Oil hits 2-week low on Iran talks resuming, US crude build

[NEW YORK] Oil prices fell about 1 per cent to their lowest in two weeks on Thursday after Iran said talks with world powers on its nuclear programme would resume by the end of November and on rising US crude inventories.

Brent crude was US$1.06, or 1.2 per cent, lower at US$83.52 a barrel by 12.31 pm ET (1631 GMT), having hit a two-week low of US$82.32 earlier in the session and falling 2.1 per cent on Wednesday.

US West Texas Intermediate (WTI) crude fell 79 cents, or 0.9 per cent, at US$81.86, having earlier touched a two-week low of US$80.58. The benchmark dropped 2.4 per cent on Wednesday after weekly data showed US crude stockpiles grew more than expected.

Iran's top nuclear negotiator Ali Bagheri Kani on Wednesday said the country's talks with six world powers to try to revive a 2015 nuclear deal will resume by the end of November.

A deal could pave the way to lifting harsh sanctions imposed by former US President Donald Trump on Iran's oil exports in late 2018.

"The market reacts to these headlines, but may be disappointed by how much oil actually returns," said Phil Flynn, senior analyst at Price Futures Group in Chicago.

US crude stocks rose by 4.3 million barrels last week, the US Energy Department said on Wednesday, more than double the 1.9 million-barrel gain forecast by analysts.

The hefty stockbuild was because of a large jump in net imports of crude oil while refinery processing remained sluggish, Citi Research analysts said in a note.

Yet petrol stocks fell by 2 million barrels to their lowest in nearly four years, even as US consumers contend with rising pump prices.

At the WTI delivery hub in Cushing, Oklahoma, crude storage was at its lowest levels in three years, with prices for longer-dated futures contracts indicating supplies will remain low for months.

Energy information provider Genscape said that as of Oct 26, tank levels at Cushing had fallen by 2.772 million in the last week, market participants said.

Outbreaks of coronavirus infections in China and record deaths and the threat of lockdowns in Russia, along with rising cases in western Europe, also weighed on prices.

REUTERS