25 September 2013, News Wires – Brent crude oil futures were little changed on Wednesday and hovered near $109 a barrel, with investors watching whether relations between the United States and Iran will thaw and if it will impact a long-running nuclear dispute.
Uncertainty about the US Federal Reserve’s outlook for monetary stimulus added to investor caution.
Checking any substantial upside was an improvement in supply from Iraq and Libya and an assurance from Saudi Arabia’s oil minister that the oil market has enough supply and prices are at a favourable level.
Brent crude oil futures edged higher by 10 cents to $108.74 a barrel early on Wednesday.
US crude gained 13 cents to $103.26 a barrel, after four days of losses that drove it to seven-week lows in the previous session.
“There are some hopes that there might be a gradual forging of relationship between the west and Iran, though it’s still very early days,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
“The overall risk of supply disruption in the Middle East is a constant present for the oil market…It’s very hard to know what will happen in Iran except that if there was in fact a stabilisation, that would be a significant development for international markets.”
The West’s standoff with Iran over the Opec nation’s nuclear programme has helped support oil prices for nearly a decade. Years of sanctions have cut Iranian oil exports by more than 1 million barrels per day.
Iran has agreed to talks on its nuclear programme with top diplomats from six world powers on Thursday, including US Secretary of State John Kerry, increasing hopes Tehran’s relations with the United States could thaw.
But a failed effort to arrange a simple handshake between US President Barack Obama and Iran’s President Hassan Rouhani on the sidelines of the United Nations General Assembly underscored entrenched distrust that will be hard to overcome.
Rouhani told CNN he did not meet Obama at the UN General Assembly because the two sides “didn’t have sufficient time to really coordinate the meeting”.
Obama also appealed to the UN on Tuesday to back tough consequences for Syria if it refuses to give up chemical weapons and urged Russia and Iran to end their support for Syrian President Bashar Assad.
Syria is not a major oil producer but traders worry any escalation of Middle East violence could disrupt oil flows.
Oil supply has improved, as Iraq boosted output from its southern oilfields after repairing a leaking pipeline, although planned work was continuing to keep a lid on exports from Opec’s second largest producer.
Saudi Arabia’s Oil Minister Ali Naimi also allayed supply fears when he said that the oil market has enough supply and prices are at a favourable level, affirming the willingness of the world’s top crude exporter to meet shortages.
US crude stocks fell by 54,000 barrels last week, less than the 1.1 million barrel draw anticipated by analysts, data from industry group the American Petroleum Institute showed on Tuesday. Refined product inventories rose by over 800,000 barrels.
The more closely-watched data from the US government Energy Information Administration will be released later on Wednesday.
Investors were also cautious on uncertainty about the US Federal Reserve’s policy outlook.
The Federal Reserve 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, an influential central bank policymaker said on Monday.