Oil steadies near three-year highs on recovery signs

NEW YORK: Oil prices steadied on Thursday, holding close to their highest levels in almost three years, supported by drawdowns in U.S. inventories and accelerating German economic activity.

Doubts about the future of the 2015 Iran nuclear deal that could end U.S. sanctions on Iranian crude exports also helped prices.

Brent rose 12 cents, or 0.2pc, to $75.31 a barrel by 12:28 p.m. EDT (1628 GMT), after earlier rising to $75.78. U.S. crude slipped 1 cent to $73.07 a barrel, after hitting a session high of $73.61 earlier.

Both benchmarks had hit their highest since October 2018 on Wednesday before paring gains.

Data from Germany showed the largest upward leap in retail conditions since German reunification more than three decades ago, further stoking expectations of a European fuel demand recovery.

Across the Atlantic, U.S. crude inventories dropped to their lowest since March 2020, official data showed. U.S. gasoline stocks also posted a surprise draw.

The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+ that meets on July 1, have been discussing a further unwinding of last year's record output cuts from August but no decision has been made, two OPEC+ sources said on Tuesday.

"Talk of a possible production lift of half a million barrels per day over and above current planned increases could offer a bullish consideration, especially since we feel that demand is likely falling short of most expectations," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

Indian Oil Minister Dharmendra Pradhan on Thursday urged OPEC to phase out crude output cuts as high prices are stoking inflation.

"Given the good sentiment and robust demand, OPEC+ is likely to find it easy next week to announce a further increase in production, at least for August, without jeopardizing the upswing enjoyed by the oil price," Commerzbank analysts wrote.

They said "the currently positive general tenor on the oil market" was driving prices up.

Brent has gained more than 45pc this year on the OPEC+ supply cuts and recovering demand. Some industry executives have talked of crude returning to $100 for the first time since 2014.

Iran said on Wednesday the United States had agreed to remove all sanctions on Iran's oil and shipping but Washington said "nothing is agreed until everything is agreed" in talks to revive the 2015 Iran nuclear deal.