Brent dipped on Wednesday but held above $60 a barrel, supported by a rise in Saudi crude prices and air strikes on oil facilities in Libya.
In a move widely seen as showing Saudi Arabia’s confidence in a recovery of demand, the OPEC kingpin raised the official selling prices (OSPs) for its oil deliveries to Asia and the United States on Tuesday.
“This is a sign that prices have bottomed out because it means Saudi is confident in raising prices without being afraid of losing market share,” said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.
In the past seven weeks, Brent crude has risen from a six-year low to hold above $60 a barrel despite continued concern about a global oversupply.
The April Brent contract was down 29 cents at $60.73 by 0751 GMT, after rising 2.5 percent on Tuesday. U.S. crude futures edged up 8 cents to $50.60 a barrel.
Air strikes on oil terminals and an airport in Libya on Tuesday helped to underpin prices.
However, uncertainty about talks between major powers and Iran over its nuclear program capped oil price gains. Any sign of a lasting agreement between Tehran and six world powers - the so-called P5+1 group - could result in a flood of Iranian crude returning to the market.
“We still have the big question mark over Iran. This month is the crunch time for P5+1 talks,” Nunan said.
Some investors are also looking to weekly U.S. government inventories data due later on Wednesday to provide more price support, after an industry report showed a smaller-than-expected build-up in U.S. commercial crude stocks last week.
Data from the American Petroleum Institute on Tuesday showed U.S. crude stocks rose 2.9 million barrels last week versus analysts’ expectations of an increase of 4.2 million.
Meanwhile, talks between Royal Dutch Shell and a local union will resume on Wednesday in the United States.
A resolution between the two in the biggest U.S. refinery walkout in 35 years could narrow West Texas Intermediate’s (WTI) spread with Brent, Phillips Futures analyst Daniel Ang said in a note.
Brent’s premium over U.S. crude was at close to $10 a barrel on Wednesday, down from about $13 at the start of the week.SHOW MORE