News of stepped-up US sanctions on Iran Wednesday overcame
an early decline in oil prices, leaving the commodity nearly flat.
The cost of a barrel of West Texas Intermediate oil for March
delivery ended two cents lower at $96.62 on the New York Mercantile
Exchange.
In London, the price of a barrel of European benchmark Brent closed at $116.73, up 21 cents from Tuesday.
US oil prices were down about $1.60 a barrel early in the session,
but largely recovered those losses after the US Treasury Department
announced new sanctions targeting Iranian oil revenue.
Under the plan unveiled Wednesday, Iran is denied direct access to the money from its oil sales to other countries.
"The main mover this morning was the new US sanctions that hampered
the Iranian oil trade," said Rich Ilczyszyn of iiTrader.com. "The market
sold off pretty good this morning and, on that story, came all the way
back."
The action followed a weekly US oil inventory report that was fairly market-neutral.
The US government's Energy Information Administration announced
Wednesday that American oil stockpiles climbed by 2.6 million barrels in
the week ending February 1.
While a build of oil is a bearish development, the amount undershot
expectations of a larger gain of 2.9 million barrels, according to
analysts polled by Dow Jones Newswires, suggesting
stronger-than-expected energy demand in the world's biggest economy.
The report also showed that crude oil stocks at the much-watched
Cushing, Oklahoma hub fell 300,000 compared with last week. The oil
market has for months been fixated on the build-up of excess supplies at
Cushing.
Crude futures had fallen in earlier trading as traders took profits
and the market was pressured by the stronger greenback, which makes
dollar-priced crude more expensive for buyers using weaker currencies.
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