|
ANS surges into $70s US/Iran confrontation fans price but US inventories see big build Steve Sutherlin Petroleum News
Alaska North Slope crude settled at $71.04 per barrel Feb. 24, down 32 cents on the day as it consolidated its position in the lower $70s, following crude's dramatic rise over the trading week to seven-month highs on geopolitical tension between Iran and the United States.
West Texas Intermediate and Brent trimmed gains as well, down 68 cents and 72 cents on the day respectively to close at $65.63 and $70.77.
The "geopolitical risk premium could spike at any moment," Tradu's Nikos Tzabouras told the Wall Street Journal in a Feb. 25 email.
President Trump put continued pressure on Iran during his State of the Union address, after giving a 10-15-day ultimatum for a deal, Tzabouras said, adding that those actions maintained risks of military conflict, which could disrupt oil flows and push prices higher.
Indirect talks over Tehran's nuclear intentions -- viewed as a last chance for diplomacy between Iran and the United States -- were underway in Geneva as Petroleum News went to press Feb. 26.
U.S. special Mideast envoy Steve Witkoff, communicating though mediator Oman with Iranian Foreign Minister Abbas Araghchi, asked Iran to halt its enrichment of uranium and curtail production of long-range missiles.
After a three-hour session the American delegation left the site, according to the Associated Press. Iranian state television reported that the talks would resume after a break.
Oman's Foreign Minister Badr al-Busaidi, negotiation mediator, said the two sides are exchanging "creative and positive ideas," adding that he is hopeful that more progress can be made later in the day when negotiations resume.
A prominent advisor to Iran's Supreme Leader suggested that Iran could reach an immediate agreement if talks with the U.S. focused solely on Iran's commitment not to develop nuclear weapons.
"If the main issue of the negotiations is Iran's non-development of nuclear weapons, this is consistent with the Supreme Leader's fatwa and Iran's defense doctrine, and an immediate agreement is within reach," Ali Shamkhani wrote in a post on X.
Oil prices slid on cautious peace optimism following the post, taking Brent below $70.
"Geo-risk will continue to rise and fall in response to latest U.S./Iran headlines, but global oil supplies are increasing appreciably as floating shadow inventories are moving into more transparent regions of the world," Ritterbusch and Associates said in a note, the WSJ reported.
Demand is slacking and the energy complex is losing support from diesel futures "as the heating season winds down amid a broad-based warming trend across the U.S. during the next couple of weeks," the firm added.
Oil bears found further cheer in a massive surprise build of U.S. commercial crude oil inventories reported by the Energy Information Administration in data released Feb. 25.
The inventories for the week ended Feb. 20 vaulted by 16.0 million barrels from the previous week to 435.8 million barrels -- 3% below the five-year average for the time of year. Total motor gasoline inventories decreased by 1.0 million barrels over the week to 254.8 million barrels -- 3% above the five-year average for the season, the EIA said. Distillate fuel inventories increased by 0.3 million barrels last week to 120.4 million barrels -- 5% below the five-year average for the season.
Dramatic price surge ANS blasted into the $70s Feb. 19, leaping $1.63 to close at $71.62, while WTI leapt $1.57 to close at $66.43 and Brent leapt $1.72 to close at $71.66.
That surge came on the shoulders of even hotter price action on Feb. 18 which saw ANS skyrocket $2.70 to close at $69.99, as WTI zoomed $2.53 to close at $64.86 and Brent zoomed $2.52 to close at $69.94.
Prices began to moderate Feb. 20, taking ANS down 17 cents to close at $71.44, while WTI edged 4 cents lower to $66.39 and Brent added 10 cents to close at $71.76.
The slide continued Feb. 23. ANS slipped 9 cents to close at $71.35, WTI slipped 8 cents to close at $66.31 and Brent fell 27 cents to close at $71.49.
ANS tallied a jump of $3.38 over the trading week from its close of $67.66 Feb. 13, to a close of $71.04 Feb. 24.
ANS leapt to a 27-cent premium over Brent Feb. 24, while posting a $5.41 premium over WTI.
Weakness in the North Sea physical oil market is weighing on oil prices, UBS analyst Giovanni Staunovo told Reuters.
The North Sea physical market underpins the Brent futures contract, prices of which have advanced some 15% in 2026.
| 