Oil floats amid supply woes, hopes for Iran deal
Crude oil prices fell in volatile trading on Thursday amid the tight supply and expectations of a new Iran deal.
Brent futures were down 58 cents, or 0.48%, to $121.02 a barrel at 0502 GMT. West Texas Intermediate futures fell 96 cents, or 0.84%, to $113.97 a barrel. Both contracts rose $1 and $2, respectively, in early trade.
Lifting Iran's export restrictions would help alleviate the enormous supply shortage currently prevalent in crude oil markets. The White House said on Wednesday that the United States and its allies had made progress in the Iran nuclear talks, but problems remained.
It is said that Iran is preparing for an increase in exports and the state refinery NIOC is starting to reach key former customers in India and South Korea.
Brent futures have posted steep gains this week, over $14 a barrel, or 13%, and WTI over $10 a barrel, or over 10%, since Monday amid concerns about increased supply disruptions following Russia's invasion of Ukraine.
Oil markets rose more than 5% on Wednesday after reports that exports of crude oil from Kazakhstan's Caspian Pipeline Consortium (CPC) terminal had come to a complete halt following storm damage. Russia said oil supplies could be halted for two months.
US President Biden will meet with NATO allies today and additional sanctions are expected to be applied on Russia for its actions in Ukraine, which Moscow calls a "special operation".
Meanwhile, US inventories fell by 2.5 million barrels last week, while US Strategic Petroleum Reserve inventories decreased by 4.2 million barrels, according to data from the US Energy Information Administration. Contrary to that, market participants expected a modest increase in supply.
U.S. oil production held steady at 11.6 million barrels per day, according to EIA data.
If the oil market stays tight and US production remains stable, if global oil stocks continue to fall, the direction of oil prices is very clear.
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