Crude oil prices fell in choppy trading on Thursday as investors assessed the potential for new supply in tight markets amid prospects of a new Iran deal.
Brent crude futures were down 58 cents, or 0.48 percent, at $121.02 a barrel, and US West Texas Intermediate crude futures were down 96 cents, or 0.84 percent, at $113.97 a barrel at 0502 GMT. Both contracts rose by $2 and $1, respectively, in early trade.
White House National Security Adviser Jake Sullivan said on Wednesday that the United States and its allies have made progress in Iran nuclear talks, but issues remain.
“The lifting of Iran’s export restrictions will help alleviate the massive malaise prevailing in the crude oil markets at the present time,” consultancy JBC Energy said in a note.
The memo added that Iran is already preparing to increase exports, and the National Iranian Oil Company (NIOC) is said to have started contacting former major customers in India and South Korea.
Both contracts made big gains this week, with Brent crude futures up more than $14 a barrel, or 13%, since Monday, and West Texas Intermediate crude rising more than $10 a barrel, or 10%, as concerns escalated about supply disruptions after Russian invasion of Ukraine.
Oil markets jumped more than 5% on Wednesday after reports that crude oil exports from the Caspian Pipeline Consortium (CPC) terminal in Kazakhstan have come to a complete halt after the storm damage. The Russian Deputy Prime Minister said that oil supplies may stop for two months.
US President Biden will meet with NATO allies on Thursday and is expected to announce additional sanctions on Russia over its actions in Ukraine, which Moscow calls a “special operation.”
Meanwhile, stocks in the United States fell by 2.5 million barrels last week while those in the US Strategic Petroleum Reserve fell by 4.2 million barrels, according to data from the US Energy Information Administration. Market participants expected a modest increase in supplies.
US oil production has held steady at 11.6 million barrels per day, according to Energy Information Administration data.
“The oil market is very tight and with US production holding steady and with inventories still low, oil prices have only one way to go,” Edward Moya, chief market analyst at OANDA, wrote in a note.
(Reporting by Mohi Narayan and Liz Hampton; Editing by Kenneth Maxwell and Sam Holmes)
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