Crude oil prices fell in tumultuous trading on Thursday as investors assessed the possibilities for new supply in tight markets amid the chance of a new Iran agreement.
At 0502 GMT, Brent futures were down 58 cents, or 0.48 percent, to $121.02 a barrel, while West Texas Intermediate futures were down 96 cents, or 0.84 percent, to $113.97 a barrel. In early trade, both contracts increased $2 and $1, respectively.
According to White House National Security Adviser Jake Sullivan, the US and its partners have made progress in Iran nuclear talks, but concerns remain.
“A lifting of Iranian export restrictions would help alleviate the immense tightness prevalent in crude markets right now,” consultancy JBC Energy said in a note.
Iran is already planning to increase exports, and the state refiner NIOC has reportedly begun to reach out to previous important customers in India and South Korea, according to the letter.
Both markets have risen sharply this week, with Brent futures up more than $14 a barrel, or 13%, since Monday and WTI up more than $10 a barrel, or 10%, as concerns about supply interruptions grew in the aftermath of Russia’s invasion of Ukraine.
Oil prices rose more than 5% on Wednesday after news that oil exports from Kazakhstan’s Caspian Pipeline Consortium (CPC) terminal had been fully halted due to storm damage. According to Russia’s deputy prime minister, oil supplies could be cut off for two months.
On Thursday, US President Joe Biden will meet with NATO allies and is anticipated to announce more penalties against Russia for its actions in Ukraine, which Moscow refers to as a “special operation.”
Meanwhile, US stockpiles fell by 2.5 million barrels last week, while US Strategic Petroleum Reserve inventories fell by 4.2 million barrels, according to statistics from the US Energy Information Administration. Market participants had anticipated a little increase in supply.
According to EIA data, US oil output remained steady at 11.6 million barrels per day.
“The oil market is very tight and with U.S. production remaining steady and as stockpiles continue to decline, oil prices have only one way to go,” Edward Moya, a senior market analyst with OANDA, wrote in a note.
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