NEW YORK: Oil prices gained nearly 2 percent on Wednesday, as investors worried about escalating tension between Iran and the US, which were preparing to resume negotiations, while a weekly report showing large build in crude inventories in the US limited gains.
Brent crude oil futures were up USD1.22, or 1.77 percent, at USD70.02 a barrel by 11:47 a.m. ET (1647 GMT). US West Texas Intermediate crude rose USD1.21, or nearly 1.89 percent, to USD65.17.
Tension in the Middle East continue to support prices, although there has been no supply disruption so far, said UBS oil analyst Giovanni Staunovo.
On Tuesday, US President Donald Trump said he was considering sending a second aircraft carrier to the Middle East if a deal is not reached with Iran, even as Washington and Tehran prepared to resume talks.
US and Iranian diplomats held indirect talks last week in Oman, amid a regional naval buildup by the US threatening Iran. The date and venue of the next round of US-Iran talks have yet to be announced.
“While rhetoric remains belligerent at times, there are no signs, at least for now, of escalation, and the US President believes that Iran will ultimately want to strike a deal on its nuclear missile programme,” PVM Oil Associates analyst Tamas Varga said in a note.
Also supporting oil prices, US job growth unexpectedly accelerated in January and the unemployment rate fell to 4.3 percent, the Labor Department said, signaling a healthy economy.
“A resilient labor market underpins demand for transport fuels, petrochemicals and power generation, reducing downside risks to US consumption at a time when macro sentiment had turned cautious,” Rystad Energy said in a note, adding that “labor market stability reinforces the view that the demand picture is firming up.”
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