BEIJING: Oil prices rose slightly on Thursday morning as investors worried about escalating tensions between the US and Iran.
Brent crude oil futures rose 34 cents, or 0.49%, to $69.74 a barrel by 0126 GMT. U.S. West Texas Intermediate crude rose 37 cents, or 0.57%, to $65.00.
Both benchmarks rose and stabilized on Wednesday. Brent futures rose 0.87% and WTI rose more than 1.05% as investor concerns over US-Iran tensions overshadowed rising US crude inventories.
US President Donald Trump said on Wednesday after a meeting with Israeli Prime Minister Benjamin Netanyahu that he had not reached a “final” agreement on how to proceed with Iran, but insisted negotiations with Iran would continue.
Even as the United States and Iran prepare to resume talks, President Trump said on Tuesday that he is considering sending a second aircraft carrier to the Middle East if a deal is not reached with Iran.
U.S. and Iranian diplomats held indirect talks in Oman last week. The date and venue for the next US-Iran talks have not yet been announced.
IG analyst Tony Sycamore said further escalation in Middle East markets would be needed to sustain above the $65-$66 level, while any easing could quickly push profit-taking back toward WTI’s $60-$61 range.
The Labor Department announced that U.S. job growth unexpectedly accelerated in January, and the unemployment rate fell to 4.3%, demonstrating the health of the economy.
“The resilient U.S. economy also supports oil demand expectations,” said Mingyu Gao, chief researcher in energy and chemicals at China Futures.
A large increase in US crude oil inventories capped price increases. U.S. crude oil inventories rose by 8.5 million barrels last week to 428.8 million barrels, the Energy Information Administration said, far exceeding the 793,000 barrel increase expected by analysts polled by Reuters.
However, the buildup of global oil inventories since the beginning of the year has generally been lower than expected, and net long positions in foreign crude oil futures and options have not yet reached overweight levels, Gao said.
Therefore, oil prices are likely to continue to be biased towards the upside, supported by the situation in the US and Iran, tightened sanctions on Russian oil, and expectations for a decline in exports, Gao added.
(Reporting by Sam Lee and Lewis Jackson in Beijing; Editing by Thomas Darpinhaus)
