Florence Tan

SINGAPORE (Reuters – Oil prices were mixed in Thursday’s session after rallying following an unexpectedly low inventories the previous session. This was as investors awaited the outcome of U.S./Iran nuclear negotiations that could increase crude supply quickly for global markets.

Futures fell 10 cents or 0.1% to $91.45 per barrel at 0130 GMT. U.S. West Texas Intermediate crude oil was $89.74 per barrel, an 8-cent increase.

Strong demand recovery after the coronavirus epidemic has maintained oil supplies in good shape. Global inventories of key fuel hubs worldwide are hovering around multi-year lows.

U.S. crude oil inventories dropped by 4.8 Million barrels during the week ending February 4, to 410.4 M barrels, the Energy Information Administration reported. This is their lowest level of commercial inventory since October 2018. A Reuters poll showed that analysts had predicted a rise of 369,000 barrels.

EIA data revealed that U.S. product supply – which is the most reliable indicator of demand – reached a peak at 21.9million barrels per daily (bpd), over the last four weeks because there has been strong economic activity across the country.

OANDA analyst Edward Moya stated in a note that the surprise crude draw demonstrates how tight the market is.

He said that crude oil prices “have too many catalysts” to support an increase to $100 per barrel in the future. This was referring to geopolitical tensions throughout Europe and the Middle East and to improving global demand as normal travel returns to large areas of the globe.

Investors are still closely monitoring the U.S.-Iran nuke talks, which resumed last week. Deals could remove U.S. oil sanctions from Iran and increase global supply.

On Wednesday, President Obama publicly urged Iran to revive 2015 Iran nuclear deal quickly. He stated that if the agreement isn’t reached in the next few weeks it would not be possible to return to the accord.

Henry Rome from Eurasia said the core question is still whether Iran would be willing to sign the dotted-line. He added that the company was keeping a 40% demand for a review of the agreement.

Separately on Wednesday, U.S. President Joe Biden called King Salman, the Saudi Arabian King, to discuss energy supplies and other developments in Middle East including Iran and Yemen.

Salman talked about the maintenance of stability and balance on the oil market and emphasised that the OPEC+ supply arrangement must be maintained, according to state news agency SPA.

U.S. vice president Kamala Harris in Europe will be in Munich meeting with allies and partners next week in an effort to prevent Russian aggression in Ukraine.