Oil prices stable at $90/bbl, Iran supply prospects add pressure

By Rowena Edwards

LONDON (Reuters) -Oil prices were stable around $90 a barrel on Wednesday, as the prospect of increased supply from Iran and the United States pressured the market.

Brent crude futures edged up 44 cents, or 0.5%, to $91.22 a barrel by 1504 GMT.

U.S. West Texas Intermediate crude rose 28 cents, or 0.3%, to $89.64 a barrel.

The contracts slid about 2% on Tuesday as Washington resumed indirect talks with Iran to revive a nuclear deal.

An agreement could lift U.S. sanctions on Iranian oil and quickly add supply to the market, although a number of vital issues need to be resolved.

“If US-Iran talks continue to progress, this level should come under some pressure, while a collapse of negotiations could be the catalyst that drives the price towards triple-figure territory,” said Craig Erlam, senior market analyst at OANDA.

Market sentiment took a hit from the latest monthly report from the Energy Information Administration, which raised its outlook for U.S. crude production to average 11.97 million bpd this year.

More data from the U.S. EIA will be available at 10:30 a.m. EST (1530 GMT).

Furthermore, industry worries over geopolitical risks appeared to reduce on Wednesday, several analysts said.

“The concerns about a further escalation of the Russia-Ukraine conflict appear to have eased somewhat following the latest diplomatic efforts, which is reducing the risk premium on the oil price,” said Commerzbank commodities analyst Carsten Fritsch.

French President Emmanuel Macron said on Tuesday he believed steps could be taken to de-escalate the crisis after a meeting with Russian President Vladimir Putin and called on all sides to stay calm.

The market has seen some support from bullish U.S. inventory data.

U.S. crude, gasoline and distillate stocks fell last week, according to market sources citing American Petroleum Institute figures on Tuesday.

Crude inventories fell 2 million barrels, according to API, versus analysts’ expectations of a 400,000-barrel increase.

(Additional reporting by Florence Tan in Singapore; Editing by Kirsten Donovan and Barbara Lewis)