Oil prices extended losses for a third consecutive session during Asian trade on Thursday, falling to multi-month lows as progress in indirect talks between the United States and Iran eased concerns over potential disruptions to global crude supplies.
By 2:45 pm AEST (4:45 am GMT), Brent crude futures were down 74 cents, or 1.0%, at US$70.83 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 77 cents, or 1.1%, to $67.81 a barrel.
The declines followed losses in the previous session, when Brent and WTI fell 1.3% and 1.9%, respectively.
Investor sentiment improved after Qatar said indirect negotiations between the U.S. and Iran had made progress on issues related to the Strait of Hormuz, through which around one-fifth of global oil supply flowed before the recent conflict.
A spokesperson for Qatar's Ministry of Foreign Affairs said the discussions had produced "positive progress" on issues related to the memorandum that ended hostilities in June, although there was no indication the two sides had moved closer to a lasting peace agreement.
ANZ analysts said easing geopolitical tensions had added to concerns over abundant global supply.
“Crude oil extended recent losses on further signs of oversupply in the market amid easing tensions in the Middle East. The U.S. and Iran arrived for peace talks in Doha, with U.S. negotiators saying progress in indirect talks with Iran had been made.
"This eased concerns that a return to conflict between the two sides would disrupt the movement of oil through the Strait of Hormuz.
"That supply flow has surged in recent weeks, with a Bloomberg report quoting a U.S. official as saying American military support has helped boost oil flows to more than 10mb/d.”
Further pressure came from expectations that OPEC+ will approve another production increase when the producer group meets on Sunday. Sources cited by Reuters indicated on Wednesday that member nations are likely to agree to a further rise in output targets from August.
Qatar's Foreign Ministry also confirmed the next round of indirect negotiations between U.S. and Iranian officials will take place after the funeral processions for Iran's late Supreme Leader Ayatollah Ali Khamenei on 9 July.
Meanwhile, fresh U.S. inventory data pointed to another decline in crude stockpiles, although the draw was smaller than anticipated.
The U.S. Energy Information Administration (EIA) reported commercial crude oil inventories, excluding the Strategic Petroleum Reserve, fell by 3.775 million barrels in the latest week. Analysts had expected a larger draw of 5.1 million barrels.
