Oil Prices Rose Thanks to One Factor

Oil prices rose on Thursday. They benefited from an unexpected drop in U.S. crude inventories in the previous session, as investors monitored the outcome of U.S.-Iran nuclear talks that has the potential to add crude supplies quickly to global markets.

Brent crude futures advanced 65 cents or 0.7% to $92.20 a barrel at 11:40 GMT. U.S. West Texas Intermediate (WTI) crude added $98 or 1.1% to $90.64 a barrel.

Robust demand recovery from Covid-19 kept the global oil supplies snug, with inventories at key fuel hubs globally hovering at multi-year lows.

Oil prices and nuclear talks

U.S. crude inventories dropped 4.8 million barrels in the week to February 4. Crude inventories fell to 410.4 million barrels – their lowest for commercial inventories since October 2018. 

U.S. product supplied – the best proxy for demand – peaked at 21.9 million barrels per day (bpd) over the past four weeks due to strong economic activity around the country.

Nevertheless, investors are closely monitoring the outcome of U.S.-Iran nuclear talks, which resumed this week. A deal between the U.S. and Iran could lift U.S. sanctions on Iranian oil and ease global supplies.

On Wednesday, the White House publicly pressured Iran to revive the 2015 Iran nuclear deal as soon as possible. The White House stated that it will be impossible to return to the accord if an agreement is not struck within weeks.