Brent crude futures contracted on Wednesday, May 2, surrendering early gains after evidence of further increases in U.S. shale supply and a rise in Iranian exports ahead of a possible renewal of U.S. sanctions on Tehran.
July Brent futures LCOc1 were down 16 cents at $72.97 a barrel by 1100 GMT, after falling nearly 3 percent on Tuesday to their lowest in two weeks.
U.S. West Texas Intermediate crude futures were up 18 cents at $67.43, off a session high of $67.85.
“Geopolitical noise remains loud and in part pushed oil prices towards $75 per barrel,” said Norbert Ruecker, head of commodity and macro strategy at Julius Baer.
“The elevated uncertainty suggests volatile but range-bound oil prices going forward.”
Iran, a member of the Organization of the Petroleum Exporting Countries, re-emerged as a major oil exporter in January 2016 when some international sanctions against Tehran were lifted in return for curbs on Iran’s nuclear program.
The United States has questioned Iran’s sincerity in implementing the nuclear curbs and President Donald Trump has threatened to reimpose sanctions if adjustments are not made to the agreement.
Iran’s oil exports hit 2.6 million barrels per day (bpd) in April, according to the Oil Ministry, a record since the lifting of sanctions. China and India bought more than half of the oil.
“The expectation that the U.S. will leave the sanctions waivers is leading Iran to sell as much as it can,” Petromatrix strategist Olivier Jakob said.
Trump will decide by May 12 whether to restore U.S. sanctions on Iran, which would likely reduce its oil exports.
U.S. crude inventories rose by 3.4 million barrels to 432.575 million in the week to March 27, according to a report by the American Petroleum Institute on Tuesday, Reuters reports.
Rising inventories are partly due to soaring U.S. production C-OUT-T-EIA, which jumped by a quarter in the last two years to 10.6 million bpd.
