fell to 9 million barrels above the five-year average, from 340 million barrels above the average in January 2017.
"We expect the EIA report to display bearish results amidst higher rig counts and production levels in the USA", said Singapore-based brokerage Phillip Futures.
US shale production is expected to hit a record 7.18 million barrels per day (bpd), the Energy Information Administration said.