Oil prices held steady on Friday after shedding earlier gains, as market jitters kicked in over the prospect of geopolitical risks from possible new US sanctions against Iran.
US West Texas Intermediate (WTI) crude futures were trading 1 cent lower at USD 68.42 per barrel by 0258 GMT.
Brent crude oil futures were at USD 73.59 per barrel, down 3 cents, or 0.04 percent, from their last close after touching a intraday high of USD 73.80 per barrel in early morning trading.
Technical analysis from Reuters’ Wang Tao showed the market may retest a price support level at USD 72.39 per barrel after peaking around a resistance at USD 75.45.
Friday morning’s fluctuations came as investors sifted through the upcoming Iran sanction decision and an increasing US crude inventory build for clues.
Iran’s foreign minister said on Thursday US demands to change its 2015 nuclear agreement with world powers were unacceptable, as a deadline set by President Donald Trump for Europeans to “fix” the deal loomed.
“Current prices reflect a premium for Iran uncertainties. Investors are worried about supplies after Iran took a tough stance in its response to the United States,” Wang Xiao, Head of Crude Research with Guotai Junan Futures said, adding prices may fall if expectations for new sanctions ease.
European powers still want to hand Trump a plan to save the Iran nuclear deal next week. But they have also started work on protecting E.U.-Iranian business ties if the US president makes good on a threat to withdraw, six sources told Reuters.
Markets will remain skittish as the May 12 deadline to rectify the deal approaches, ANZ Research said in note.
Iran resumed its role as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran’s nuclear program.
Aside from security concerns, growing US crude supplies are capping price gains.
West Texas Intermediate crude for delivery in Midland slid for a fourth day on Thursday to hit its lowest in more than three-and-a-half years. WTI at Midland WTC-WTM traded as much as USD 14 a barrel below benchmark futures.
Surging production in the Permian basin has continued to outpace pipeline capacity, while local refining issues have exacerbated oversupply in the region, dealers told Reuters.
Multi-year low spot market prices followed US government data that showed a 6.2-million-barrel jump in crude inventories last week.
The United States now produces more crude oil than top exporter Saudi Arabia.