Oil prices fell slightly in holiday-thinned trade on Tuesday, with focus squarely on upcoming negotiations between the U.S. and Iran.

Strength in the dollar, before a string of economic and Federal Reserve cues this week, also pressured crude markets.

Brent oil futures for April fell 0.3% to $68.45 a barrel, while West Texas Intermediate crude futures rose 1.1% to $63.45 a barrel by 21:00 ET (02:00 GMT). The move in WTI futures was skewed by a U.S. holiday on Monday.

Trading volumes were largely quashed by market holidays in China, Hong Kong, Taiwan, South Korea, and Singapore.

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US-Iran dialogue in focus amid heightened tensions
U.S. and Iranian ministers are set to meet in Geneva, Switzerland, on Tuesday to discuss the Middle Eastern country’s nuclear enrichment activities, media reports showed.

U.S. President Donald Trump told reporters on Monday that he will be “indirectly involved” in the discussions, although it was unclear what this will entail.

The Geneva meeting comes just weeks after talks between Tehran and Washington proved to be largely inconclusive earlier this month.

Reports showed the U.S. had deployed a second aircraft carrier to the Middle East ahead of talks with Iran, and that Washington was planning an extended military campaign in the region if talks fell through.

Markets priced in a greater risk premium for crude on the prospect of worsening geopolitical conditions in the Middle East, which stand to potentially disrupt supplies.

Dollar strength weighs ahead of more economic cues
Strength in the dollar pressured oil prices this week, with the greenback advancing in thin trade ahead of several more cues on the U.S. economy.

The dollar rose 0.2% against a basket of currencies on Tuesday.

Focus this week is squarely on a host of U.S. economic readings, including industrial production, trade, and most importantly, PCE price index data. The latter is the Federal Reserve’s preferred inflation gauge and is likely to factor into the central bank’s plans for interest rates.

The minutes of the Fed’s January meeting are also due this week and are likely to offer more cues on monetary policy.
Source: Investing.com