Oil prices gave up earlier gains to trade lower on Thursday after a report on news outlet Axios said the U.S. and Iran have reached a ceasefire extension deal.
U.S. data showing a smaller-than-expected draw from crude stockpiles last week added to the more bearish mood.
Brent crude futures fell 73 cents, or 0.8 per cent, to $93.56 a barrel as of 12:43 p.m. EDT. U.S. West Texas Intermediate futures were down marginally at $88.66.
The agreement between the U.S. and Iran would need final approval from U.S. President Donald Trump, who has told mediators he wants a few days to make the final decision, Axios reported, citing U.S. officials and a source involved in the mediation. Oil prices have been volatile in recent sessions as traders parse conflicting signals on the possibility of an end to the three-month Iran war and potential re-opening of the Strait of Hormuz. Traffic through the maritime chokepoint remains a small fraction of the pre-war level. Brent and WTI futures rose more than 2 per cent earlier in the session after Iran’s Revolutionary Guards said they had targeted a U.S. airbase in response to a U.S. attack on the port city of Bandar Abbas.
“The complex continues to advance grudgingly on bullish developments out of Iran while plunging markedly on even the slightest suggestion of a reopening of the Strait of Hormuz,” oil trading advisory firm Ritterbusch and Associates said.
“This contrast in responses to bullish and bearish inputs could continue as long as the ceasefire remains intact.”
Oil prices came under more pressure after official U.S. data showed the country’s crude oil stockpiles fell by 3.3 million barrels last week, a sixth consecutive week of declines but lower than the 4.1 million barrel draw analysts polled by Reuters expected.
U.S. gasoline and distillate fuel stockpiles also fell.
The oil market remains more sensitive to Middle East headlines despite another week of large declines in U.S. stockpiles, UBS analyst Giovanni Staunovo said.