Oil prices edged up on Thursday morning as investors worried about escalating tensions between the US and Iran.
Brent crude oil futures were up 34 cents, or 0.49 per cent, at $69.74 a barrel at 0126 GMT. US West Texas Intermediate crude rose 37 cents, or 0.57 per cent, to $65.00.
Both benchmarks settled higher on Wednesday. Brent futures gained 0.87 per cent and WTI gained more than 1.05 per cent, as investor worries about US-Iran tensions overshadowed a build in US crude stocks.
US President Donald Trump said after talks with Israeli Prime Minister Benjamin Netanyahu on Wednesday that they reached no “definitive” agreement on how to move forward with Iran, but he insisted negotiations with Tehran would continue.
On Tuesday, Trump said he was considering sending a second aircraft carrier to the Middle East if a deal is not reached with Iran, even as Washington and Tehran prepared to resume talks.
US and Iranian diplomats held indirect talks last week in Oman. The date and venue of the next round of US-Iran talks have yet to be announced.
A sustained break above a $65-$66 level would require further escalation in the Middle East, while any de-escalation could quickly trigger profit-taking back toward $60-$61 in WTI, IG analyst Tony Sycamore said.
US job growth unexpectedly accelerated in January and the unemployment rate fell to 4.3 per cent, the Labor Department said, signaling health in the economy.
“The resilient US economy is also supporting oil demand expectations,” said Mingyu Gao, chief researcher for energy and chemicals at China Futures.
A hefty build in US crude inventories capped price gains. US crude inventories rose by 8.5 million barrels to 428.8 million barrels last week, the Energy Information Administration said, far exceeding analysts’ expectations in a Reuters poll for a 793,000-barrel rise.
However, since the start of the year, global oil inventory builds have generally come in below expectations and net long positions in overseas crude oil futures and options have not yet reached overweight levels, said Gao.
Oil prices are therefore likely to remain biased to the upside, supported by the US-Iran situation, tighter sanctions on Russian oil and expectations of reduced exports, Gao added.
