Crude oil prices eased in early Asian trading on Thursday after rising in the previous session, as markets assessed the latest developments in US-Iran peace talks and the outlook for crude oil supplies from the Middle East.
Brent crude was around USD 96.97 per barrel, down 1.08 per cent from the previous session. US crude, or West Texas Intermediate (WTI), was around USD 89.27 per barrel, down 1.29 per cent.
Earlier in the session, Brent futures were quoted at USD 98.15 per barrel, up 12 cents or 0.1 per cent, while WTI was at USD 90.35 per barrel, down 7 cents or 0.1 per cent.
The movement came after crude prices recorded gains in the previous session. Investors are now watching whether the recovery in Middle East oil flows can continue and whether the US and Iran can reach an agreement.
Brent crude remains close to $97 per barrel
Brent crude fell towards USD 97 per barrel on Thursday, giving up part of the gains recorded in the previous session.
According to the latest price data, Brent was at USD 96.971 per barrel, down USD 1.056 or 1.08 per cent on the day. It was still up 1.39 per cent for the month and 51.24 per cent for the year.
US crude was quoted at USD 89.252 per barrel, down 1.29 per cent on the day. It was down 1.91 per cent for the month but remained 47.61 per cent higher on a year-to-date basis.
The weekly movement also showed some correction, with Brent down about 5.16 per cent over the week and US crude down around 2.39 per cent.
Middle East oil flows show signs of recovery
The recent decline in crude prices has come as the market sees signs of a recovery in oil flows from the Middle East.
Crude shipments from the region were nearing pre-war levels after Saudi Arabia restored half the capacity of its East-West pipeline.
Flows through the Strait of Hormuz also increased to 13.2 million barrels per day. The waterway remains important for global oil supplies, making developments around the strait a key factor for crude prices.
The improvement in flows has reduced some of the immediate supply concerns in the oil market. However, the market remains cautious about the sustainability of the recovery as there is still no lasting agreement to end the conflict involving Iran.
US-Iran talks remain key for oil prices
Investors are closely tracking the outcome of peace talks between the United States and Iran. The negotiations have remained at an impasse, while both Tehran and Washington have claimed full control over the Strait of Hormuz.
Iranian government spokesperson Fatemeh Mohajerani said Tehran had received a US proposal regarding the reopening of the strait. Any further developments around the talks could affect expectations for Middle East crude supplies. A sustained recovery in oil flows could reduce supply concerns, while any disruption could again put pressure on crude prices.
For the oil market, the focus therefore remains on both the negotiations and the actual movement of crude through key export routes.
OPEC+ output decision also in focus
Along with developments in the Middle East, the market is also watching the upcoming OPEC+ meeting. OPEC+ is expected to keep its November output quotas unchanged at its meeting this weekend.
An unchanged production policy would keep the focus on actual supply conditions and demand expectations rather than a change in official output targets.
The direction of crude prices in the coming sessions is likely to depend on how Middle East supply flows develop, along with the latest signals from the US-Iran negotiations.
US inflation and spending data add to market focus
US economic data is another factor being watched by investors. The US Personal Consumption Expenditures (PCE) price index rose 3.4 per cent in August from a year earlier, according to the latest estimates from the US Bureau of Economic Analysis.
Every month, the PCE price index increased 0.3 per cent in August. The core PCE index, which excludes food and energy, rose 0.2 per cent during the month. On a year-on-year basis, core PCE inflation increased 3 per cent.
US consumer spending also increased 0.9 per cent in August. Personal income rose by USD 66.6 billion, or 0.2 per cent, during the month, while disposable personal income increased by USD 68.6 billion, or 0.3 per cent.
The BEA said the rise in personal income mainly reflected higher compensation and government social benefits.
