By Ambar Warrick
Investing.com-- Oil prices rose further on Thursday as traders awaited more details on the potential lifting of U.S. sanctions against Iran, while a drop in crude inventories also helped support sentiment.
London-traded Brent oil futures rose 0.06% to $101.74 a barrel, while benchmark U.S. West Texas Intermediate futures rose 0.4% to $95.25 a barrel by 20:08 ET (00:08 GMT).
Both contracts added over 1% in choppy trade on Wednesday after the U.S. said it had filed its response to Iran and the European Union over reviving the nuclear deal.
While details of the response were not revealed, analysts speculated that Washington was likely to seek more changes from the west Asian country.
Speculation over the deal- which could see the lifting of sanctions against Iranian oil and release over 1 million barrels of daily crude supply into the market, has largely dictated crude prices in recent weeks.
Threats of supply cuts by Saudi Arabia, in response to the deal, also drove prices higher this week, helping them recover from six-month lows.
Overnight, a bigger-than-expected drop in U.S. crude inventories also helped support prices. Inventories shrank 3.3 million barrels in the week to Aug. 19, more than expectations for a drop of 0.9 million barrels.
The drop was largely driven by record-high U.S. crude exports, indicating that overseas demand for crude remained robust. Several countries in Europe and Asia are struggling with severe fuel shortages. The EU in particular is looking at a potential fuel crisis, as it looks to wean itself off Russian crude imports.
U.S. gasoline inventories fell less than expected through the week, raising concerns that domestic demand is still on the ropes. Concerns over a potential recession in the United States are also expected to weigh on the outlook for crude demand, especially as interest rates rise further in the country.
Rising inflation and interest rates have seen U.S. consumers scale back on fuel spending. Markets are now looking to more cues from the Federal Reserve this week on the path of monetary policy.