Oil prices rose in Asian trade on Wednesday as traders awaited more insight on how relations between the U.S. and Iran will develop, while focus also turned to travel demand during a major upcoming Chinese holiday.

Crude prices recovered from some losses logged on Tuesday, with a subdued dollar, ahead of key U.S. economic prints, also lending support.

Brent oil futures for April rose 0.6% to $69.18 a barrel, while West Texas Intermediate crude futures rose 0.6% to $64.19 a barrel by 21:04 ET (02:04 GMT).

US-Iran uncertainty buoys oil on supply disruption fears
Iranian officials said on Tuesday that nuclear talks with the U.S. allowed Tehran to gauge Washington’s seriousness, and that diplomacy between the two countries was set to continue.

This came after the two sides held talks last week over Tehran’s nuclear program, after U.S. President Donald Trump deployed several warships to the Middle East.

While Iran and the U.S. flagged some progress from their weekend dialogue, their comments were overshadowed by the U.S. issuing a warning for ships traveling in the Strait of Hormuz.

Reports also showed Trump considering the deployment of a second aircraft carrier near Iran– a move that could greatly ramp up tensions in the Middle East.

Uncertainty over Iran saw traders price in some risk premium into oil, amid concerns that military action could disrupt oil supplies from Iran.

China Lunar New Year travel in focus, CPI disappoints
Oil prices took some support from speculation over increased Chinese fuel demand during the upcoming Lunar New Year holiday.

This year’s Lunar New Year– the Year of the Horse in the Chinese zodiac– falls on February 17, and will be accompanied by a longer than usually, nine-day public holiday in China, from February 15 to 23.

The Lunar New Year holiday usually sees increased spending by Chinese consumers, with travel being a key part of their spending.

Chinese officials said they expect China to log a record 9.5 billion passenger trips during the spring holiday.

Outbound travel is expected to cover several popular destinations in Southeast Asia, although flights to Japan were seen falling sharply amid a bitter diplomatic spat between Tokyo and Beijing.

Chinese economic data also pointed to a sustained deflationary trend in the country, with consumer price index inflation data missing market expectations, while producer prices remained in contraction.
Source: Investing.com