Oil hardly changed after unexpected increase in US stock

Tokyo — Oil prices were little changed on Thursday as investors stayed cautious, focusing on renewed Iran-US nuclear talks, though unexpected builds in US crude and fuel inventories raised concerns about demand from the world's largest oil consumer.

Brent futures inched up 4c to $64.95 a barrel by 4.56am GMT, while US West Texas Intermediate (WTI) crude gained 10c to $61.67.

Both benchmarks fell earlier in the session after US crude and fuel inventories posted surprise stock builds last week, the Energy Information Administration (EIA) said on Wednesday, as crude imports hit a six-week high and petrol and distillate demand slipped.

Crude inventories rose by 1.3-million barrels to 443.2-million barrels in the week ended May 16, the EIA said. Analysts in a Reuters poll had expected a 1.3-million barrel drawdown.

“The EIA’s reported surprise stock builds will have a downward pressure particularly on WTI,” said Emril Jamil, a senior analyst at LSEG Oil Research. He added this could further incentivise more US exports to Europe and Asia.

Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities, said: “While rising US inventories have raised concerns, some investors expect the summer driving season starting after Memorial Day weekend to draw down stocks, limiting further downside.”

Both benchmarks lost 0.7% on Wednesday after Oman’s foreign minister said the fifth round of nuclear talks between Iran and the US will take place on Friday in Rome.

Prices had jumped earlier on Wednesday following a CNN report that US intelligence suggests Israel is preparing to strike Iranian nuclear facilities, though it was not clear whether Israeli leaders have made a final decision.

Iran is the third-largest producer among members of oil cartel Opec and an Israeli attack could upset supply from the country.

“Traders remain cautious, avoiding large positions as they assess conflicting signals over US-Iran nuclear talks and a media report of potential Israeli strikes on Iranian nuclear facilities,” said Kikukawa.

Priyanka Sachdeva, senior market analyst at Phillip Nova, said: “Additionally, Ukraine suggested that it would seek harsher sanctions on Russia from the EU, which could further disrupt the flow of Russian oil barrels to global markets.”

Ukraine will ask the EU next week to consider big new steps to isolate Moscow, according to a white paper, including seizing Russian assets and bringing in sanctions for some buyers of Russian oil.

Reuters