Oil prices increased today because of investors’ scepticism over whether relations between US and Iran would ease, amid new talks on Tehran’s nuclear programme; however, improving supplies from North Africa and the Middle East have restricted gains.
Brent crude increased by 42 cents to $109.06 a barrel, while US oil increased by 48 cents to $103.61 a barrel, reported Reuters.
Iran has agreed to talk about its nuclear programme with top officials from the US and other world powers on 26 September 2013, increasing hopes of an improving relationship between the two countries.
However, attempts to arrange a potential encounter at the UN meet between US President Barack Obama and Iranian President Hassan Rouhani failed, highlighting entrenched distrust that will be hard to overcome.
Obama urged the UN to back tough consequences for Syria if the latter falls foul of its word to surrender chemical weapons and asked Russia and Iran to end their support for the government of President Bashar al-Assad.
Traders still remain concerned that any escalation of violence in Syria, even though it is not a major oil producer, could disrupt supplies from the Middle East.
Oil price gains were capped with improved supplies from Iraq and Libya, amid a statement from Saudi Arabia’s oil minister Ali al-Naimi that supplies in the oil market are adequate.
The American Petroleum Institute (API) report showed that inventories of US crude dropped by 54,000 barrels last week, less than the anticipated 1.1 million barrel draw, while those of refined products increased by more than 800,000 barrels.
The US Energy Information Administration is scheduled to release its weekly inventory report today.
Also, the Federal Reserve’s policy outlook has added to investor caution, as the central bank said it must for now continue to push hard against threats to the US recovery, but should still be able to reduce its support for the economy later this year.
Image: Oil futures rise on scepticism over a thaw in US and Iran relations. Photo courtesy of freedigitalphotos.net.