Oil prices remained almost unchanged amid investor caution and the resumption of US-Iran negotiations
22 May 09:24
Oil prices were little changed on Thursday as investors remained cautious, focusing on the resumption of nuclear talks between Iran and the United States. At the same time, an unexpected increase in US crude oil and fuel stocks has raised concerns about demand from the world’s largest oil consumer, "Komersant Ukrainian" reports citing Reuters.
Price dynamics for major oil futures
Brent crude oil futures rose slightly by 4 cents to $64.95 per barrel as of 06:56 Kyiv time. U.S. West Texas Intermediate (WTI) rose by 10 cents to $61.67 per barrel.
Both benchmark crude oil grades fell earlier in the trading session after the U.S. Energy Information Administration (EIA) reported on Wednesday an unexpected increase in U.S. crude oil and fuel stockpiles last week. This came as crude oil imports hit a six-week high and demand for gasoline and distillates declined.
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Detailed data on oil reserves in the United States
According to the EIA, crude oil inventories rose by 1.3 million barrels to 443.2 million barrels in the week ended May 16. Analysts in a Reuters poll had expected a 1.3 million barrels decline in stocks, making the actual increase a complete surprise to the market.
“The EIA’s announcement of an unexpected increase in inventories will create downward pressure, especially on WTI,”
– said Emril Jamil, senior analyst at LSEG Oil Research. He added that this could further stimulate an increase in US exports to Europe and Asia.
Hiroyuki Kikukawa, Chief Strategist at Nissan Securities Investment (a division of Nissan Securities), commented:
“Although the rise in U.S. inventories has been a concern, some investors expect the summer driving season that begins after the Memorial Day weekend to reduce inventories, which will limit further price declines.”
Impact of geopolitical factors on oil prices
Both benchmarks lost 0.7% on Wednesday after Oman’s foreign minister said that the fifth round of nuclear talks between Iran and the United States will take place on Friday in Rome.
Earlier on Wednesday, prices jumped sharply after CNN reported that U.S. intelligence suggests Israel is preparing to strike Iranian nuclear facilities, although it was not clear whether Israeli leaders had made a final decision on the matter.
Iran is the third largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC), and a potential Israeli attack could disrupt oil supplies from this country, which would significantly affect the global market.
“Traders remain cautious, avoiding large positions as they assess conflicting signals regarding the US-Iran nuclear talks and media reports of potential Israeli strikes on Iranian nuclear facilities,”
– kikukawa explained.
Impact of the Ukrainian-Russian factor on the oil market
Priyanka Sachdeva, Senior Market Analyst at Phillip Nova, noted:
“In addition, Ukraine has proposed stricter sanctions against Russia by the EU, which may further disrupt the flow of Russian oil barrels to global markets.”
Ukraine is expected to ask the EU next week to consider major new steps to isolate Moscow. These measures would include the confiscation of Russian assets and the imposition of sanctions on some buyers of Russian oil.
Such potential sanctions could have a significant impact on global oil supplies, as Russia remains one of the largest energy exporters in the world, adding further uncertainty to the already complex geopolitical situation on energy markets.
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