Oil prices experienced a decline in the wake of an unexpected rise in U.S. crude and fuel reserves. This development has raised apprehensions regarding demand. Investors are closely monitoring the resurgence of nuclear negotiations between Iran and the U.S. Tensions persist in light of a report concerning possible Israeli strikes on Iranian nuclear facilities. Kazakhstan’s oil production has risen, even in the face of OPEC+ pressure.
Oil prices declined on Thursday due to unexpected increases in U.S. crude and fuel inventories, which heightened concerns about demand. Meanwhile, investors remained cautious, paying close attention to the renewed nuclear talks between Iran and the U.S. Brent futures declined by 33 cents, equivalent to 0.5%, settling at $64.58 a barrel, whereas U.S. West Texas Intermediate crude fell by 32 cents, also 0.5%, to $61.25. On Wednesday, both benchmarks experienced a decline of 0.7%.
The Energy Information Administration reported on Wednesday that U.S. crude and fuel inventories experienced unexpected stock builds last week, coinciding with crude imports reaching a six-week peak while demand for gasoline and distillates declined. According to the EIA, crude inventories increased by 1.3 million barrels, reaching a total of 443.2 million barrels for the week ending May 16. Analysts participating in a Reuters poll had anticipated a reduction of 1.3 million barrels.
“While rising U.S. inventories have raised concerns, some investors expect the summer driving season starting after Memorial Day weekend to draw down stocks, limiting further downside,” said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities. “Traders remain cautious, avoiding large positions as they assess conflicting signals over U.S.-Iran nuclear talks and a media report of potential Israeli strikes on Iranian nuclear facilities,” he added, predicting WTI to trade between $55 and $65 for the time being.
On Wednesday, Oman’s foreign minister announced that the fifth round of nuclear talks between Iran and the United States is scheduled for May 23 in Rome. CNN reported on Tuesday that U.S. intelligence indicates Israel is poised to target Iranian nuclear facilities, referencing several U.S. officials and noting that it remains uncertain whether Israeli leaders have reached a definitive conclusion. Iran ranks as the third-largest producer within the Organization of the Petroleum Exporting Countries, and an Israeli attack could disrupt the flow of oil from the nation.
The U.S. and Iran have engaged in multiple discussions this year regarding Iran’s nuclear program, as U.S. President Donald Trump has reinitiated a strategy of intensified sanctions on Iranian crude exports. In the meantime, an industry source reported on Tuesday that Kazakhstan’s oil production has increased by 2% in May, countering OPEC+ efforts to curtail output.