Summary
- US oil stockpiles rise by the most in three years
- US-Iran nuclear talks seek to avert military conflict
- Saudi Arabia boosts oil output
(Reuters) – Oil prices fell on Thursday after the biggest jump in U.S. crude inventories in three years, with signs of weakness in the physical oil market also weighing on prices, while traders assess the supply implications arising from U.S.-Iran talks.
Brent crude futures were down $1.05, or 1.5%, at $69.80 a barrel by 1235 GMT. WTI futures lost $1.26, or 1.9%, to $64.16.
Get the Latest US Focused Energy News Delivered to You! It’s FREE:
U.S. crude inventories rose by 16 million barrels last week, Energy Information Administration data showed on Wednesday.
Weakness in the North Sea physical oil market is also weighing on oil prices, said UBS analyst Giovanni Staunovo, adding that markets would focus on the outcome of Thursday’s third round of U.S.-Iran talks.
The North Sea physical market underpins the Brent futures contract, prices of which have advanced by about 15% so far this year as potential military conflict between the U.S. and Iran has outweighed expectations of oversupply.
U.S. envoy Steve Witkoff and Jared Kushner are due to meet an Iranian delegation in Geneva on Thursday.
Also on the supply side, Saudi Arabia is boosting oil production and exports in a contingency plan should any U.S. strike on Iran disrupt supplies from the Middle East, two sources familiar with the plan said on Wednesday.
OPEC+, which groups members of the Organization of the Petroleum Exporting Countries and allies including Russia, is likely to consider raising oil output by 137,000 barrels per day in April, three sources with knowledge of OPEC+ thinking said as the group prepares for peak summer demand while prices remain strong.
Brent rose on Monday to its highest since July 31 as Washington positioned military forces in the Middle East to press Iran to negotiate an end to its nuclear and ballistic missile programme.
An extended conflict could disrupt supplies from Iran, OPEC’s third-biggest crude producer, and other Middle East exporters.
“The outcome of U.S.-Iran nuclear talks today will be key to the direction of oil prices,” ING analysts said in a note.
“A constructive resolution would likely prompt the market to gradually unwind as much as a $10 per barrel risk premium, which we believe is currently priced in.”
Share This:
More News Articles
