Oil Flat As Traders Contemplate Another Potential Release Of U.S. Reserves

Meanwhile, Iran is moving more oil onto ships ahead of a nuclear deal agreement: File Image/Pixabay

Crude traders on Wednesday took a rare break from being swayed exclusively by the Russia/Ukraine conflict and instead focused on news that the U.S. is considering another release from its oil reserves in coordination with allies – which pared gains, albeit minimally.

Two people familiar with the matter told media that the potential release was an effort to mitigate a surge in prices brought on by the Russia's hostilities against Ukraine.

White House press secretary Jen Psaki said, "What we're trying to do and focus on is take every step we can working around the world with our counterparts and partners to minimize the impact on the global energy market."

West Texas Intermediate on Wednesday rose 19 cents to settle at $92.10 per barrel, while Brent was unchanged, settling at $96.84 per barrel.

Also influential to trading on Wednesday were the ongoing Iran nuclear talks, with the Islamic republic's foreign minister stating that it wants to settle remaining issues in the coming days but won't concede on its red lines "under any conditions."

It was reported that Iran is moving more oil onto ships in the Persian Gulf to speed up exports in anticipation of the deal being revived (it is estimated that Iran could restore about 1 million barrels per day of supply to global markets).

The amount of oil on tankers has jumped by 30 million barrels since early December to 103 million barrels, according to analysis firm Kpler.

However, it seems certain that Russia will continue to dominate crude trading in the near future, and JPMorgan Chase & Co. said that if the Russian escalation of hostilities against Ukraine is coupled with an Iranian deal, Brent is likely to average $110 in the second quarter.

Meanwhile, although many analysts are worried that high oil prices will ultimately halt demand recovery, Bloomberg's weekly Oil Demand Monitor on Wednesday showed that gasoline consumption has risen to within a few percentage points of pre-pandemic levels in the U.S. and India, meaning that for the time being motorists are willing to deal with high prices at the pump.