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SINGAPORE (Reuters) - Brent crude held steady at $120 on Thursday as supply disruption worries eased with Iran saying it would present new proposals in the upcoming nuclear talks with world powers, reversing some of the previous session's gains.
Prices were also under pressure following comments by top U.S. Fed officials that the central bank is still waiting to see if more monetary stimulus is needed, and on resurfacing worries about Spain's fiscal woes. These factors overshadowed an unexpected drop in U.S. oil product stocks.
Brent crude fell 1 cent to $120.17 a barrel by 11:28 p.m. Eastern Time, after touching a low of $119.93 earlier in the session. Brent settled 30 cents higher at $120.18 on Wednesday.
U.S. oil fell 11 cents to $102.59, after gaining $1.68 in the previous session.
"At the end of the day, Iran is also worried about its exports, about being able to do business with other countries. They need to maintain their budget, otherwise they cannot survive," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments.
"There is worry on the demand side as well, especially after last week's U.S. jobs data."
For a 24-hr technical outlook on Brent:
GRAPHIC on Iranian oil exports to Asia:
The offer for new proposals was made by head of Iran's Supreme National Security Council, Saeed Jalili, according to the country's English-language Press TV. But it was unclear if Tehran was willing to address its disputed uranium enrichment drive as six world powers want.
Previous rounds of talks with the P5+1 group - the five U.N. Security Council members, the United States, Britain, France, Russia and China, plus Germany - foundered in part because of Iran's refusal to negotiate on the scope of its uranium enrichment work, instead floating vague proposals for trade and security cooperation.
Oil reversed two days of losses on Wednesday as U.S. gasoline stocks fell 4.3 million barrels and distillate stocks, which include heating oil and diesel fuel, slid 4.0 million barrels -- both much above forecasts.
That overshadowed the 2.8 million-barrel build in U.S. crude stocks, their third straight weekly gain, dwarfing analysts' forecasts for an increase of 2.1 million barrels. <EIA/S>
Oil investors are worried about oil demand growth after a recent spate of weak numbers from the United State and China - two of the world's top economies - suggest the health of the global economy may be worse than expected.
The Federal Reserve's ultra-easy monetary policy is appropriate given high unemployment and the headwinds facing the economy, Janet Yellen, the No. 2 official of the U.S. central bank said on Wednesday.
The comments from Yellen and two other top U.S. Federal Reserve officials suggest the central bank is on hold as it waits to see whether a modest recovery will accelerate despite some stumbles, or whether more monetary stimulus will be needed.
"It is not easy for the Fed to come out and talk about further monetary stimulus," said Emori. "They would probably wait and watch how the economy progresses for another two to three months."
Broader markets are also worried about Europe's economy as Spain's fiscal woes worsen, even after a better-than-expected debt auction by Italy and supportive comments from a European Central Bank official on Spain.
Asia shares eked out small gains on Thursday reflecting the caution. <MKTS/GLOB>
Brent is expected to consolidate in a range of $119.39 to $120.97 per barrel, before either rebounding more or sliding towards $117.80, while U.S. oil has turned neutral in a range of $100.81-$103.40, following its rebound on Wednesday, according to Reuters technical analyst Wang Tao. <TECH/C>
Editing by Himani Sarkar