Oil prices stable at $90/bbl, Iran supply prospects add pressure
Oil prices were stable around $90 a barrel on Wednesday but the prospect of increased supply from Iran and the United States kept pressure on the market.
Brent crude futures edged down 34 cents, or 0.4%, to $90.44 per barrel.
U.S. West Texas Intermediate crude settled 30 cents, or 0.34%, higher at $89.66 per barrel.
The contracts slid about 2% on Tuesday as Washington resumed indirect talks with Iran to revive a nuclear deal.
An agreement could lift U.S. sanctions on Iranian oil and quickly add supply to the market, although a number of vital issues still need to be ironed out.
“Oil price sentiment has thus far been dominated by a tightening imbalance so little wonder that the prospect of increased supply sent prices in reverse,” PVM analyst Stephen Brennock said.
Market sentiment also took a hit from the latest monthly report from the Energy Information Administration, which raised its outlook for U.S. crude production to average 11.97 million bpd this year.
Furthermore, industry worries over geopolitical risks appeared to reduce on Wednesday, according to several analysts.
“The concerns about a further escalation of the Russia-Ukraine conflict appear to have eased somewhat following the latest diplomatic efforts, which is reducing the risk premium on the oil price,” said Commerzbank commodities analyst Carsten Fritsch.
French President Emmanuel Macron said on Tuesday he believed steps could be taken to de-escalate the crisis after a meeting with Russian President Vladimir Putin and called on all sides to stay calm.
However, the downward pressure on prices has been somewhat limited by bullish U.S. inventory data.
U.S. crude, gasoline and distillate stocks fell last week, according to market sources citing American Petroleum Institute figures on Tuesday.
Crude inventories fell 2 million barrels, according to API, versus analysts’ expectations of a 400,000-barrel increase.
More data from the U.S. EIA will be available at 10:30 a.m. EST (1530 GMT)
